1.4 Stakeholders and the External Environment

Past Exam Questions

1) Describe one advantage and one disadvantage of a private limited company. (4 marks)

2) Comment on the purpose of Non Government Organizations (NGOs) such as animal rights groups. (3 marks)

3) Explain the purpose of a mission statement (3 marks)

4) Explain the reasons why organisations consider setting ethical objectives. (5 marks)

Use mark scheme on own work or each other’s – Mark out of 15.

StakeholdersPeople and organisations with an interest in a business are stakeholder in

it.They can be internal or external. Divide these stakeholders in your notes:• Suppliers• Customers• Managers• Competitors• Employees• Shareholders• Bankers• Environmentalists• Communities

Internal Stakeholders External Stakeholders

HL – Stakeholder Conflicts

Happiness

Directors

Employees

Shareholders

External Environment

• Businesses do not operate in a ‘goldfish bowl’; they have to be alert to the external environment, reacting to threats and seizing opportunities. An example is businesses who have taken account of global warming concerns have found that consumer preferences have switched in their favour. By identifying changing the external environment, businesses can be responsive and be one step ahead of the competition.

• Co-operative Bank plc has re-branded itself as a greener and more caring organisation; it also says it will not invest in unethical companies wherever they are in the world.

PEST Analysis• A PEST analysis assesses the impact of the external

environment on an organisation’s future activities.

Political issues include: Economic issues include:Elections resulting in a new government party

A rising exchange rate or interest rate

The country joining the EU (trading bloc) Economic growth slowingA new law on competition being passed Unemployment risingSociological issues include: Technological issues include:More one-parent families Internet security improvements for

customer paymentsMore people interested in environmental issues

New materials

More people buying online New machinery or patents developed by a competitor

Carry out a PEST analysis in detail on an organisation of your choice. Use the notes from the handout. Come back and discuss

all 3 as a group.