Identify stakeholder groups and objectives
Identify internal and external stakeholders and explain what each group may want from a business.
Cambridge IGCSE Business 0264, 2027–2029 syllabus, Topic 1. Apply concepts to the stated business and weigh benefits against costs and stakeholder effects. Written practice is self-checked and does not certify exam readiness
Before you begin
- No previous business study is assumed. Read each scenario for the decision-maker, objective, available evidence and constraints.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which is an external stakeholder group?
What you will learn
- Identify internal and external stakeholders
- Explain stakeholder objectives
- Link a business decision to affected groups
Stakeholders can be inside or outside
Internal stakeholders include owners, managers and employees. External stakeholder groups include customers, suppliers, lenders or banks, government and the local community.
Stakeholders may have different objectives: owners may seek profit or growth; employees may value pay, security and conditions; customers may seek suitable quality and price; suppliers may want reliable orders and payment.
Make the impact specific
A business decision can affect several groups differently. A price increase may improve revenue per unit but concern customers; a new branch may create jobs while increasing traffic for neighbours.
Use the stated stakeholder and decision. Do not treat every member of a group as having identical preferences, and explain why the impact occurs.
Pause and explain
What may a lender or bank want from a borrowing business?
Worked example
A business plans to automate packing. Identify two stakeholder groups and a possible objective for each.
Show the worked solution
- Employees are internal stakeholders.
- Owners/managers are also internal; customers and suppliers are external.
- Explain a likely objective in this decision.
Answer Employees may want job security or training; owners may seek lower costs or higher productivity. The actual response depends on how automation affects roles and output.
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Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A firm delays supplier payments to protect cash. Explain one possible benefit to owners and one concern for suppliers.
Give me a hint
Follow the effect on cash and payment reliability.
Compare my reasoning
- Keeping cash temporarily may help immediate liquidity.
- Suppliers may need cash to pay their own costs.
- Late payment may damage trust or supply continuity.
Owners may preserve short-term cash to meet urgent costs, while suppliers may face cash-flow pressure and become less willing or able to supply reliably.
Look for these in your work
- Owner effect explained
- Supplier objective explained
- Trade-off linked
A council objects to a factory's night deliveries. Identify the external stakeholder and explain a possible concern without assuming every resident objects.
Give me a hint
Connect the group to a local effect.
Compare my reasoning
- The local community is external.
- Noise or traffic may affect nearby residents.
- Use 'some' or 'may' because views can differ.
The local community may be concerned about noise or traffic at night; some residents may be affected more than others, so the business should examine the context.
Look for these in your work
- Group classified
- Impact linked
- Variation acknowledged
A business wants to reduce wages to improve profit. Identify two affected stakeholder groups and explain why their objectives may conflict.
Give me a hint
Compare owners' financial aim with employee income and conditions.
Compare my reasoning
- Owners may seek higher profit.
- Employees may seek fair pay and job security.
- The change could reduce costs but harm motivation or retention.
Owners may expect lower wage costs to support profit, while employees may oppose reduced income or security. Any saving should be weighed against motivation, productivity and turnover effects.
Look for these in your work
- Two groups named
- Objectives contrasted
- Indirect effects considered
Common mistakes
- Calling customers internal stakeholders
- Assuming stakeholder groups always agree
- Listing a stakeholder without explaining its objective
What can you explain now?
Which is an external stakeholder group?
Compare with the explanation
Customers
Customers are outside the business but affected by it.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Name two internal and three external stakeholders, with one objective for each.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.