👥 Internal and External Stakeholders
Big Idea: A stakeholder is any individual or group that affects or is affected by the business's actions and decisions. Stakeholders can be internal (inside) or external (outside) the business.
Internal stakeholders
People inside the business who are directly involved in its operations.
- Employees -- want fair pay, job security, good working conditions, career progression
- Managers -- want resources, authority, recognition, and the business to succeed
- Owners/shareholders -- want profit, growth, return on their investment, and increasing business value
External stakeholders
People or groups outside the business who are affected by its activities.
- Customers -- want good quality products at fair prices with excellent service
- Suppliers -- want regular orders, prompt payment, and long-term contracts
- Government -- wants tax revenue, legal compliance, job creation, and economic contribution
- Local community -- wants jobs, minimal pollution, and positive contribution to the area
- Pressure groups -- want the business to change specific behaviours (e.g. environmental groups)
- Banks/creditors -- want loan repayments on time with interest
- Competitors -- affected by the business's pricing, marketing and market share
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Different stakeholders, different interests
Each stakeholder group has its own priorities. These interests often pull in different directions, creating tension.
- Shareholders want maximum dividends -- may conflict with employee demands for higher wages
- Customers want low prices -- conflicts with the business's desire for high profit margins
- Employees want higher wages and job security -- conflicts with cost-cutting measures
- Community wants environmental protection -- conflicts with cheap production methods
- Government wants tax compliance -- businesses want to minimise tax
- Suppliers want prompt payment -- businesses want to delay payment to improve cash flow
Always think about WHO is affected and HOW. Different stakeholders care about completely different things! 👥
A factory in a small town: Employees want job security. The community wants clean air. Shareholders want cost reductions. The government wants tax revenue. A decision to automate the factory (cutting jobs but reducing costs) affects each group differently.
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🎯 How to answer stakeholder questions
Stakeholder questions appear in almost every BM exam paper. Here is how to approach them:
Three-step approach
- Step 1: Name the specific stakeholder group (e.g. 'employees' not just 'people')
- Step 2: State their interest (e.g. 'employees want fair pay and job security')
- Step 3: Explain how the specific decision affects them (e.g. 'the relocation would require employees to commute further, potentially reducing job satisfaction and increasing turnover')
This three-step approach -- name, interest, impact -- scores well in exams. Always be specific about WHICH stakeholder and HOW they are affected.
Common question types
- 'Identify two stakeholders affected by this decision' (2 marks)
- 'Explain how [decision] affects [stakeholder group]' (2-4 marks)
- 'Discuss the impact on different stakeholder groups' (extended response)