GCSE Business Studies/Stakeholders

Everyone who is affected by a business is called a stakeholder.

Internal Stakeholders

Internal stakeholders are inside the business. There are two you need to know:

Owners

• The most important stakeholders.
• They decide what happens to the business. They're the ones who make a profit if the business is successful.
• In a sole trader or a partnership, they are the owners. In a limited company, they are the shareholders.

Employees

• If the company does badly, they may become unemployed.
• They want job security, promotion prospects, a decent wage, and good working conditions.

External Stakeholders

External stakeholders are outside the business. There are four main ones:

Customers

• Sales or promotions to bring new and old customers back
• They want high quality products at low prices.

Suppliers

• The business provides them with their income.
• They may face cash flow problems if the business doesn't pay on time.
• If the business closes, they will lose work and money.

Local community

• The business provides job opportunities and may provide useful facilities which they can use (e.g. a gym)
• On the other hand, if the business causes noise and pollution, this will disrupt them (e.g. a power plant)

Government

• They receive taxes when the business makes a profit.

Why Stakeholders Are Important

• Shareholders/owners are the most important stakeholders as they control the business. If they are unhappy than they can sack its directors or managers, or even sell the business to someone else.
• No business can ignore its customers. If it can't sell its products, it won't make a profit and will go bankrupt.
• If a business doesn't keep its employees happy, it may become unproductive. It won't work to its full potential and so its profits may suffer.
• A business may not mind being unpopular in the local community if it sells its products to a wider area.