Shareholders Versus Stakeholders (Edexcel A Level Business)

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

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 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 

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

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

A manager of a McDonald's outlet may want the restaurant to increase sales and reduce costs by improving efficiency

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 

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 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

A shareholder of Apple may want the company to release new products and increase sales to increase the value of their shares

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

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 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

Burnley Savings & Loans Ltd (Bank of Dave) donates all of its profits to local charities and good causes

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

The government may want a company to pay taxes, comply with environmental regulations, and create jobs

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

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 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

In 2022, UK 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

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 businesses to raise prices

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%

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

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%

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

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