Shareholders Versus Stakeholders (Edexcel A Level Business)

Owners 

• Owners may be sole traders, a partner in a business or a shareholder in a private limited company
• Owners are likely to work within the business as well as own it and so will be relying on the business to provide an income
• They will want all, or a share of the profit and will want the business to be succeed

• E.g the owner of a small building business may want it to provide a job and income
  • The owner may also have the aim of passing the business on to a family member on retirement

Employees

• Employees are individuals who work for a company
• Their primary objective is to earn a living, have job security and be compensated fairly for their work and have a safe working environment 

• E.g. Google employees in California have some of the best working conditions in the world, with the Company offering sleeping pods, games rooms and free speciality coffee all day

Management

• Managers are individuals who are responsible for the day-to-day operations of a company
• Their primary objective is to meet the company's goals and objectives
• They want to maximise profits and minimise costs while ensuring that the company operates efficiently

• E.g. a manager of McDonald's may want the restaurant to increase sales and reduce costs by improving efficiency

Customers

• Customers are individuals or businesses who purchase goods/services from a business
• Their primary objective is to receive high-quality products or services at a fair price
• Customers also want good customer service and a positive experience with the company 

• E.g. a customer of Nike may want the company to provide high-quality shoes at a reasonable price - and to deal promptly with any customer concern issues

Shareholders

• Shareholders are individuals or entities who own a portion of a company's stock
• They invest in the company with the goal of making a profit
• Shareholders' primary objective is to maximise their returns on investment
• They want the company to be profitable and generate a high return on their investment

• E.g. a shareholder of Apple may want the company to release new products and increase sales to increase the value of their shares

Suppliers & creditors

• Suppliers and creditors are likely to be one and the same
• Their primary objective is for the business to pay what it owes promptly and in full
• Suppliers often want to be able to establish long-term arrangements with customers to improve business stability

• E.g. an egg supplier is likely to value a  long-term supply contract with a leading supermarket even if the price it receives for its eggs is low because sales are guaranteed 

The local community

• The local community includes individuals and organisations that live or operate in the area where a business operates
• Their primary objective is for the business to have a positive impact on the community
  • This may include  the business being environmentally responsible, providing jobs, and contributing to local causes

• For example, Burnley Savings & Loans Ltd (Bank of Dave) donates all of their profits to local charities and good causes

Local and national government

• The government is responsible for creating and enforcing laws and regulations that affect businesses
• Their primary objective is to promote the public good and protect the interests of citizens
• The government wants companies to operate within the law and contribute to the economy

• E.g. the government may want a company to pay taxes, comply with environmental regulations, and create jobs

Pressure groups

• Pressure groups are organisations that seek to influence the policies and actions of businesses or governments
• Their primary objective is to promote a specific cause or agenda
• Pressure groups want the company to support their cause or take action on an issue

• E.g. an animal rights group may want a clothing company to stop using animal products in their clothing

• If a business experiences financial difficulties, shareholders may lose value in their investments and employees may face job losses or pay cuts
• If a business is profitable, shareholders may benefit from increased dividends and employees may receive bonuses or promotions
• Customers can be affected by business activity in terms of product availability, quality, and pricing
• The local community can be impacted by the environmental and social impact of business operations, such as pollution or job creation
• The government can be affected by business activity in terms of tax revenue and regulatory compliance (following the laws)

• Customers can influence product development and pricing through their purchasing decisions and feedback
• Employees can impact business activity through their productivity, skills, and job satisfaction
• Shareholders can impact business activity through their investment decisions and demands for returns
• The local community can impact business activity through regulations and permits (from the local council), and social pressure
• Pressure groups can impact business activity by lobbying for changes in policy or boycotting products
• The government can impact business activity through taxes, regulations (laws), and subsidies

Shareholders & Employees

• Shareholders aim to maximise the return on their investment which usually requires the business to make as much profit as possible
• Employees aim for higher wages and better conditions which is likely to increase costs and reduce profits

• E.g. in 2022 postal workers were engaged in strike action against their employer Royal Mail as they objected to a range of changes being made to their pay and working conditions intended to boost profits

Shareholders & Customers

• Customers aim for fair (or low) prices as well as good customer service
• As shareholders demand high profits to achieve maximum dividends there is pressure on a business to raise prices

• E.g. customers of UK energy suppliers have been concerned that record-breaking shareholder dividends in 2022 occurred at the same time as consumer prices rose by more than 60%

Shareholders & Management

• Management aims to run the business effectively and ensure it pleases its shareholders
• Management may recommend the decision to retain profits to invest and grow the business rather than issue it to shareholders as dividends

• E.g. in early 2023 large numbers of shareholders of Boohoo voted against management plans to boost executive pay at the same time as dividends fell by 85%

Shareholders & Government

• Governments want businesses to create good quality jobs, whilst complying with laws and tax contributions
• Shareholders  are less interested in job creation and more interested in profit maximisation

• E.g. large corporations such as Amazon and Shell have been accused of tax avoidance through the offshoring of profit, reducing the amount of corporation tax paid to the UK government