Skip to content
MarkSchemeMarkScheme
Sign up — no card

7115 · 1.5

Business objectives and stakeholder objectives — practice questions

Practice and worked examples for 7115 Business objectives and stakeholder objectives. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Factory plans automation cutting 200 jobs but raising profit by $3m. Identify three stakeholder groups and their likely views.

Show solution outline

Shareholders: Support — $3m profit rise, higher dividends and share price.

Employees (and unions): Oppose — 200 redundancies, community unemployment; may strike (2.1.7).

Local community: Mixed — lost spending power vs tax base if firm stays profitable.

Customers: Neutral/positive if quality/cost improves; negative if service suffers during transition.

Government: Concern over unemployment — may offer retraining grants; wants tax revenue maintained.

Worked example 2

GreenLeaf Cafe currently buys its coffee beans from a local supplier at $20 per kg. They are considering switching to an overseas supplier who offers beans at $14 per kg. GreenLeaf uses 500 kg of coffee beans per month. Calculate the potential annual cost saving. Analyse the conflict this decision creates between the objectives of shareholders and two other stakeholder groups.

Show solution outline

Step 1: Calculate the current monthly cost. 500 kg × 20/kg=20/kg = 10,000 per month

Step 2: Calculate the new monthly cost. 500 kg × 14/kg=14/kg = 7,000 per month

Step 3: Calculate the monthly and annual cost saving. Monthly saving = 10,000−10,000 - 7,000 = 3,0003,000 Annual saving = $3,000/month × 12 months = $36,000

Step 4: Analyse the stakeholder conflict.

  • Shareholders/Owners: Their objective is profit maximisation. They would strongly support this switch as the $36,000 annual saving directly increases profit, leading to a higher return on their investment.
  • Local Supplier (External Stakeholder): Their objective is to have regular orders and a stable income. This decision directly conflicts with their objective as they would lose a contract worth $10,000 per month (or $120,000 per year). This could significantly harm their business.
  • Customers (External Stakeholder): Their objective is to receive high-quality coffee and may value the cafe's support for local businesses. If the new overseas beans are of lower quality or if customers dislike the move away from local sourcing, they may become dissatisfied. This could lead to a loss of sales, potentially offsetting the cost savings. The conflict is between the business's desire for lower costs and the customers' desire for quality and local values.
Mark a 7115 question on this topicFull lessonOpen in course studio