Stakeholders (OCR GCSE Business)

Revision Note

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Lisa Eades

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Business Content Creator

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

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 Tip

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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