Business Stakeholders
How stakeholders are affected by business activity
Stakeholders are affected by business activity in different ways, so one decision can benefit some groups while harming others. Working out what changes for each named group, and why, is what shows how big an effect a decision really has.
How each stakeholder group is affected
| Stakeholder group | How business activity can affect them |
|---|---|
| Employees | A pay freeze, new shift pattern, extra training or expansion changes their income, hours, workload and job security; a closure can mean redundancy. |
| Managers | They are responsible for results, so a successful launch can bring bonuses and reputation, while poor performance or closure threatens job security and adds to workload. |
| Customers | Price changes affect what they pay; quality, choice, availability and service affect what they get. Withdrawing a product or closing removes an option. |
| Shareholders | Profit changes affect dividends and share value. Growth can raise returns but also risk; bad publicity can lower share value. |
| Suppliers | Order levels and payment terms matter. Expansion means more orders and longer contracts; a closure or late payment threatens their cash flow and jobs. |
| Local community | New jobs, local spending and footfall help, but traffic, noise and pollution harm. A closure can damage the local economy; regeneration can revive it. |
| Government | Tax revenue, employment and economic activity change, and the business must keep to the law; its environmental or social impact can add to demand for public services and shape policy. |
One decision, many effects
For example, a workwear brand opens a second factory and raises its prices to help pay for it. Shareholders may gain if the extra capacity lifts sales and profit, though the investment carries risk, and suppliers gain larger orders for fabric and thread. Managers take on more responsibility across two sites, while employees may earn extra overtime but carry a heavier workload. Customers pay more for their jackets, and people living nearby get new jobs and more spending in local shops but more lorries on the roads. The government collects more tax and sees more people in work. That is one decision with seven different effects.
Practise this
Edexcel GCSE Business · 1.5.1 Business stakeholders