Stakeholder Objectives (Cambridge (CIE) IGCSE Business): Revision Note

Introduction to business stakeholders

• Business stakeholders are individuals or groups that affect or are affected by the actions of a business 

  • Internal stakeholders include anyone within the organisation, such as employees, owners, shareholders, and managers

  • External stakeholders are people and organisations that are outside of the business and include suppliers, governments, customers, trade unions, and creditors

Stakeholder objectives

• Stakeholders can have different objectives based on their different roles and perspectives

• A business needs to take into account the needs and interests of its stakeholders to operate successfully and ensure long term success

Typical stakeholder objectives

1. Owners (shareholders)

   • Shareholders are individuals or entities who own a portion of a company's stock

   • They invest in the company to make a profit

   • Shareholders' primary objective is to maximise their returns on investment

   • They want the company to be profitable and generate a high return on their investment

     • E.g. A shareholder of Apple may want the company to release new products and increase sales to increase the value of their shares

2. Employees

   • Employees are individuals who work for a company

   • Their primary objective is to earn a living, have job security and be compensated fairly for their work and have a safe working environment 

     • E.g. Google employees in California have some of the best working conditions in the world, with the Company offering sleeping pods, games rooms and free speciality coffee all-day

3. Management

   • Managers are individuals who are responsible for the day-to-day operations of a company

   • Their primary objective is to meet the company's goals and objectives

   • They want to maximise profits and minimise costs while ensuring that the company operates efficiently

     • E.g. A manager of McDonald's may want the restaurant to increase sales and reduce costs by improving efficiency

4. Suppliers

   • Suppliers are individuals or businesses who provide goods or services to a business

   • Their primary objective is to sell their products or services and make a profit

   • Suppliers want to be paid on time and have a long-term relationship with the company

     • E.g. Busco Sugar Milling Co., Inc supplies Coca-Cola with 84% of its sugar requirements. They want the company to continue buying their sugar and to pay their bills on time

5. Customers

   • Customers are individuals or businesses who purchase goods/services from a business

   • Their primary objective is to receive high-quality products or services at a fair price

   • Customers also want good customer service and a positive experience with the company 

6. Pressure groups

   • Pressure groups are organisations that seek to influence the policies and actions of businesses or governments

   • Their primary objective is to promote a specific cause or agenda

   • Pressure groups want the company to support their cause or take action on an issue

   • E.g. An animal rights group may want a clothing company to stop using animal products in their clothing

7. The local community

   • The local community includes individuals and organisations that live or operate in the area where a business operates

   • Their primary objective is for the business to have a positive impact on the community

   • This may include  the business being environmentally responsible, providing jobs, and contributing to local causes

     • E.g. Burnley Savings & Loans Ltd (Bank of Dave) donates all of their profits to local charities and good causes

8. The government

   • The government is responsible for creating and enforcing laws and regulations that affect businesses

   • Their primary objective is to promote the public good and protect the interests of citizens

   • The government wants companies to operate within the law and contribute to the economy

How stakeholders are affected by business activity

• Business activity can have various impacts on stakeholders

  • If a business experiences financial difficulties, shareholders may lose value in their investments, and employees may face job losses or pay cuts

  • If a business is profitable, shareholders may benefit from increased dividends, and employees may receive bonuses or promotions

  • Customers can be affected by business activity in terms of product availability, quality, and pricing

  • The local community can be impacted by the environmental and social impact of business operations, such as pollution or job creation

  • The government can be affected by business activity in terms of tax revenue and regulatory compliance (following the laws)

How stakeholders impact business activity

• Stakeholders can impact business activity in various ways

  • Customers can influence product development and pricing through their purchasing decisions and feedback

  • Employees can impact business activity through their productivity, skills, and job satisfaction

  • Shareholders can impact business activity through their investment decisions and demands for returns

  • The local community can impact business activity through regulations and permits (from the local council), and social pressure

  • Pressure groups can impact business activity by lobbying for changes in policy or boycotting products

  • The government can impact business activity through taxes, regulations (laws), and subsidies

Stakeholder conflict

• Stakeholder groups can have conflicting interests and objectives, which can lead to tensions and conflicts

  • Shareholders may prioritise profit maximisation, while employees may prioritise fair treatment and high wages

  • Customers may prioritise low prices, while the local community may prioritise environmental sustainability which raises costs and prices

• These conflicts can create challenges for businesses to balance the competing demands of different stakeholder groups

  • E.g. A company may need to invest in costly environmental technology to meet the demands of the local community, but this may reduce profitability and upset shareholders

• Conflicts can also arise when stakeholders have different levels of power and influence

  • E.g. Pressure groups with strong public support may be able to influence business activity more than individual shareholders

• Managing stakeholder conflicts requires careful communication, transparency, and compromise

Examples of stakeholder conflicts