9609 · 1.5.1
Business stakeholders flashcards
Revision flashcards for Cambridge 9609 Business stakeholders (syllabus 1.5.1). Flip, recall, then mark a real past-paper question.
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Stakeholder?
Any group with interest in or affected by business activities.
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Shareholder vs stakeholder?
Shareholder owns shares; stakeholder is broader — includes employees, customers, etc.
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Internal stakeholders?
Owners, managers, employees — inside the organisation.
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External stakeholders?
Customers, suppliers, creditors, government, local community.
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Classic conflict?
Higher wages (employees) vs higher profit (shareholders).
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Power/interest matrix?
Manage closely (high power + interest); keep satisfied; monitor; minimal effort.
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Supplier stakeholder?
Wants reliable orders and prompt payment.
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Government stakeholder?
Tax, jobs, legal compliance, economic stability.
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What is the primary objective of shareholders?
To maximise their return on investment. This is achieved through profit maximisation, leading to higher dividend payments and an increase in the share price (capital gain).
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Define 'stakeholder conflict'.
A situation where the objectives of different stakeholder groups are incompatible, meaning a decision that benefits one group may harm another. For example, cutting wages to increase profit for shareholders.
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In Mendelow's Matrix, how should a business manage a stakeholder with high power but low interest?
They should be 'Kept Satisfied'. This involves meeting their needs to prevent them from gaining interest and using their high power against the business. An example is a large institutional investor.
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Why is a supplier considered an external stakeholder?
Because they are a separate business entity, not part of the internal structure. However, they have a direct interest in the business's success, relying on it for regular orders and prompt payment to maintain their own viability.
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Why is the local community considered a stakeholder?
The local community is affected by a business's decisions regarding employment (job creation/losses), environmental impact (pollution, noise), and its effect on local infrastructure and services.