Stakeholder Considerations (OCR GCSE Business)

Revision Note

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Lisa Eades

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Business Content Creator

Stakeholder Influences on Business

There are several ways stakeholders can put pressure on businesses to behave in a particular way

**Employees, consumers, investors and other stakeholders put pressure on businesses to behave in a particular way**

Stakeholder influences

Consumer pressure

Consumers can influence businesses by making choices about what they buy
- Consumers may boycott a company's products or services due to unethical business practices
  - This affects a business's revenue and may force them to change their behaviour

Investor pressure

Shareholders can use their ownership stake to push for changes in company policies and practices
- They can vote against management proposals or sell their shares in companies that fail to meet their standards

Regulatory pressure

Governments can introduce laws and regulations that require businesses to operate in a particular way and impose penalties for non-compliance
- This can force companies to change their behaviour to avoid fines, legal consequences or the loss of operating licenses

Public pressure and activism

Non-profit organisations, such as pressure groups, and individual activists can launch public awareness campaigns, protests, or boycotts
- These activities draw attention to unethical or harmful business practices, which can damage a business's reputation and create pressure for change

Employee pressure

Employees can voice their concerns internally, join or form trade unions, or engage in collective action
- They may demand improvements in workplace conditions, pay or issues such as poor environmental practices

Industry pressure

Companies within the same industry can establish voluntary codes of conduct or best practices
- These pressure businesses to adopt similar policies to those of competitors or risk lagging behind

Legal action

Stakeholders can take legal action against companies for unethical, illegal, or harmful business practices
- If successful, these can result in costly legal settlements or fines

Business Impacts on Stakeholders

Similarly, businesses can affect stakeholders, positively or negatively, in a number of ways

Business Impacts on Stakeholders

Stakeholder	Business Impact
Employees	Employees are affected by policies related to pay, benefits, working conditions and development opportunities Fair treatment, competitive pay and a positive work environment can lead to employee satisfaction and retention of staff Poor practices can result in low morale, high staff turnover, and legal issues.
Customers	Businesses often affect customers through the quality, pricing, and availability of their products Providing high-quality products, good customer service and fair pricing leads to customer satisfaction and loyalty Poor quality, deceptive practices, or unfair pricing can damage a company's reputation and lead to customers shopping elsewhere
Shareholders	The financial performance, decisions and growth of a business affect its shareholders Strong financial results, effective decision-making, and ethical conduct can increase the value of shares Poor performance, mismanagement, or unethical behaviour can lead to losses and a decline in shareholder confidence
Suppliers	Businesses affect suppliers through their purchasing practices and contract terms Fair dealings, timely payment of invoices and long-term relationships with suppliers builds trust Unfair treatment, delayed payments, or frequent switching to rivals can strain relationships and impact the supply chain
Local communities	Businesses affect local communities through their environmental impact, employment opportunities and community contributions Responsible environmental practices, job creation, charitable donations, and community involvement benefit the local area Pollution, job losses, and lack of community support have significant negative impacts on local residents
Government	Business compliance with laws and regulations, tax payments, and lobbying activities affect location and national governments Meeting legal and regulatory requirements and paying tax in full and on time can foster positive relationships Non-compliance, tax avoidance or exerting undue influence can lead to fines, legal issues and negative public perceptions, such as distrust in politics

Examiner Tip

Conflict between stakeholder needs is an effective evaluative point. A business may effectively meet the needs of one stakeholder group while ignoring the equally pressing needs of another. Making the point that businesses often have to compromise the needs of stakeholders can make recommendations in 9-mark answers stand out.

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