Understanding Business
Outcome 2
2012-13
Stakeholders
What is a Stakeholder?
Stakeholders are groups of
individuals with an interest in or an
influence on an organisation.
The Oban Chocolate Company
Discuss:
Background
Info Here
 A family run business… an Award
Winning business… making luxury
chocolates:
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Selection boxes
Wedding favours
Special Events eg Easter
Hampers
Wedding Cakes
Video Here
(and downloaded)
Who are the Stakeholders?
Who are the Stakeholders?
Local
Community
Customers
Local Council
Suppliers
Bank (RBS)
PSYBT
Scottish
Government
Argyll & Islands
Enterprise
Employees
Any Others?
Who are Stakeholders?
 Watch the Video…and discuss as a class.
What are Stakeholders Interests?
 Using the template worksheet… note
down the interests and influences that
different stakeholders have.
 See how many you can come up with
before the slide is displayed…
Owners/Shareholders
INTERESTS
 To receive a share of the
profits made
 To see the business succeed
and survive
 To see an increase in the
value of shares
 For the company to operate
in an ethical and socially
responsible manner
INFLUENCES
 Decide to buy/sell shares
 Opportunity to vote at
AGM (Ltd/plc)
 Direct influence on
decision-making (ST/PT)
Employees
INTERESTS
 Job Security
 Improved Salaries
 Career Opportunities
 Working Conditions
INFLUENCES
 Level of Productivity
 Industrial Action
Management
INTERESTS
 Job Security
 Profit Maximisation
 Improved Salaries and
Bonuses
 Career Opportunities
 Working Conditions
 Growth of the Business
INFLUENCES
 Key Decisions Made
Banks
INTERESTS
 Ability to Pay Back Loans
 Profits/Growth –
Additional Business for
Bank
INFLUENCES
 Grant/Refuse Loan
Application
 Setting Interest Rates
 Terms & Conditions of
Loan
Customers
INTERESTS
 Best Prices (Value for
Money)
 High Quality
 Range of Products
 Customer Service
 Guarantees
INFLUENCES
 Whether to Buy the
product/service
 Repeat Purchasing
Suppliers
INTERESTS
 Continuing Custom
 Ability to Pay Invoices
INFLUENCES
 Quality of Raw Materials
 Set Raw Material Price
 Set Credit Terms
Local Community
INTERESTS
INFLUENCES
 Environment
 Ability to Persuade
Businesses to carry out
 Jobs
their wishes
 Effect on other Businesses
 Positive/Negative
 Infrastructure
Publicity
Pressure Groups
INTERESTS
 Environment
 Jobs
INFLUENCES
 Lobby Businesses –
Positive/Negative
Publicity
Local/National Government
INTERESTS
 Attracting Jobs
 Collection of Taxes
 Improvement of
Economy
INFLUENCES
 New Legislation
 Levels of Taxation
Competing Aims of Stakeholders
 Different stakeholders can have competing aims eg:
 Senior Management may wish to maximise profit whereas
customers want low prices.
 The Managing Director may wish to have an innovative
atmosphere whereas employees are looking for job security
(innovation might include the introduction of automation leading to job
losses)
‘Insert Your Team’ Football Club
 Thinking about your favourite football club (if you
have one – otherwise you can support your teacher’s
favourite!)….
 Create a display which clearly shows the different
stakeholders and their interests and influences on
the club.
Possible Solution
Did you think of any others?
Optics plc Questions
 Using your knowledge
gained so far answer
the following
questions…
Extension Tasks
 GCSE Business: Asda Dividend
 GCSE Business: ReTyre
 GCSE Business: Powergen
 Times 100: Shell – Balancing Shareholder Needs
Shell: Balancing Shareholder Needs
 identify the various stakeholders in the business.
 what interest and impact do they have on the
business?
 how does Shell balance the needs of various
stakeholders in order to avoid conflict?
Factors Affecting Businesses
Business Challenges
A business challenge is anything that prevents a
business from fully achieving its aim(s).
Examples of business challenges:
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Morrison’s aim to maximise profits is challenged by Asda opening for 24-hours each day.
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Enrico’s fish and chip shop’s aim to maximise profit is challenged by an increase in the cost of fish
and potatoes.
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The Roodland’s Hospital aim to provide the best possible patient care is challenged by there being
a shortage of trained staff.

Cancer Research UK’s aim to raise more money for charity is challenged by the difficulty of
obtaining finance to open new premises.
Business Challenges
 In pairs list as many factors which you think would
affect decisions that businesses, such as the Oban
Chocolate Company, might make today or prevent
them from successfully achieving their aims.
eg the recession.
 Feedback to the class and categorise your findings
into 2 columns Internal and External Factors.
Internal or External?
 A fire broke out in the stockroom.
 The price of visitor parking in a neighbouring council-run car park
has increased by 20%
 The rate of inflation rose, leading to a general rise in prices.
 There was a rise in customer complaints due to poor customer
service.
 There was an upward trend in online shopping.
Can we insure against some factors?
Apart from crime,
discuss as a class some
external influences that
an organisation could
insure against.
Looking at Internal Factors first in
more detail…
 Employees
 inc management
 Equipment
 Finance
 Shareholder Influence
 Information
Internal Factors
 Employees (including Management):
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quality of production;
skill/ability level;
work rate;
attitude;
motivation;
poor industrial relations;
staff leaving the company
 What would be the impact of each of the above?
Internal Factors
 Equipment
 Expense to install initially
 Faults/maintenance
 Finance
 Is there capital available for changes to be implemented?
 Shareholder Influences
 What are their demands eg dividends vs reinvestment?
 Information
 High quality and relevance to decision being made?
 What would be the impact of each of the above?
SWOT Analysis
 Internal and External factors affecting a businesses success or failure
can be analysed using a SWOT Diagram.
Strengths
(Internal)
Opportunities
(External)
Weaknesses
(Internal)
Threats
(External)
Analyse the
Crazy Music
Case Study
using these
headings.
Factors Affecting Success?
Internal and External
 'Crazy Music' is a local music shop which sells CDs, cassettes, videos, vinyl records and t-shirts. The
business started 2 years ago when the owner, Dave, financed the business with money that he had
inherited. Although he has a great knowledge of music his business sense leaves lot to be desired.
 Sales of CDs, cassettes and t-shirts were initially good but have steadily fallen since another record
shop started up in business last year. The competitor – 'Trendy Music' – uses aggressive advertising
campaigns on television and in the local newspapers.
 'Crazy Music’s premises are small. The section of the shop which sells classical music is not
particularly successful.
 'Trendy Music' has recently invested in EPOS (Electronic Point of Sale) whereas Crazy Music is still
using cash registers.
 It also appears that suppliers are charging 'Crazy Music' more for goods compared to its competitors.
Crazy Music Solutions…
 Strengths - knowledge of music
 Weaknesses - lack of business sense, no investment in new technology cash registers, small premises, selection of classical stock which is not selling
well, keeping track of stock levels.
 Opportunities - strong advertising using various media, eg newspapers, TV,
change suppliers, invest in EPOS, remodernise or move to new premises,
business course.
 Threats - 'Trendy Music', suppliers increasing prices, changing customer
tastes.
…and now The External Factors
 Political
 Economic
 Social
 Technological
 (Environmental)
 (Competitive)
External Factors
 Political –
 legislation (eg environmental, employment, taxation)
 Economic
 Interest rates, exchange rates, stage of business cycle (eg recession)
 Social
 Trends and fashions (including environmental issues)
 Technological
 Improving technology (inc eg Facetime , Skype, CAD/CAM)
 Competition
 Innovative ideas from other companies
 What would be the impact of each of the above?
External Factors - Videos
 Legislation
Contact Lenses (5 mins 26 seconds)
 How does the Economy affect business?
(4 mins 44 seconds)
 An ever-changing world
(3 mins 34 seconds)
CASE STUDY
Class Challenge: Vue Cinemas
 Vue Cinemas are facing an ever increasing pace of
change that could affect their profitability.
 In pairs, discuss the challenges that they may be facing
(5 minutes)
CASE STUDY EXAMPLE SOLUTIONS
Class Challenge: Vue Cinemas
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Loss in popularity of cinema
Cheap cost of DVDs to buy/rent – competition
Streaming services eg LoveFilm
Sky/Cable TV
Changing lifestyles
Trying to please everyone
Pirate DVDs
Government legislation
To survive
Technological changes
Location costs in city centres.
GEN 2006Q5e
Summary Task:
Political, Economic and Social
After reading the information provided, answer Task 1 and
Task 2…
 Task 1 – Interest Rates
 Task 2 – Legislation
 How could technological factors affect Hislop’s Coach
Tours?
L&L Business Level 4 – p 44/45
Research Task
Using your research skills, find some recent examples of
how businesses have been affected by factors outwith
their control (ie external factors)
Prepare a short report, and be willing to share your
findings with the class.
 Next slides could be made into a match-it activity?
Challenges that a business may face
due to Government legislation
LEGISLATION AND GOVERNMENT ACTION
CHALLENGE
The Government raises tax on leaded petrol.
Garages have to decide whether to raise their prices
and so pass the increase in their costs onto their
customers.
The Government increases direct taxes on business
income.
Businesses pay more Corporation Tax so profits may
fall.
Government spending is decreased.
Businesses which supply Government departments
with goods/services will suffer a decrease in sales.
Challenges that a business may face
due to economic issues
ECONOMIC CHANGES
The economy experiences a recession.
CHALLENGE
Sales may decrease and profits may fall.
Businesses may have to consider making
some workers redundant.
There is a period of rapid inflation – rising Price of goods that UK businesses export
prices.
may increase and profits may fall.
Exports become more expensive for other
countries to buy.
Customs duties are increased.
Businesses that import goods from
overseas face rising costs and therefore
profits may fall.
Challenges that a business may face
due to economic issues
ECONOMIC CHANGES
CHALLENGE
There is a rise in the exchange rate against
all other currencies - £ is worth more.
Exports may become more expensive.
There is also a challenge to UK businesses
that face competition from cheap imports
– imports of cheap clothing affect
domestic textile industry.
Developments in ICT make it easier to
access markets in all parts of the world.
Businesses exporting need to make an
effort to know the language, import
regulations, safety standards, customer
profile of the country to which they wish
to export and need to obtain finance and
insurance cover to protect their exports
from damage/loss.
Challenges that a business may face
due to economic issues
ECONOMIC CHANGES
CHALLENGE
There are changes in age structure of the
Challenges to businesses that sell goods
population (demographic changes) – fewer and services to both young people and old
young people, more older people.
people.
There is a rise in the rate of interest
charged on borrowed money.
Businesses that borrow money face
increased interest rate costs and thus
possible falls in profit. There is likely to
be less investment in new technology,
buildings, equipment etc. It will be more
costly to expand using borrowed money.
Challenges that a business may face
due to environmental and social
issues
ENVIRONMENTAL/SOCIAL ISSUES
CHALLENGE
Legislation is brought in to control the
emission of toxic waste.
Businesses are faced with the problem of
how to dispose of toxic waste. Often this
means extra costs and less profit.
The Government increases tax on leaded
petrol.
Businesses have to pay more for petrol or
purchase new vehicles which take
unleaded petrol. This increases costs.
Consumers are demanding sports facilities Local authorities will have to meet the
to promote healthy life.
demand with limited financial resources.
Challenges that a business may face
due to environmental and social
issues
ENVIRONMENTAL/SOCIAL ISSUES
CHALLENGE
Customers are becoming more concerned
about the effect of the actions of
businesses on the environment.
Being environmentally friendly can add to
business costs –
Businesses have to persuade customers
that their production process does not
damage the environment.
Oil firms must not damage the
environment laying new pipes.
Cosmetic firms must not use products
which have been tested on animals.
Supermarkets must use recycled
materials in packaging.
Challenges that a business may face
due to environmental and social
issues
ENVIRONMENTAL/SOCIAL ISSUES
CHALLENGE
Living styles are changing. Working
Retail businesses must decide if they
women now require longer shopping hours should have a different pattern of opening
hours. This could increase costs and
reduce profits.
Challenges facing businesses due to
developments in ICT
DEVELOPMENTS IN ICT
CHALLENGE
A business spends substantial sums of
money on ICT equipment.
Businesses need to ensure that the use of
ICT really does improve the business’s
efficiency.
ICT equipment needs to be maintained
and updated.
Businesses require to have the latest
technology. There are all costs involved
in the training and re-training of staff to
use the new equipment and systems.
Challenges facing businesses due to
developments in ICT
DEVELOPMENTS IN ICT
ICT offers huge opportunities for
businesses and consumers:
Businesses – access to global markets.
CHALLENGE
Developments in electronic
communication and faster transportation
have ‘shrunk’ the world. Now,
communication with markets in all parts of
the world is much easier due to ICT.
This may be a challenge to UK businesses.
Consumers – purchasing goods from the
manufacturer rather than a retailer.
Businesses overseas use ICT to compete in
the UK market. Using the internet to
purchase goods directly presents a
challenge to the very existence of
wholesalers and retailers.