Stakeholders and their conflicting interests
A stakeholder is any individual or group with an interest in the activities and performance of a business. Internal stakeholders are inside the business, such as owners or shareholders, employees and managers.
Method
- Learn the definition of a stakeholder and be able to sort a list of stakeholders into internal (inside the business) and external (outside the business).
- Learn the typical interest of each major stakeholder group: owners or shareholders (profit, return on investment), employees (pay, job security, working conditions), customers (quality, value, reliability), suppliers (being paid on time, repeat orders), the local community (jobs, low pollution or noise), and the government (tax paid, the law being followed).
- Learn that stakeholder interests frequently conflict, for example shareholders wanting higher dividends can conflict with employees wanting higher wages, since both come from the same pool of profit.
- For identify questions, name the stakeholder group directly from the case with no explanation.
- For explain questions on a conflict, name both stakeholder groups, state their competing interest, and link it to why the interests clash over the same decision or resource.
- For evaluate questions on which stakeholder a business should prioritise, weigh the impact on at least two stakeholder groups and reach a decision that refers to details in the case, such as which stakeholder the business depends on most.
Worked example
A supermarket chain is deciding whether to install self-service tills across all of its stores. Explain one way this decision could benefit shareholders and one way it could create a conflict with employees.
- Identify the shareholder interest: shareholders want the business to be run profitably so they receive a strong return or dividend.
- Link automation to that interest: self-service tills reduce the number of staff needed on checkouts, cutting wage costs and increasing profit, which benefits shareholders.
- Identify the employee interest: employees want job security and reliable pay.
- Link automation to the conflict: fewer staff are needed once self-service tills are introduced, which could mean checkout staff lose their jobs or have their hours cut, directly conflicting with their interest in job security.
- Write the full explained answer, combining both linked points into one clear response.
Practice questions
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Q1Define the term stakeholder.Show answer
Answer: Any individual or group with an interest in the activities and performance of a business.
Q2Identify whether shareholders are internal or external stakeholders.Show answer
Answer: Internal.
Q3Identify whether the local community is an internal or external stakeholder.Show answer
Answer: External.
Q4State one interest a supplier has in the businesses it supplies.Show answer
Answer: Being paid on time, and receiving repeat, reliable orders.
Q5Give one interest the government has as a stakeholder in a business.Show answer
Answer: The tax the business pays and its compliance with the law.
Q6State one reason shareholder and employee interests can conflict.Show answer
Answer: Because higher wages for employees reduce the profit available to pay out to shareholders as dividends.
Q7Name one stakeholder group, other than shareholders and employees, that a new factory would affect.Show answer
Answer: For example, the local community, through jobs created or noise and pollution caused, or local suppliers.
Exam-style questions
Written in the style of a GCSE Business exam paper, with a full mark scheme.
Explain two reasons why a factory's decision to extend its opening hours to run through the night might affect its relationship with the local community.
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A logistics company is considering moving its warehouse from a location on the edge of town to a much larger site 15 miles away, which is cheaper to rent and better placed for major roads. The move would let the company take on more contracts and eventually create 40 new jobs at the new site, but most of its current 25 warehouse staff do not drive and could not reasonably commute to the new location. Evaluate whether the company should go ahead with the move.
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See real GCSE Business past-paper questions, with official mark schemes →
Free printable worksheet
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