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Flip to reveal answersHow do shareholders influence business decisions?
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All 20 Flashcards — Stakeholder influence and impact
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Question
How do shareholders influence business decisions?
Answer
They vote at AGMs, elect directors, and approve major decisions.
💡 Hint
Votes drive governance.
Question
Why do business decisions create “winners and losers” among stakeholders?
Answer
Because a decision can benefit one group while harming another (e.g. cost cuts help profits but can cause redundancies).
💡 Hint
One decision, different impacts.
Question
How can an ethical failure affect customers?
Answer
Customers may lose trust and switch to competitors, reducing sales and damaging loyalty.
💡 Hint
Trust drives purchases.
Question
Stakeholders influence decisions AND experience ______ from decisions.
Answer
Impact.
💡 Hint
Influence + impact.
Question
Give one way employees can influence decisions.
Answer
Through trade unions and industrial action (e.g. strikes) or suggestion schemes.
💡 Hint
Collective action = power.
Question
Give one example of stakeholder influence by customers.
Answer
Buying or boycotting products to reward or punish business behaviour.
💡 Hint
Customers vote with spending.
Question
Give one stakeholder impact of cost-cutting.
Answer
Employees may face redundancies (negative) while shareholders benefit from higher profits (positive).
💡 Hint
Cost cuts shift benefits.
Question
How can an ethical failure affect employees?
Answer
Morale may drop, productivity can fall, and talented staff may leave due to disagreement with the business’s values.
💡 Hint
Ethics affects morale.
Question
Give one example of stakeholder influence by government.
Answer
Changing regulations or taxes that force the business to adapt.
💡 Hint
Law shapes behaviour.
Question
How can price increases impact customers and owners differently?
Answer
Customers may switch to competitors (negative), while owners may gain higher revenue per unit (positive).
💡 Hint
Price up: customers unhappy, margins up.
Question
Why can ethical issues trigger regulatory action?
Answer
Regulators may investigate, impose fines, and add compliance requirements, increasing costs and limiting operations.
💡 Hint
Ethics can become legal risk.
Question
How can customers influence a business?
Answer
By purchasing (or boycotting), leaving reviews, complaining, and switching to competitors.
💡 Hint
Customers vote with money.
Question
How does government influence business behaviour?
Answer
By setting regulations, changing tax policy, offering incentives, or imposing penalties.
💡 Hint
Rules + taxes shape decisions.
Question
How can expansion into new markets affect the local community?
Answer
It can create jobs (positive) but also increase traffic, noise, and pollution (negative).
💡 Hint
Community impact has both sides.
Question
In stakeholder analysis, what should you show besides the “winner”?
Answer
Show the loser too: explain both positive and negative impacts on different groups.
💡 Hint
Always show both sides.
Question
How can ethical failures affect investors/shareholders?
Answer
Investors may sell shares due to reputational risk, reducing share price and firm value.
💡 Hint
Confidence drives valuation.
Question
Exam rule: What makes stakeholder influence answers strong?
Answer
They apply influence and impact to the case and show effects across multiple stakeholders.
💡 Hint
Apply + multiple stakeholders.
Question
Exam tip: In an ethical impact answer, how many stakeholder groups should you cover?
Answer
At least 2–3 stakeholder groups, each with a clear impact linked to the case.
💡 Hint
Show the ripple effect.
Question
Exam skill: What should you always do when asked about stakeholder impact?
Answer
Explain both positive and negative effects and link them to the case facts.
💡 Hint
Show BOTH sides.
Question
How can pressure groups influence business decisions?
Answer
They run campaigns and use media/public opinion to pressure the business to change behaviour.
💡 Hint
Reputation pressure.
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Topic 1.4 hub
Stakeholders
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