Stakeholder Objectives | Business Studies for GCSE/IGCSE - Year 11 PDF Download

Introduction to Business Stakeholders

• Business stakeholders encompass individuals or groups who influence or are influenced by the actions of a business.
• Internal stakeholders comprise individuals within the organization, including employees, owners, shareholders, and managers.
• External stakeholders consist of people and entities external to the business, such as suppliers, governments, customers, trade unions, and creditors.

Diagram to show examples of business stakeholders

Objectives of Stakeholder Groups

• Stakeholders can have diverse objectives based on their roles and perspectives.
• A business must consider the needs and interests of stakeholders for successful operations and long-term viability.

The Different Objectives of Stakeholders

How stakeholders are impacted by business activity

Stakeholders play a crucial role in businesses by influencing and being impacted by various activities. Let's delve into how different stakeholders are affected:

• Customers: Customers expect quality products/services, excellent customer service, and fair pricing. For example, a dissatisfied customer may switch to a competitor, affecting the business's revenue.
• Employees: Employees seek fair wages, job security, and a safe working environment. If these needs are not met, there may be high turnover rates or decreased productivity.
• Investors: Investors aim for a return on their investment. They are affected by the company's financial performance and strategic decisions. Poor performance may lead to a decrease in stock value.
• Government: Government entities regulate businesses through policies and laws. Compliance is crucial to avoid fines or legal issues that can impact the company's reputation.

How stakeholders impact business activity

• Stakeholders play a crucial role in influencing business operations and decisions.
• Customers have the power to affect product development and pricing by making purchasing choices and providing feedback.
• Employees contribute to business activity through their productivity, skills, and job satisfaction levels.
• Shareholders influence business activity through their investment decisions and expectations for returns on investments.
• The local community impacts business operations through regulations, permits from local authorities, and social pressures.
• Pressure groups exert influence by advocating for policy changes or initiating product boycotts.
• The government significantly impacts business activity through taxation policies, regulations, and subsidies.

Stakeholder Conflict

• Stakeholders often have differing interests and goals, leading to potential conflicts within organizations.
  • Shareholders typically aim for profit maximization, while employees may seek fair treatment and higher wages.
  • Customers might prioritize affordability, whereas the local community could prioritize environmental sustainability, even if it raises costs.
• These conflicting priorities can pose challenges for businesses striving to meet the diverse needs of various stakeholder groups.
  • For instance, a company might be required to invest in expensive environmental technologies to satisfy local community expectations, which could reduce profits and displease shareholders.
• Conflicts can also emerge due to variations in the power and influence held by different stakeholders.
  • Pressure groups with significant public backing may wield more influence over business operations compared to individual shareholders.
• Effectively managing stakeholder conflicts demands open communication, transparency, and a willingness to find mutually acceptable solutions.

Real-life Examples of Stakeholder Conflicts