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IB DP Business Management — Unit 1: Introduction to Business Management | SL | 1.4 Stakeholders
📋 What You Will Learn
- Define stakeholders and distinguish between internal and external stakeholders
- Identify the key interests and objectives of each major stakeholder group
- Explain why stakeholder interests frequently conflict and give real business examples
- Apply stakeholder analysis to a business decision, identifying who gains and who loses
- Evaluate how a business should respond to stakeholder conflict, weighing ethical and commercial considerations
🔍 Guiding Question When a business decision benefits one group but harms another, whose interests should take priority — and how does that choice reveal what the business truly values?
🌍 Why This Matters In 2023, Amazon announced the closure of several UK warehouses, affecting thousands of workers. Shareholders welcomed the cost savings; employees faced redundancy; local communities lost jobs and spending power. One decision, multiple affected parties — this is stakeholder conflict in its most visible form.
What Is a Stakeholder?
Every business decision creates winners and losers beyond the boardroom. Understanding who those parties are — and what they want — is the starting point for responsible and effective management.
📘 Stakeholder Any individual or group that has an interest in, or is affected by, the activities and decisions of a business. Stakeholders may influence the business or be influenced by it — often both simultaneously.
📘 Shareholder An individual or institution that owns shares (equity) in a company and therefore has a legal ownership stake. Shareholders are a subset of stakeholders — all shareholders are stakeholders, but not all stakeholders are shareholders.
💡 Analogy: The Ecosystem Think of a business as an ecosystem. Every organism (stakeholder) depends on the health of the system, but each competes for different resources. A thriving ecosystem requires balance — dominance by one species (stakeholder group) can destabilise the whole.
Internal Stakeholders
Internal stakeholders are those who operate within the organisation. Their interests are directly tied to the day-to-day running of the business.
Employees
- Primary interest: job security, fair wages, safe working conditions, career development, and a sense of purpose.
- Influence: productivity, quality of output, industrial action, staff turnover — all directly affect business performance.
- Motivation theories (Unit 2) explain what employees want beyond pay: Maslow's hierarchy, Herzberg's hygiene and motivators, and Deci & Ryan's self-determination theory all point to non-financial needs.
Managers
- Primary interest: authority, career progression, bonuses linked to performance targets, and the resources to implement strategy.
- Managers act as agents of shareholders (the principal–agent problem): their personal incentives may not always align with shareholder value.
- Example: a manager may pursue empire-building (expanding their department) rather than maximising profit.
Shareholders (in the context of internal stakeholders)
- In small, owner-managed firms, shareholders are also