Owners, employees, customers, the local community, suppliers — every business decision lands differently on each of them, and what one group wants can easily clash with what another needs.
Stakeholders sit around every part of the business — inside its operations and human resources, and outside it through marketing to customers and finance from owners.
Defining the term
What is a stakeholder?
A stakeholder is any individual or group who has an interest in a business, or who is affected by what it does. That's a much wider net than it might first sound — it includes people who never buy anything from the business at all, like residents living next to a new factory.
What makes stakeholders worth studying as their own topic is that a single business decision rarely affects only one group. A factory extending its opening hours to increase output affects employees (different shift patterns), the local community (more noise later into the evening), suppliers (needing to deliver more frequently), and owners (hopefully, more profit) all at once — sometimes in conflicting directions. Understanding who the stakeholders are, and what each one actually wants, is the first step towards understanding why business decisions are so rarely simple.
Common mix-up: a shareholder is someone who owns shares in a company — they're always a stakeholder, but not every stakeholder is a shareholder. Employees, customers, suppliers and the local community all have a stake in a business without owning a single share of it. Exam answers that treat "stakeholder" and "shareholder" as interchangeable lose easy marks.
Who's involved
The main stakeholder groups
AQA expects you to know five main stakeholder groups. Tap each card to reveal what they typically want from the business.
Ownerstap to reveal
Want a good return on their investment — profit, growth, or high dividend payments.
Employeestap to reveal
Want fair pay, job security, safe working conditions, and opportunities to progress.
Customerstap to reveal
Want good quality products, fair prices, reliable service, and ethical business practices.
Local communitytap to reveal
Wants local jobs and investment, but minimal noise, traffic, or environmental impact.
Supplierstap to reveal
Want to be paid promptly and fairly, with reliable, long-term order volumes.
A two-way relationship
Impact and influence run both ways
Stakeholders don't just sit on the sidelines watching a business operate — the relationship works in both directions.
How a business affects its stakeholders
Closing a factory costs employees their jobs and reduces spending in the local community
Expanding creates more orders for suppliers and more local employment
Cutting corners on quality directly harms customers
Poor profit performance reduces the return owners receive
How stakeholders influence a business
Employees can reduce productivity or take industrial action if unhappy
Customers can switch to a competitor or boycott the business entirely
Suppliers can tighten credit terms, raise prices, or delay deliveries
The local community can lobby against planning permission for expansion
Owners can withdraw investment or vote out the board of directors
In the real world: Heathrow Airport's proposed third runway has faced years of opposition from local residents concerned about noise and air quality — a clear example of the local community influencing a business's plans. British Airways' major IT outages in past years led to widespread customer complaints and demands for compensation, showing how quickly customers can push back when a business falls short.
The hard part
Conflict between stakeholders
Because different stakeholder groups want different things, a business can rarely satisfy every group at once — action that pleases one group often comes at another's expense.
OwnersvsEmployees
Owners wanting higher profit may push to cut staffing costs or freeze pay rises — directly working against employees' objective of fair pay and job security.
OwnersvsLocal community
Owners wanting to expand a factory to increase output may face a community objecting to the extra noise, traffic or environmental impact that expansion would bring.
CustomersvsSuppliers
Customers wanting lower prices can push a business to demand cheaper terms from suppliers — squeezing supplier margins to protect customer-facing prices.
A good exam answer doesn't just spot that conflict exists — it explains why the two objectives can't both be fully met at the same time, using the specific numbers or detail given in the scenario.
In the real world: UK dairy farmers have long argued that supermarkets push milk prices so low that suppliers struggle to cover their own production costs — a real example of the customers-vs-suppliers conflict, playing out through the supermarkets in between. Rail strikes led by unions such as the RMT are a familiar example of the owners-vs-employees conflict over pay and conditions spilling into public view.
Apply it
Match the stakeholder to their objective
Drag each objective into the stakeholder group most likely to want it.
High dividend payments
Job security and fair pay
Reliable, good-value products
Minimal noise and traffic
Being paid on time, in full
Owners
Employees
Customers
Community
Suppliers
Knowledge check
Test yourself
1. Which of these is a stakeholder but not necessarily a shareholder?
2. A business cutting staff pay to boost profit is most likely to create conflict between which two stakeholders?
3. How might unhappy suppliers influence a business?
Exam practice
Have a go
2 marks
State two stakeholders of a business.
Structure guide: two correctly named stakeholder groups — 1 mark each, no explanation required.
Case study — Foss Valley Dairy: Foss Valley Dairy is a private limited company that processes milk from local farms into cheese and yoghurt, employing 120 people. Shareholders are pushing the board for higher dividend payments, and the board is considering investing in automated processing equipment. This would reduce the workforce to around 70 employees, but would also allow the dairy to buy 20% more milk from local farmers, who currently supply almost all of its raw milk.
4 marks
State and explain two stakeholder groups affected by Foss Valley Dairy's decision to automate its processing.
Structure guide: state a stakeholder group affected (1 mark), explain how, using detail from the case study (1 mark) — repeated twice over.
6 marks
Analyse the conflict between shareholders and employees created by Foss Valley Dairy's automation decision.
Structure guide: a single developed line of reasoning grounded in the case study (eg: automation reduces staffing from 120 to 70 → cutting labour costs and increasing profit available for dividends → but this directly threatens the job security of the 50 employees who could lose their roles → creating a conflict shareholders' financial objective and employees' objective of secure employment).
9 marks
Recommend whether Foss Valley Dairy's board should proceed with the automation plan. Justify your answer using the case study.
Structure guide: a "recommend" question needs a justified judgement — weigh the benefit to shareholders and local farmer-suppliers against the cost to the 50 employees who could lose their jobs, before reaching a clear final recommendation.
Key terms
Glossary
Stakeholder
Any individual or group with an interest in, or affected by, a business's activities.
Shareholder
A person or organisation that owns shares in a company — always a stakeholder, but only one type of stakeholder.
Owners
Those who own the business, seeking a return through profit, growth or dividends.
Local community
Residents and organisations near a business, affected by its jobs, investment, noise and environmental impact.
Supplier
A business that provides raw materials, goods or services to another business.
Stakeholder conflict
A situation where satisfying one stakeholder group's objective works against another group's objective.