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Stakeholders (OCR GCSE Business)

Revision Note

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

Introduction to Stakeholders

  • Stakeholders are individuals or groups that affect, or are affected by, the actions of a business 

  • Stakeholder expectations influence business owners and senior managers

Diagram: Business stakeholders

Stakeholders are the individuals or groups that have an interest in a business
Stakeholders are individuals or groups with an interest in the activities of a business

Internal Stakeholders

  • Internal stakeholders are individuals or groups within a business that often have a strong influence on business objectives and decisions

  • The main internal stakeholders are owners and employees

  • Internal stakeholders have a range of expectations and objectives, which can sometimes conflict

    • The business owners' objectives to maximise profit may conflict with workers' objectives to earn higher wages

      • E.g. In 2020, British Airways faced protests and legal challenges from its employees and trade unions after announcing plans to cut 12,000 jobs and reduce pay for remaining staff due to the impact of the COVID-19 pandemic on airline industry profits

  • Where conflict occurs, internal stakeholders may take a range of steps to increase their chances of achieving their objectives

    • Employees or their representatives may engage in negotiations with managers to improve their pay and conditions

    • Shareholders can vote on key business decisions at the annual general meeting

    • Employees can take direct action, such as going on strike, when negotiation has not been effective in achieving their aims

Objectives of Internal Stakeholders

Stakeholder

Objectives

Owners

  • Owners are individuals or entities who own all or a portion of a business

  • They may be sole traders, partners or shareholders

  • They generally invest in a business to make a profit

  • Small business owners often have objectives related to work-life balance and personal satisfaction

  • Shareholders' primary objective is to maximise their return on 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

Employees

  • Employees are individuals who work for a company

  • Their primary objective is to earn a living, have job security, 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

  • Employees include managers, whose primary objective is to meet the company's goals and objectives

  • Managers want to maximise profits and minimise costs while ensuring that the company operates efficiently

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

External Stakeholders

  • External stakeholders are individuals or groups outside a business that have some influence on business objectives and decisions

  • When external stakeholders are in conflict with a business, they may choose to take a range of steps to increase their chances of achieving their objectives

    • Suppliers can refuse to supply further goods to a business

    • Customers can boycott businesses or their brands

    • Local councils can refuse to grant planning permission for business developments

    • Pressure groups or the local community can stage protests or spread viral

      campaigns targeting a business

      • E.g. In 2019, plans to build a new high-speed rail line, HS2, faced protests from pressure groups and residents of areas affected by the proposed route, who argued that the project would damage the environment, disrupt communities, and be too expensive

Objectives of External Stakeholders

Stakeholder

Objective

Suppliers

  • Suppliers are individuals or businesses that provide goods or services to a business

  • Their primary objective is to sell their products or services and make a profit

  • Suppliers want to be paid on time and have a long-term relationship with the company

    • E.g. Busco Sugar Milling Co., Inc supplies Coca-Cola with 84% of its sugar requirements. It wants the company to continue buying their sugar and to pay their bills on time

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 sports shoes at a reasonable price - and to deal promptly with any customer concerns

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

    • E.g. Burnley Savings & Loans Ltd (Bank of Dave) donates all of their profits to local charities and good causes

  • The local community may act as a pressure group to influence the policies and actions of businesses

  • 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. A group of local residents may put pressure on a business to reduce its impact on traffic congestion

The government

  • Local councils and the national government are 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 UK government wants businesses to pay taxes, comply with environmental regulations and create jobs

  • The level of influence stakeholders have determines the necessity of the business responding to their concerns

    • In some cases, external stakeholders have a significant influence on business decisions

      • E.g. If a business does not meet a major supplier's objectives (e.g. failing to pay invoices on time), it could lead to a delay in the delivery of raw materials or components, which could cause production stoppages

    • The objectives of other external stakeholders may be less influential

      • E.g. A business may ignore demands from an environmental pressure group to phase out the use of single-use plastics as it would increase business costs

Examiner Tips and Tricks

Considering the impact on stakeholders of business decisions is a great way to build chains of analysis in longer exam answers. You could consider how a decision may benefit some stakeholders, yet cause problems for others. You might also consider how stakeholders could respond to business decisions, and the impact of their responses on the business.

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    Author
    Reviewer
    Lisa Eades

    Author: Lisa Eades

    Expertise: Business Content Creator

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.