Who are a business's stakeholders, what do they want, and how do their interests conflict?
Stakeholders: the groups that have an interest in a business (owners, employees, customers, suppliers, the local community and the government), what each wants from the business, and how stakeholder interests can conflict.
A CCEA GCSE Business Studies guide to stakeholders. Covers who the stakeholders of a business are, owners, employees, customers, suppliers, the local community and the government, what each group wants from the business, and how their interests can conflict, with worked exam technique.
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What this dot point is asking
You need to identify the stakeholders of a business, owners, employees, customers, suppliers, the local community and the government, explain what each wants, and explain how stakeholder interests can conflict. CCEA examiners reward precise interests applied to a real business, and, for higher marks, clear explanation of conflict rather than just a list. Stakeholders matter because a business affects, and is affected by, many groups, and managing their competing interests is a constant part of running a business.
Who the stakeholders are
A stakeholder is any group or individual with an interest in a business, that is affected by what it does or can affect it.
What each stakeholder wants
Each group has its own interest in the business, and exam questions often ask you to match the group to its interest.
- Owners or shareholders want profit and a return on their investment, and for the business to grow and survive.
- Employees want fair pay, job security, good working conditions and the chance to develop.
- Customers want good quality, low prices, choice and reliable service.
- Suppliers want to be paid on time, to receive regular orders, and for the business to do well so it keeps buying from them.
- The local community wants jobs, local spending, and little disruption such as noise, traffic or pollution.
- The government wants the business to pay its taxes, obey the law, and create jobs that reduce unemployment.
Each group judges the business by whether its own interest is being met, which is why a single decision can please some stakeholders and upset others.
How stakeholder interests conflict
Because stakeholders want different things, their interests often clash, and a business cannot fully satisfy everyone at once.
For example, a business that cuts costs by lowering wages pleases its owners (more profit) but upsets its employees (less pay) and possibly its customers if service then suffers. Recognising that a decision has winners and losers among the stakeholders is exactly the analysis CCEA rewards.
Worked example: analysing a decision's effect on stakeholders
A common exam task is to take a business decision and explain how it affects different stakeholders.
Why this matters
Stakeholders connect a business to the wider world and explain why running one is about more than profit. Every decision, on prices, wages, location or growth, affects several groups, and ignoring a powerful stakeholder can backfire: unhappy employees may leave, angry customers may switch, and a hostile community can block expansion. This links forward to motivation (keeping employees satisfied) and to the effects of business growth on stakeholders. In the exam, the most valuable skill is to analyse how a specific decision affects named stakeholders and to explain the conflict between them.
Try this
Q1. Define the term stakeholder. [2 marks]
- Cue. Any person or group that has an interest in a business or is affected by its activities.
Q2. State what suppliers want from a business. [2 marks]
- Cue. To be paid on time and to receive regular orders, and for the business to keep trading well.
Q3. Give one example of a conflict between two stakeholder groups. [2 marks]
- Cue. Owners want higher profit and so low wages, while employees want higher pay; or customers want low prices while owners want higher prices.
Exam-style practice questions
Practice questions written in the style of CCEA exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
CCEA Unit 1 (style)4 marksIdentify two stakeholders of a supermarket and state what each wants from the business.Show worked answer →
A short application question testing AO1 and AO2. Name a stakeholder, then state its interest, for two marks each.
Customers want low prices, good quality and a wide choice of products.
Employees want fair pay, job security and good working conditions.
Other valid answers: owners or shareholders want profit; suppliers want to be paid on time and to get regular orders; the local community wants jobs and little disruption; the government wants taxes paid and laws obeyed. The mark is for the stakeholder plus its specific interest.
CCEA Unit 1 (style)6 marksExplain how the interests of different stakeholders in a business can conflict.Show worked answer →
An explain question testing AO2 and AO3. Show conflict between two named groups.
Owners want higher profit, which can lead them to keep wages low; but employees want higher pay, so the two interests conflict.
Customers want low prices, but suppliers want a good price for their goods; the business cannot fully satisfy both at once.
The local community may oppose a new factory because of noise and traffic, while owners want it for profit and employees want it for jobs.
A developed answer explains at least one conflict clearly, showing why both sides cannot be fully satisfied, and reaches the higher marks.
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Sources & how we know this
- CCEA GCSE Business Studies specification — CCEA (2017)