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Who has an interest in a business, and what happens when their interests clash?

Stakeholders: the main internal and external stakeholders of a business, their differing objectives, how business activity affects them, and how their objectives can conflict.

A focused answer to the Eduqas GCSE Business C510 content on stakeholders, covering internal and external stakeholders, their differing objectives, how decisions affect them, and how stakeholder objectives can conflict.

Generated by Claude Opus 4.811 min answerUpdated 2026-06-02

Reviewed by: AI editorial process; not yet individually human-reviewed

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Quick answer

A stakeholder is any individual or group with an interest in a business and how it performs. Internal stakeholders are inside the business: the owners or shareholders (who want profit and a return), the managers (who want the business to succeed and their own careers to progress), and the employees (who want secure, well-paid jobs and good conditions). External stakeholders are outside the business: customers (who want quality, value and good service), suppliers (who want regular orders and prompt payment), the local community (which wants jobs and minimal nuisance), the government (which wants taxes paid and laws obeyed), lenders (who want their loans repaid), and pressure groups (which want ethical and environmental behaviour). Their objectives often conflict: paying staff more reduces the profit owners want; cutting costs by moving production abroad harms local jobs; lowering prices for customers can squeeze suppliers. A business has to balance these competing interests, and the exam rewards you for weighing the trade-offs rather than listing the groups.

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What this topic is asking
What a stakeholder is
Internal stakeholders and their objectives
External stakeholders and their objectives
How business activity affects stakeholders
Stakeholder conflict
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What this topic is asking

Eduqas C510 wants you to identify a business's internal and external stakeholders, explain their differing objectives, show how business activity affects them, and analyse how their objectives can conflict. Stakeholder questions are a favourite for extended evaluate answers, because a single decision usually helps some groups and harms others.

What a stakeholder is

The word matters: a stakeholder has a "stake", a reason to care how the business performs, even if they do not own it.

Internal stakeholders and their objectives

External stakeholders and their objectives

How business activity affects stakeholders

Almost every business decision ripples out to its stakeholders. Opening a new factory creates jobs (good for employees and the community) but may increase traffic and noise (bad for nearby residents). Raising prices pleases shareholders if profit rises, but may upset customers. Because the effects pull in different directions, a business cannot satisfy every stakeholder at once.

Stakeholder conflict

Managing these conflicts is a core business skill. A business may prioritise the stakeholders with the most power (large shareholders, key customers) or take a longer view that keeping employees and the community on side protects the business in the long run.

Weighing a wage rise against profit

Set out the figures

A factory employs $50$ staff and is asked for a pay rise of $1{,}500$ each per year. Last year it made a profit of $200{,}000$ .

Cost of the pay rise

\text{Extra wage cost} = 50 \times 1{,}500 = 75{,}000.

Effect on profit (all else equal)

\text{New profit} = 200{,}000 - 75{,}000 = 125{,}000, \quad \text{a fall of } \frac{75{,}000}{200{,}000} \times 100 = 37.5\%.

Interpret the result

Granting the rise costs $75{,}000$ and would cut profit by more than a third, from $200{,}000$ to $125{,}000$ . That is the heart of the owner-employee conflict: the employees gain better pay, but the owners see a sharp fall in their return. The business has to judge whether the cost is worth it, perhaps because better pay improves motivation, cuts staff turnover and protects output, which could recover some of the lost profit over time. Putting a number on the conflict, rather than just naming it, is what lifts an evaluation answer.

Try this

Q1. Identify two internal stakeholders of a business. [2 marks]

Cue. Owners/shareholders, managers, employees.

Q2. Explain one way a decision to cut prices could create stakeholder conflict. [3 marks]

Cue. Customers gain cheaper goods, but the lower price may cut profit for owners or squeeze the prices paid to suppliers.

Exam-style practice questions

Practice questions written in the style of WJEC Eduqas exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

Eduqas 20192 marksIdentify two stakeholders of a supermarket. (Component 1)

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A 2-mark AO1 recall question, one mark per valid stakeholder. Acceptable answers name any two groups with an interest in the supermarket: owners or shareholders, employees, customers, suppliers, the local community, the government, and lenders (the bank). Markers want a named stakeholder group, not a vague answer such as "people". Pairing each with a one-word interest (for example "employees, who want secure jobs") is good practice but not required for the mark.

Eduqas 20219 marksA clothing manufacturer is deciding whether to move production overseas to cut costs. Evaluate the impact of this decision on its different stakeholders. (Component 2)

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A 9-mark Evaluate question needing several stakeholders, both gains and losses, and a judgement applied to the manufacturer. Owners and shareholders gain: lower production costs raise profit and the return on their investment. Customers may gain: lower costs can mean lower prices or better value. UK employees lose: jobs are cut as production moves abroad, harming the local workforce and community. The local community loses: less local spending and possible economic decline. Overseas workers and that community may gain employment. Judgement: the decision sets the owners' objective (higher profit) directly against the employees' and community's objective (secure local jobs), which is a classic stakeholder conflict. A balanced conclusion weighs the size of the cost saving against the damage to the workforce, the firm's reputation, and any ethical concerns about overseas conditions, and reaches a supported view rather than simply listing winners and losers. Markers reward several stakeholders covered with two-sided impact and a reasoned overall judgement.

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Sources & how we know this

WJEC Eduqas GCSE Business specification (C510) — WJEC Eduqas (2017)