1. HOW ARE SMALL BUSINESSES INFLUENCED
Stakeholders
N4 BUSINESS IN ACTION/N5 UNDERSTANDING BUSINESS

2. LEARNING INTENTIONS AND SUCCESS CRITERIA
I understand that there
are different stakeholders
who can influence
business activities and
success.
SUCCESS CRITERIA:
I can explain what a stakeholder is
I can identify and describe internal and external stakeholders
I can describe the different interests that stakeholders have and how these can conflict.
I can describe what stakeholders can do to influence a business both positively and negatively.

3. WHAT IS A STAKEHOLDER? A person or group of people who have an
interest in a business or organisation and in
the way in which it is managed and run.

4. PORTLETHEN ACADEMY STAKEHOLDERS
Think about our school. There are many
people that have a ‘stake’ in it and have a
genuine concern about how well it is
performing.
Can you name some of these stakeholders?
What is the difference between them?

5. BUSINESS STAKEHOLDERS
As with the school, businesses have people
or groups of people who are interested in
how each business performs. Each will be
looking for that business to produce
results which suit their own personal
needs.

6. INTERNAL STAKEHOLDERS
These are people or groups of people who
are inside the business, eg employees.
Can you think of any more internal
stakeholders?
Managers, Directors, Shareholders/Owners, Volunteers,
Councillors.

7. EXTERNAL STAKEHOLDERS
These are people or groups of people who
are outside the business eg suppliers.
Can you think of any more external
stakeholders?
Customers, Lenders, Government (HMRC), Local
Community, Pressure Groups, Support Agencies

8. VIDEO Let’s watch a short video clip about Stakeholders:
Now complete Worksheet 13 on the computer and
Worksheet 14 in your jotters.

9. Conflicts of Interest You have seen by doing Worksheet 14 that
different stakeholders have different interests.
Can anyone see a problem with this?
Due to the demands placed on businesses by so
many different stakeholders, it is no surprise that
there are often disagreements and conflict
between the different groups.

10. AREAS OF CONFLICT Shareholders and Employees
Shareholders want good dividends whereas
Employees want good pay and conditions of
work. To give employees a pay rise means
that costs will be up and profits down, so
Shareholders will get a smaller dividend.

11. AREAS OF CONFLICT Managers and Employees
Managers want to keep within the budget for
their department so that they get a bonus.
Employees want more pay eg more
overtime pay.
To give employees more overtime pay
means that managers go over their budget
and will not receive a bonus.

12. AREAS OF CONFLICT Customers and Business Owners
Customers want value for money, good
quality and good service. Owners want
good profits.
To give customers value for money may
mean lowering the selling price which may
mean lower profits. To get good profits
businesses may cut costs by reducing the quality
of the product.

13. AREAS OF CONFLICT Local Community and the Business Owners
The local community can often suffer at the hands of a
businesses through the effects of pollution, noise,
congestion and the building of new factories in areas of
outstanding beauty.
However, if the business faces strong protests from
residents and from pressure groups concerned about its
actions, then it may decide to relocate to another area,
causing much unemployment in the community it leaves
behind.

14. TASK In pairs, each of you will be given the
interests/complaints of stakeholders in the
business Primark.
Starting with the pair who are the Chancellor
of the Exchequer, read your script and then
exchange views and have a lively debate
about stakeholders conflicts of interests!

15. INFLUENCE OF STAKEHOLDERS
OWNER’S INFLUENCE
Owners influence the activities of a business
by being able to MAKE DECISIONS that
managers and staff have to work to achieve.
Owners have a HIGH level of influence
because no one else in the business has
the authority to overrule their decisions.

16. STAKEHOLDER INFLUENCES
MANAGER’S INFLUENCE
Managers influence the activities of business by
MAKING DECISIONS to help it achieve the
objectives the owners have set.
The level of influence of a manager VARIES with
their level of AUTHORITY. For example, top
managers can overrule decisions of managers
below them in the organisation.

17. STAKEHOLDER INFLUENCES
EMPLOYEES INFLUENCE
Employees can positively influence the activities of
a business by WORKING HARD to support
the decisions of owners and managers.
Employees can negatively influence the activities
of a business by INDUSTRIAL ACTION (such as a
STRIKE).

18. STAKEHOLDER INFLUENCES
THE GOVERNMENT
Government influence the activities of a business by
MAKING LAWS which change the way that they have to
operate. They also influence the activities of a business by
changing TAX RATES which will affect the amount of
money that it has.
Government has a HIGH level of influence because
businesses will end up in court facing penalties if they do
not do as they are told by law.

19. STAKEHOLDER INFLUENCES
BANKS
Banks positively influence the activities of a
business by LENDING enough money at
reasonable RATES OF INTEREST to allow
them to do things that will increase consumer
satisfaction.
Banks negatively influence the activities of a
business by NOT LENDING enough money or
charging high RATES OF INTEREST.

20. STAKEHOLDER INFLUENCES
CUSTOMERS
Customers can positively influence the ability of a business
to achieve its objectives by USING MORE OF THEIR
GOODS AND SERVICES.
Customers can negatively influence the ability of a
business to achieve its objectives by NOT USING THEIR
The level of influence that a customer has VARIES with the
amount that they are SPENDING.

21. STAKEHOLDER INFLUENCES
SUPPLIERS
Suppliers positively influence the activities of a
business by PROVIDING the RESOURCES they
need for production.
Suppliers negatively influence the activities of a
business by NOT PROVIDING the RESOURCES
they need for production eg if they were not paying
their bills on time.

22. STAKEHOLDER INFLUENCES
LOCAL COMMUNITY
The local community can positively influence the
activities of a business by supporting them through
the MEDIA eg writing good reviews.
The local community can negatively influence the
activities of a business by campaigning
against them as PRESSURE GROUPS and
in the MEDIA.

23. TASK
Complete Worksheet 15 in your jotters.