Business stakeholders
Who are stakeholders?
A stakeholder is any individual or group that has an interest in a business and is affected by its decisions and activities.
Internal stakeholders (inside the business):
- Owners/shareholders: want profit/dividends and long-term business success.
- Employees: want fair pay, job security, safe working conditions, career development.
- Managers: want to meet targets, receive bonuses, have strategic control.
External stakeholders (outside the business):
- Customers: want quality products, fair prices, good service, and ethical sourcing.
- Suppliers: want regular orders, prompt payment, and a long-term relationship.
- Government: wants businesses to pay taxes, comply with laws, create employment.
- Local community: wants local jobs, minimal disruption (noise/pollution/traffic), and community engagement.
- Pressure groups: want businesses to act ethically and sustainably (Greenpeace, Amnesty International, Which?).
Stakeholder objectives and conflicts
Different stakeholders often have conflicting objectives:
| Conflict | Explanation |
|---|---|
| Owners vs employees | Owners want to reduce labour costs (to increase profit); employees want higher wages. |
| Owners vs customers | Owners want to maximise price to increase revenue; customers want lower prices. |
| Business vs local community | Expansion (new warehouse, night deliveries) creates jobs (good for community) but may increase noise/traffic (bad for residents). |
| Business vs environment/pressure groups | Cutting costs via cheaper processes may increase pollution; pressure groups demand sustainable practices which cost more. |
| Shareholders vs employees | Shareholders may push for layoffs to cut costs; employees want job security. |
How businesses respond to stakeholders
- Consulting stakeholders: listening sessions, surveys, annual reports, AGMs.
- Compromising: finding a middle ground (e.g. noisy deliveries only between 8am–6pm).
- CSR (Corporate Social Responsibility): voluntarily adopting ethical/environmental practices beyond the legal minimum.
- Lobbying government: influencing policy decisions that affect the business.
- Ignoring minor stakeholders: a business may prioritise shareholders over pressure groups if the financial stakes are high enough.
Prioritising stakeholders
Not all stakeholders are equal. Businesses typically prioritise based on:
- Power: how much influence does this stakeholder have? (e.g. a major supplier with no alternative is powerful)
- Urgency: how immediately do they need a response?
- Legitimacy: how valid is their claim?
UK example: during Covid-19, supermarkets prioritised customer safety (limiting shoppers, social distancing) over short-term profit — responding to the most powerful and immediate stakeholder pressure.
Edexcel examiner tip
Edexcel often describes a business decision (opening a new factory, cutting staff, raising prices) and asks you to:
- Identify stakeholders who are affected.
- Explain how each is affected (positively and negatively).
- Discuss or evaluate whether the business should prioritise one stakeholder group over another.
AI-generated · claude-opus-4-7 · v3-edexcel-business