The Main Stakeholders in a Business
Business: Cambridge International GCSE (2027 Exams), topic 1.5.1
The Main Stakeholders in a Business
A stakeholder is any individual, group or organisations that is affected by a business and its operations. This includes everything from the owners to the local community. There are five main stakeholders in a business.
Internal vs external stakeholders
- Internal stakeholders are those directly involved in the business.
- Such as owners and employees.
- External stakeholders are those outside the business who are still affected by its activities.
- Such as suppliers, customers, and the local community.
Owners (internal)
- Whether it is the shareholders of a limited company or a sole trader, the owners are always the main stakeholders.
- They have money invested, own a share of the profit and make key decisions about what should happen to the business.
- Their main objective is usually to maximise profit and the value of the firm.
Suppliers (external)
- Businesses that supply a company with raw materials or certain goods/services have a significant stake because the business is a customer.
- If the company fails, then the suppliers will lose a customer and this might be significant, especially if they have an exclusive contract. -E.g. the fashion manufacturer John Smedley used to supply Marks and Spencers with its exclusive knitwear clothing.
Customers (external)
- Businesses serve customers needs and wants.
- Think about your stake in Instagram, if they became bankrupt, and closed tomorrow, your life would be affected. This is the essence of a customers’ stake in a business.
- The main objectives are therefore for the firm to deliver quality products at an appropriate price and for the firm to survive.
Local community (external)
- Business operations affect those that live nearby. Businesses can provide employment and economic activity, but also create noise and environmental pollution.
- A local community may be negatively affected by noise and pollution caused by businesses.
- For example, the village of Alton near the Alton Towers theme park is affected by both noise and pollution caused by the traffic and customers of Alton Towers.
Employees (internal)
- If a business is doing well or doing badly it can have an impact on the wages of the employees and even whether or not they keep their jobs (job security).
- If a business is growing rapidly then employees have more chance of being promoted to higher paid roles and if a business goes bust then the employees will lose their jobs.
- For employees, the main objectives for the company would be survival and growth.
Test yourself on The Main Stakeholders in a Business
Who are the 5 main stakeholders in a business?
Who is not a stakeholder of a supermarket in Brighton?