To understand the roles, rights and responsibilities of the main stakeholders that affect and are affected by a business, and to be able to analyse how stakeholder interests shape strategic decisions, corporate social responsibility (CSR) and overall business performance.
A stakeholder is any individual or group that can affect or be affected by the achievement of an organisation’s objectives. Stakeholders are grouped as:
| Stakeholder Group | Internal / External? |
|---|---|
| Owners / Shareholders | Internal |
| Employees | Internal |
| Managers | Internal |
| Customers | External |
| Suppliers | External |
| Creditors (banks, bond‑holders) | External |
| Government / Regulators | External |
| Local Community | External |
| Trade Unions | External |
| Non‑Governmental Organisations (NGOs) | External |
Cambridge expects you to assess stakeholder power and interest when planning strategy. The most common tool is the Power‑Interest Grid.
| Stakeholder | Potential Impact | Typical Reaction |
|---|---|---|
| Owners / Shareholders | Cost savings vs. short‑term profit dip. | Support if long‑term ROI is clear; demand detailed financial forecasts. |
| Employees (local) | Job loss or relocation. | Opposition, possible industrial action; request redeployment or severance. |
| Local Community | Loss of jobs, reduced local spending. | Protest, media pressure; may demand community‑investment scheme. |
| Suppliers | Logistics change, new contracts. | Negotiation for revised terms; some may seek alternative customers. |
| Creditors | Financing required for move. | Request additional security or covenants; monitor cash‑flow forecasts. |
| Government / Regulators | Planning permission, environmental compliance. | Inspections, possible conditions; may offer regional‑development incentives. |
| NGOs / Interest Groups | Environmental impact of new site. | Campaign for sustainable practices; may propose joint green‑project. |
| Stakeholder | Potential Impact | Typical Reaction |
|---|---|---|
| Owners / Shareholders | Potential for higher margins but increased R&D risk. | Demand market research and break‑even analysis. |
| Employees (R&D & Marketing) | New skill requirements, workload increase. | Seek training, may negotiate workload adjustments. |
| Customers (existing) | Possible price rise on current range. | Expect value justification; risk of switching to rivals. |
| Suppliers | Need for higher‑spec materials. | Renegotiate contracts; may invest in capability upgrades. |
| Creditors | Additional funding for marketing campaign. | Assess credit risk; may impose tighter covenants. |
| Government / Regulators | Compliance with product safety & labelling. | Require certifications; possible inspections. |
| NGOs / Interest Groups | Environmental footprint of premium packaging. | Pressure for recyclable or biodegradable packaging. |
Each stakeholder group has core aims that push the business toward specific objectives. Linking these aims to SMART (Specific, Measurable, Achievable, Relevant, Time‑bound) targets helps exam candidates demonstrate depth of analysis.
| Stakeholder | Core Aim(s) | Typical Business Objective Influenced | Example SMART Target |
|---|---|---|---|
| Owners / Shareholders | Maximise profit & ROI | Revenue growth & cost efficiency | Increase net profit margin from 8 % to 10 % within 24 months. |
| Employees | Job security, fair pay, safe conditions | Staff training & health‑and‑safety standards | Deliver 40 hours of health‑and‑safety training to all staff by Q3 2025. |
| Customers | High quality, value for money, reliable service | Product quality & customer‑service excellence | Achieve a 95 % customer‑satisfaction score in the annual survey. |
| Suppliers | Stable orders, timely payment | Supply‑chain reliability & ethical sourcing | Source 80 % of raw material from ISO‑14001‑certified suppliers by 2026. |
| Creditors | Low risk, timely interest & principal repayment | Maintain solvency & cash‑flow health | Keep debt‑to‑equity ratio below 0.5 for the next three financial years. |
| Government / Regulators | Public safety, tax revenue, environmental protection | Regulatory compliance & tax compliance | File all statutory returns within 7 days of the filing deadline for the next two years. |
| Local Community | Employment, environmental quality, community wellbeing | CSR & community‑investment programmes | Invest £250 000 in local education scholarships over the next 3 years. |
| Trade Unions | Fair wages, safe working conditions | Collective‑bargaining outcomes | Agree a wage increase of 4 % over two years, linked to productivity gains. |
| NGOs / Interest Groups | Ethical, social, environmental outcomes | Sustainability & ethical‑sourcing policies | Reduce carbon emissions by 15 % per unit of output by 2027. |
Conflicts are inevitable; effective management requires negotiation, compromise and, where appropriate, third‑party mediation.
Stakeholders have a “right to information” and businesses must provide formal mechanisms for accountability.
| Stakeholder | Primary Role | Key Rights | Main Responsibilities |
|---|---|---|---|
| Owners / Shareholders | Provide capital; set strategic direction via the board. | Dividends, voting at AGMs, access to audited financial information. | Monitor performance, hold directors accountable, act in the long‑term interest of the company. |
| Employees | Deliver goods/services; bring skills and labour. | Safe working conditions, fair pay, reasonable hours, representation. | Perform duties to agreed standards, comply with policies, engage in training, uphold health‑and‑safety rules. |
| Managers | Plan, organise, lead and control resources. | Access to performance data, authority to allocate resources. | Implement strategy, motivate staff, ensure legal compliance, report to owners. |
| Customers | Purchase and use the company’s products or services. | Quality, safety, accurate information, redress for faulty goods. | Pay promptly, respect contractual terms, provide feedback, use products responsibly. |
| Suppliers | Provide inputs (materials, services) needed for production. | Timely payment, fair contract terms, transparent procurement processes. | Deliver agreed quality and quantity, meet delivery schedules, uphold ethical standards. |
| Creditors | Supply finance for operations and investment. | Repayment of principal and interest, information on solvency. | Use borrowed funds as stipulated, maintain financial covenants, provide regular financial updates. |
| Government / Regulators | Set legal framework, collect taxes, enforce standards. | Enforce laws, levy taxes, require disclosures. | Comply with legislation, pay taxes on time, cooperate with inspections and provide required licences. |
| Local Community | Host the business’s physical operations. | Healthy environment, employment opportunities, community investment. | Engage in dialogue, minimise negative impacts, contribute to local development projects. |
| Trade Unions | Represent employee interests collectively. | Collective bargaining, information on employment conditions. | Negotiate fair terms, promote industrial harmony, safeguard members’ welfare. |
| NGOs / Interest Groups | Advocate on social, environmental or ethical issues. | Access to relevant information, be consulted on projects affecting them. | Raise concerns responsibly, collaborate on sustainability initiatives, monitor corporate behaviour. |
Invest capital and expect a return on investment (ROI). Influence is exercised through the board of directors and voting rights at annual general meetings (AGMs). They have a fiduciary right to accurate financial statements and material‑risk information. Responsibilities include monitoring performance, holding directors to account and ensuring the business pursues sustainable long‑term growth.
Essential for day‑to‑day operations. Rights are protected by employment legislation (minimum wage, health & safety, anti‑discrimination). Responsibilities encompass adhering to codes of conduct, maintaining productivity, engaging in training, and contributing to continuous improvement programmes.
Bridge the gap between owners and operational staff. They plan, organise, lead and control resources, ensuring that strategic objectives are translated into operational actions. Their responsibilities include setting targets, monitoring performance, motivating teams and ensuring legal compliance.
Drive revenue. Consumer‑protection legislation (e.g., Consumer Rights Act) guarantees rights to quality, safety and clear information. Companies must manage complaints, warranty claims and after‑sales service ethically and efficiently.
Provide the inputs required for production. Ethical‑sourcing policies often require suppliers to meet labour and environmental standards. Strong supplier relationships improve reliability and can be a source of competitive advantage.
Assess creditworthiness using ratios such as the debt‑to‑equity ratio:
$$\text{Debt‑to‑Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}}$$
Creditors expect the firm to maintain solvency, honour repayment schedules and comply with any covenants set out in loan agreements.
Set the legal framework, collect taxes and enforce standards. Non‑compliance can lead to fines, sanctions or loss of licence. Companies must file tax returns, obtain necessary licences and cooperate with inspections.
Hosts the business’s physical operations and is affected by employment opportunities, environmental impact and infrastructure use. CSR initiatives often target community wellbeing (e.g., scholarships, local‑charity support).
Represent employee interests collectively through collective bargaining. They negotiate wages, working hours and conditions, and play a key role in dispute resolution and industrial harmony.
May pressure firms to adopt sustainable or ethical practices. Constructive engagement can enhance reputation, reduce activist risk and open opportunities for joint sustainability projects.
| Stakeholder Group | Specific Rights (example) | Specific Responsibilities (example) |
|---|---|---|
| Owners / Shareholders | Receive audited annual accounts; vote at AGM. | Monitor directors, demand transparent reporting, act in long‑term interest. |
| Employees | Safe workplace, minimum wage, right to union representation. | Follow health‑and‑safety procedures, meet performance targets, engage in training. |
| Customers | Right to accurate product information, warranty, redress. | Pay promptly, use products responsibly, provide feedback. |
| Suppliers | Timely payment, fair contract terms. | Deliver agreed quality/quantity on schedule, comply with ethical standards. |
| Government / Regulators | Enforce laws, levy taxes, require disclosures. | Comply with legislation, file returns on time, cooperate with inspections. |
After completing the table, plot each stakeholder on the Power‑Interest Grid (use the SVG above or draw your own). Discuss which communication strategy the company should adopt for each quadrant.
These notes cover every element of Topic 1.5 in the Cambridge A‑Level Business (9609) syllabus, providing clear definitions, expanded roles/rights/responsibilities, two decision‑impact case studies, conflict examples, a SMART‑objective link, a detailed Power‑Interest Grid guide, legal‑filing requirements, and a practical activity for exam preparation.
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