Effects of Expansion on Stakeholders

Question 1

Name six stakeholders

Answer 1

Shareholders
Employees
Customers
Government
Local Community
Suppliers

Question 2

Explain shareholders as a stakeholder

Answer 2

Benefit from increased profit
May be asked to buy more shared or invest more money to help with expansion
As business grows more shares created - power of smaller shareholders is reduced - some may join together to exert more influence

Question 3

Explain employees as a stakeholder

Answer 3

Benefit from greater job security
Although, some firms tend to be more hierarchical - employees feel less involved - firms more likely to join trade union to protect interests

Question 4

Explain customers as a stakeholder

Answer 4

Benefit from economies of scale
However, larger firm may have fewer competitors so could increase prices
Individual customers are often powerless

Question 5

Explain the government as a stakeholder

Answer 5

Collect more taxes as firm becomes larger and more profitable
Hard for government to press laws or threaten business as it gets more powerful and influencial
Can investigate large firms is they believe they are behaving in an anti-competitive way

Question 6

Explain the local community as a stakeholder

Answer 6

Pollution or traffic congestion likely to be made worse
Firm makes larger profit - create jobs
To protect interests they may form pressure groups to campaign against a business

Question 7

Explain suppliers as a stakeholder

Answer 7

Benefit from increased sales

Weaker in terms of negotiation