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Impact of changing business objectives on stakeholders

Business Studies Notes and

Related Essays

The Relative Importance and Influence of Stakeholders

 A Level/AS Level/O Level

Your Burning Questions Answered!

Evaluate the relative influence and importance of different stakeholder groups in a business context.

Discuss how changes in business objectives can impact the interests and priorities of stakeholders.

Analyze the ethical implications of prioritizing the interests of certain stakeholders over others.

Examine how businesses can effectively manage and balance the competing interests of stakeholders.

Suggest strategies for mitigating the negative consequences of changing business objectives on stakeholders.

The Relative Importance and Influence of Stakeholders: Who Calls the Shots?

Think of a business like a giant ship. To sail smoothly, everyone needs to work together: the captain, the crew, the passengers, and even the people who build and maintain the ship. These people are all stakeholders – individuals or groups who have an interest in the business and its activities.

1. Identifying Stakeholders

There are many different types of stakeholders, and their interests can vary widely:

Internal Stakeholders:

  • Employees: They want fair pay, good working conditions, and job security.
  • Managers: They want the company to succeed and be profitable so they can earn bonuses and promotions.
  • Owners: They want the business to be profitable and grow in value.

External Stakeholders:

  • Customers: They want high-quality products or services at a fair price.
  • Suppliers: They want to be paid on time and have a long-term relationship with the business.
  • Investors: They want a return on their investment and to see the value of their shares grow.
  • Government: They want the business to comply with laws and regulations.
  • Community: They want the business to be a good neighbour and contribute to the local economy.

2. Understanding Relative Importance

Not all stakeholders are created equal. Their importance can vary depending on factors like:

  • Power: Some stakeholders have more power to influence the business than others. For example, a major investor might have more power than a single employee.
  • Legitimacy: Some stakeholders have a more legitimate claim to be involved in decision-making. For example, customers have a legitimate interest in the quality of products and services.
  • Urgency: Some stakeholder concerns may be more urgent than others. For example, a supplier who is owed money might be more urgent than a community group interested in environmental sustainability.

3. Impact of Changing Business Objectives

When a business changes its objectives, it can have a significant impact on its stakeholders. For example:

Example 1: Growth through Expansion

  • Objective: To open new stores or expand into new markets.
  • Impact: This might require hiring more employees, which is good for them. However, it might also mean relocating production facilities, which could disrupt the lives of the local community.

Example 2: Cost Cutting Measures

  • Objective: To reduce costs by lowering wages or cutting employee benefits.
  • Impact: This could negatively affect employees, who might feel undervalued or pressured to work harder. However, it could also help the business to remain profitable, which could benefit investors.

4. The Importance of Stakeholder Management

Businesses need to manage their relationships with stakeholders effectively by:

  • Communication: Keeping stakeholders informed about the business's plans and decisions.
  • Engagement: Actively involving stakeholders in decision-making processes.
  • Balancing Interests: Finding ways to meet the needs of different stakeholders, even when their interests conflict.

5. Real-World Examples

  • Tesla: Elon Musk, the CEO of Tesla, has faced criticism from employees for his demanding work culture. Investors, however, have rewarded Tesla's growth and innovation.
  • Amazon: Amazon has faced criticism over its working conditions and its impact on local communities where its warehouses are located. However, customers have benefited from Amazon's low prices and convenience.


Understanding the relative importance and influence of different stakeholders is crucial for businesses to succeed. By managing stakeholder relationships effectively, businesses can create a win-win situation for everyone involved.

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