Syllabus: Cambridge - International AS & A Level Business
Module: 1.5 Stakeholders in a Business
Lesson: 1.5.2 The Relative Importance and Infuence of Stakeholders on Business Activities

Introduction

This section of the Cambridge International AS & A Level Business syllabus focuses on how different stakeholders influence business activities and the degree of importance they hold in decision-making. From shareholders seeking returns, to employees wanting job security, to customers demanding value, the interplay of stakeholder needs shapes strategic and operational choices. Understanding these dynamics is critical not just for examination success, but also for developing students’ ability to interpret real-world business decisions and evaluate trade-offs between competing interests.

Key Concepts

• Stakeholders Defined: Individuals or groups affected by or able to influence business decisions. Includes internal stakeholders (owners, managers, employees) and external stakeholders (customers, suppliers, government, community, pressure groups).

• Relative Importance: Not all stakeholders have equal influence; their power depends on factors like ownership share, legal rights, economic leverage, and public opinion.

• Stakeholder Conflict: Different groups often have competing objectives, e.g. profit maximisation vs. environmental responsibility.

• Changing Priorities: The influence of stakeholders can shift depending on the business’s lifecycle stage, market conditions, or crisis situations.

• Stakeholder Mapping (Mendelow’s Matrix): Analytical tool for identifying stakeholder power and interest to inform communication and decision-making strategies.

Real-World Relevance

A clear example is seen in Tesco’s decision to reduce plastic packaging. Pressure groups and environmentally-conscious customers influenced policy, despite short-term cost implications. Similarly, in 2023, Disney’s strategic decisions were shaped by shareholder demands for streaming profitability, which impacted staffing decisions and customer-facing services. These cases highlight how balancing stakeholder demands is a constant negotiation, often requiring compromise.

How It’s Assessed

In Cambridge examinations, this topic can appear in:

• Short-answer questions testing definitions and classification of stakeholders.

• Data response questions involving application of stakeholder theory to a provided scenario.

• Essay questions asking for evaluation of how stakeholder influence affects decision-making in different contexts.
  Command words such as analyse, evaluate and discuss are common. Higher-mark questions will expect clear application of stakeholder concepts to case materials and balanced arguments about which stakeholders are most influential.

Enterprise Skills Integration

This topic lends itself naturally to active learning. Enterprise Skills’ Business Simulations can be used to replicate decision-making scenarios where students must balance stakeholder interests under pressure. For example, in a retail simulation, they could choose between a low-cost supplier (pleasing shareholders) or a fair-trade supplier (meeting community and customer expectations). This builds skills in:

• Problem-solving: weighing up options with incomplete information.

• Decision-making under pressure: making timely calls while considering multiple perspectives.

• Commercial awareness: recognising how different decisions impact profitability, brand reputation, and stakeholder relationships.

Careers Links

Understanding stakeholders aligns with Gatsby Benchmark 4 and 5 by connecting curriculum learning to careers:

• Business Analyst – evaluating the impact of stakeholder demands on strategy.

• Corporate Social Responsibility Officer – balancing profit with ethical responsibilities.

• Marketing Manager – interpreting customer and community feedback to guide campaigns.

• Human Resources Manager – managing employee relations and organisational change.
  This topic prepares students for any role where decision-making must balance diverse interests.

Teaching Notes

• Tip: Use local examples. Students relate better when stakeholder conflicts involve brands or employers they know.

• Activity: Run a stakeholder role-play, assigning each group a stakeholder perspective and debating a proposed business decision.

• Common Pitfall: Students often assume one stakeholder group is always dominant (e.g. shareholders). Encourage analysis of situational factors that shift influence.

• Extension: Introduce Mendelow’s Matrix for high-ability learners to structure stakeholder analysis in essays.

• Assessment Prep: Practise planning evaluative essays where students must argue which stakeholder is most important in a given scenario, supporting with evidence.