1 Explain one difference between the shareholder concept and the stakeholder concept. [3]

1 Explain one difference between the shareholder concept and the stakeholder concept. [3]

One difference between the shareholder concept and the stakeholder concept is that the shareholder concept places the emphasis on maximizing profits and returns for the shareholders, who are the owners of the company, while the stakeholder concept takes into account the interests of all stakeholders including employees, customers, suppliers, and the wider community in addition to the shareholders. The shareholder concept views the company as a vehicle for generating wealth for the shareholders, while the stakeholder concept views the company as having broader responsibilities beyond maximizing profits.

2 Analyze one reason why a business might have lower profits by meeting stakeholder aims. [5]

One reason why a business might have lower profits by meeting stakeholder aims is because the cost of meeting those aims may exceed the potential benefits or revenue generated. For example, if a business decides to increase employee wages or benefits to meet the aims of its employees, this may result in higher expenses for the business, which could lower its profits. Similarly, if a business decides to invest in environmentally friendly practices to meet the aims of its shareholders or customers, this may result in higher costs for the business, which could also impact its profits. In these situations, the business must weigh the potential benefits of meeting stakeholder aims against the costs and potential impact on profits.

3 Analyze one reason why a business might have higher profits by meeting stakeholder aims. [5]

One reason why a business might have higher profits by meeting stakeholder aims is that satisfied stakeholders are more likely to continue doing business with the company. For example, if a company prioritizes customer satisfaction, customers are more likely to continue purchasing from the company and may even recommend the company to others. This can lead to increased sales and higher profits for the company. Similarly, if a company prioritizes employee satisfaction, employees are more likely to be productive and committed to their work, which can lead to increased efficiency and lower employee turnover costs. Overall, meeting stakeholder aims can help a business build a positive reputation and relationships with its stakeholders, which can lead to increased profits in the long run.