A stakeholder is a person or group with an interest in, or affected by, business activity. A shareholder owns shares and is one type of stakeholder, not a synonym for every stakeholder.
Owners and shareholders may seek profit and an increase in the value of the business. Managers may seek targets, career progression and secure employment.
Employees may want pay, security, fair treatment and safe conditions. Customers may want value, quality, choice and reliable service.
Suppliers may want repeat orders and prompt payment. The local community may want jobs and useful services without excessive noise, waste or traffic.
Government may seek tax revenue, employment and compliance with legislation. Pressure groups campaign for particular causes and may influence customers or public opinion.
Business decisions affect groups differently. A factory expansion may create jobs and supplier orders but increase traffic for nearby residents.
Stakeholders influence decisions through purchases, work, investment, supply agreements, campaigns or regulation. Their influence depends on their resources and the business's dependence on them.
Conflicts arise when objectives differ: higher wages may increase employees' income but raise costs and reduce owners' profit unless productivity or revenue rises.
Fictional case: extending a café's hours can improve customer convenience and sales but require staff changes and concern neighbours. A justified decision considers all three effects and possible compromises.
1.5.2 · Technology and business
E-commerce lets customers browse, order and pay online. It can extend the market and opening availability but needs effective delivery, website maintenance and support.
Social media can promote products, gather feedback and allow customer interaction. Negative comments can also spread quickly; managing the channel takes staff time.
Digital communication includes email, messaging and video meetings. It can speed coordination and reduce travel, but unclear messages or too many notifications can reduce effectiveness.
Payment systems include card, contactless and online payments. They can make buying easier and reduce some cash-handling tasks, but transaction fees and system failures affect costs and service.
Technology can increase sales by reaching more customers or improving convenience. It can lower some costs through automation while adding equipment, subscription and training costs.
The marketing mix may change: digital promotion reaches targeted groups, online place expands access, and comparison sites can increase pressure on prices.
Staff skills, reliable systems and customer preferences affect the benefit. Technology is useful when it meets a business need, rather than simply because it is new.
Fictional case: a takeaway introduces online ordering. Fewer telephone errors may improve service, but kitchen capacity must increase if extra orders otherwise cause late deliveries.
1.5.3 · Legislation and business
Legislation sets rules that businesses must follow. At GCSE, focus on the principles of consumer and employment protection and the effects on decisions and costs.
Consumer protection covers the quality and suitability of goods and services, accurate descriptions and customer rights when something goes wrong. A business cannot treat misleading claims as an acceptable promotion strategy.
Handling legitimate complaints, repairs or refunds takes time and money, but can preserve trust and repeat purchases. Prevention through reliable products can reduce later costs.
Employment protection concerns recruitment, pay, discrimination and health and safety. Businesses must treat applicants and employees fairly and meet relevant legal obligations.
Meeting requirements can create costs for appropriate pay, training, safe equipment, procedures and record keeping. These costs must be included in planning.
Compliance can improve staff confidence, customer trust and reputation. It may reduce accidents, disruption and the cost of disputes.
Non-compliance can result in enforcement, compensation or penalties, depending on the breach, as well as lost trust and disruption. Consequences are not identical for every offence.
Fictional case: a workshop trains staff in safe equipment use. Training has an immediate cost but may reduce injury, absence and interrupted production; legal duties still apply even if sales are low.
1.5.4 · The economy and business
Unemployment is the number or proportion of people seeking work who cannot find it under the measure used. Rising unemployment can reduce household spending and make recruitment easier, although suitable skills may still be scarce.
Changes in consumer income affect demand. When disposable income falls, customers may cut discretionary purchases or switch to cheaper alternatives; essential goods may be affected less.
Inflation is a sustained increase in the general price level, not just one product's price. Rising input costs can squeeze margins if a business cannot raise its selling prices.
Higher interest rates can raise the cost of variable-rate borrowing and reduce spending funded by consumer credit. The effect depends on debts, contracts and what the business sells.
Taxation can affect business costs, profits and consumers' disposable incomes. Distinguish a change in business taxation from a tax that directly changes what households can spend.
An exchange rate is the price of one currency in another. A stronger pound generally makes foreign-currency imports cheaper in pounds, but can make UK exports dearer to overseas buyers if pound prices are unchanged.
A weaker pound generally makes foreign-currency imports more expensive and UK exports cheaper to overseas buyers. Contracts, competitors' prices and demand influence the actual outcome.
Worked example: equipment costs €1,200. At £1 = €1.20 it costs £1,000; at £1 = €1.50 it costs £800. The stronger pound reduces the pound cost by £200, ignoring fees.
Economic changes create different effects for different businesses. A budget retailer may gain customers trading down while a luxury retailer loses sales; avoid claiming every business benefits or suffers equally.
1.5.5 · Responding to external influences
External influences originate outside the business's direct control. Technology, legislation and economic conditions can change its costs, demand and available opportunities.
A response to new technology might be adopting online ordering, training employees or changing the product. Consider cash, skills and competitors' likely reactions before committing.
A response to legislation might be changing working practices, improving product checks or updating recruitment procedures. The business must meet duties, not choose whether compliance is convenient.
A response to falling income might be a lower-cost product range or smaller packs. These may protect sales, but lower prices and extra stock can reduce margins or cash.
Supplier negotiation, efficiency improvements and revised finance may help with rising costs. Cutting quality can damage reputation, so a short-term saving may create longer-term harm.
Compare alternative responses using evidence about the target market, finances and capacity. State what the result depends on and why one response fits this business better.
Fictional judgement: a café facing ingredient inflation could reduce waste before raising every price. If waste is already low, a modest price increase may be necessary; the decision depends on customer sensitivity and competitors.
Test yourself
40 questions · Random sets of 10. Type numerical answers without currency or percentage symbols unless instructed. These quick checks support revision; practise extended explanations and justified judgements too.
Mr Kidman's Classroom