Business stakeholders

Welcome to the World of Business Stakeholders!

In this chapter, we are going to explore the "people side" of business. If you think a business is just about a shop and its owner, think again! A business is like a stone thrown into a pond—it creates ripples that touch many different people and groups. These people are called stakeholders.

Don't worry if this seems a bit crowded at first. By the end of these notes, you’ll understand exactly who these people are, what they want, and why they sometimes argue!

1. What is a Stakeholder?

A stakeholder is any person, group, or organisation that has an interest in or is affected by the activities of a business.

Quick Review: Remember the difference between these two similar-sounding words:
1. Shareholder: Someone who owns a part of a company (a type of stakeholder).
2. Stakeholder: Anyone affected by the business (a much larger group).

2. Who are the Stakeholders and What do They Want?

Every stakeholder has their own "objective" (what they want to get out of the business). Let’s look at the main ones listed in your Pearson Edexcel syllabus:

Internal Stakeholders (Inside the business)

Shareholders (Owners): They want the business to make a high profit so they can receive payments called dividends. They also want the value of the business to grow.
Employees: They want job security (knowing they won't be fired tomorrow) and fair pay for their work.
Managers: They want to hit their targets, get bonuses, and perhaps gain a promotion or higher status.

External Stakeholders (Outside the business)

Customers: They want high-quality products and fair prices. They also value good customer service.
Suppliers: These are other businesses that sell materials to the shop. They want to be paid on time and receive regular orders.
Local Community: People living nearby. They want the business to provide jobs, but they don't want noise, traffic, or pollution.
Pressure Groups: Groups like Greenpeace or PETA. They want the business to act ethically (for example, using less plastic or protecting animal rights).
The Government: They want the business to follow the law and pay the correct amount of tax.

Memory Aid: The "Five-Finger Rule"

If you struggle to remember the external stakeholders, think of them as things "outside" your house: The Customers who visit, the Suppliers who deliver, the Community next door, the Pressure Groups protesting at the gate, and the Government watching from above!

Key Takeaway: Different stakeholders have different goals. Owners want profit, while customers want low prices!

3. The Two-Way Street: How Businesses and Stakeholders Interact

Business activity is a "two-way street." This means the business affects the stakeholders, but the stakeholders can also affect the business.

How Stakeholders are Affected by the Business:

Imagine a small local bakery decides to close down:
- Employees lose their jobs (no income).
- Customers have nowhere to buy their favorite bread.
- Suppliers lose a customer (fewer sales for them).
- The Local Community loses a bit of its character and local employment.

How Stakeholders Impact the Business:

Stakeholders aren't just passive; they have power!
- Customers can choose to shop at a competitor if prices are too high.
- Workers can go on strike or work slowly if they are unhappy with pay.
- Pressure Groups can start a social media campaign to damage the business's reputation.
- The Government can pass new laws (like a higher minimum wage) that increase the business's costs.

Did you know? Social media has given Customers and Pressure Groups much more power than they used to have. One viral video about a business acting badly can reach millions of people in hours!

4. Stakeholder Conflict: The Drama!

Because different stakeholders want different things, they often conflict. This is a very common topic in exams.

Example 1: Shareholders vs. Employees

Shareholders want to cut costs to make more profit. They might suggest reducing staff wages. However, Employees want higher wages. You can't have both at the same time!

Example 2: Business vs. Local Community

A business might want to stay open 24 hours a day to make more money (good for Owners and Customers). However, the Local Community will be unhappy about the noise and extra traffic at 3:00 AM.

Example 3: Customers vs. Shareholders

Customers want the lowest price possible. If the business lowers its prices, the Shareholders might see their profits drop.

Quick Review Box:
Conflict happens when the objectives of two or more stakeholder groups cannot be met at the same time. The business usually has to find a balance or choose which stakeholder is most important at that moment.

5. Summary and Common Mistakes

Before you move on to the next chapter, check these final points:

Key Points to Remember:

• Stakeholders are anyone with an interest in the business.
• Internal stakeholders are inside the business (Owners, Managers, Staff).
• External stakeholders are outside (Customers, Suppliers, Community, Government, Pressure Groups).
• Conflict is natural because different groups want different things.

Common Mistakes to Avoid:

• Mixing up Stakeholders and Shareholders: Remember, all shareholders are stakeholders, but not all stakeholders are shareholders!
• Thinking "Community" and "Customer" are the same: A customer buys the product; the community just lives nearby. They have very different interests.
• Forgetting that stakeholders have power: Don't just think about how the business affects them—think about how they can "fight back" or help the business.

Key Takeaway: A successful business is one that manages its relationships with all stakeholders effectively, even when they disagree!