The Impact of Stakeholders (SQA National 5 Business Management): Revision Note

Owners and shareholders can invest more money into the business to fund growth or withdraw it if they lose confidence

They can also vote at AGMs to change leadership or strategy, and their expectations for profits or ethical standards shape management decisions

At Ooni, shareholders influenced the decision to expand into new international markets while also demanding strong ethical practices

Employees affect business performance through their productivity, reliability and customer service

Managers influence decisions by recruiting staff, setting policies and motivating workers

Industrial action such as strikes can disrupt operations and reduce output

NHS Scotland staff strikes over pay in 2023 disrupted services and forced government negotiations on funding

Customers influence businesses through their buying choices, directly affecting revenue

Their reviews, recommendations, or complaints impact reputation

Loyal customers provide stable income, while switching to rivals reduces sales

At Nelly McCabe Boutique, positive Google reviews increased the shop’s reputation and helped to attract repeat customers

Banks influence business decisions by approving or refusing loans, setting interest rates, and changing repayment terms

These actions determine whether a business can expand or must limit its activities

Sublime Hairdressing in Stirling considered bank finance when planning expansion into beauty services

Suppliers can raise or lower prices, change credit terms, alter delivery schedules or vary the quality of goods

These actions directly affect costs, production and a business’s ability to satisfy customers

Mackie’s of Scotland relies on reliable suppliers of ingredients

Late deliveries or rising prices would directly impact production

Local communities influence businesses by supporting them as customers and providing a workforce

However, they can also protest, campaign, or use media if they feel a business is harming the environment, safety or quality of life in the area

In Edinburgh, local communities raised concerns over the number of short-term holiday lets (such as Airbnbs)

They argued they reduced housing availability and disrupted neighbourhood life

This led to stricter council regulations on short-term lets

Pressure groups can lobby politicians, organise protests, and use media campaigns to raise awareness of issues

They can pressure businesses into changing practices to avoid reputational damage or consumer boycotts

Environmental groups in Scotland have pressured salmon farming companies to improve welfare and environmental standards

The government influences businesses through tax policy, which affects profits

It also passes legislation covering employment, safety and the environment

Governments can offer grants or subsidies to encourage investment in certain areas

The Scottish Government has provided grants to businesses investing in renewable energy, such as ScottishPower’s wind farms