AQA A-Level Business: Understanding the role and importance of stakeholders (7132) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

This set covers section 3.2.3 (Understanding the role and importance of stakeholders) of the AQA A-level Business specification (7132): why stakeholder needs matter in decisions, mapping by power and interest, overlap and conflict, influences on relationships, and managing them through communication and consultation. All businesses are invented. Learn the content first from the study guide and revision notes. Related topic practice: Managers, leadership and decision making. Course hub: AQA A-level Business. Printable list: checklist. Check where you stand with the free diagnostics.

Questions

1. Define the term “stakeholder”. [2]

2. Explain one way in which the needs of two stakeholder groups might overlap when a business makes a decision. [3]

3. Stowbridge Haulage Ltd has annual revenue of £6,400,000 and an operating profit of £512,000. Its drivers’ pay bill is £1,800,000 a year. The managing director agrees a 3% pay rise for drivers. Assuming nothing else changes, calculate the new operating profit margin. [4]

4. Explain two reasons why a business should consider stakeholder needs when making decisions. [4]

5. Stowbridge Haulage plans to extend its depot on the edge of a village. Each stakeholder has been scored from 1 (low) to 5 (high), where 4 or 5 counts as high.

Stakeholder	Power	Interest
Shareholders	4	5
Drivers	3	5
County council planning committee	5	4
Village residents’ group	2	5
Fuel supplier	2	2

Analyse how Stowbridge should manage its relationship with (i) the planning committee and (ii) the residents’ group. [6]

6. Explain the difference between communication and consultation as ways of managing stakeholder relationships. Give one example of each. [4]

7. Thornleby Care Homes Ltd runs homes for 140 residents, who each pay £1,050 a week. Its care staff pay bill is £2,700,000 a year. Staff representatives ask for a 5% rise. The owners want their return unchanged, and residents’ families have said they oppose fee increases.

(a) Assuming 52 weeks a year, calculate the weekly increase per resident needed to pay for the rise entirely from fees. [3] (b) Analyse why this decision creates a conflict between stakeholder needs. [3]

8. Ormsdale Garden Centres buys £150,000 of plants a month from Cleavehill Nurseries, which sells 60% of its output to Ormsdale. Two other nurseries could supply Ormsdale. Ormsdale wants to extend its payment time from 30 days to 60 days.

(a) Calculate the extra amount Cleavehill would have to fund as a result. [2] (b) Analyse two influences on the relationship between Ormsdale and Cleavehill. [4]

9. Vellmoor Cycles plc plans to close its UK assembly factory and move production overseas. This would save £3.1m a year at a one-off cost of £4.4m. The factory employs 210 people and is the largest employer in its town. Its “made in Britain” label is used in advertising. Institutional shareholders have pressed for higher margins. A bank has lent Vellmoor money on a five-year loan.

Evaluate the extent to which Vellmoor should give priority to the needs of its shareholders when deciding whether to close the factory. [12]

10. Dovecrest Printers Ltd has 38 employees. The directors want to move from five shorter shifts to four ten-hour shifts, which they expect will cut the £22,000 annual overtime bill by 60%. Some employees have childcare commitments. Justify whether Dovecrest should simply communicate the change or consult employees first. [9]

Answers

1. An individual or group [1] with an interest in a business, or who is affected by its activities and decisions [1]. [2] Examiner insight: A definition needs both the idea of a group or person and the idea of interest or effect; a list of examples alone does not define the term.

2. Identify two groups and a shared need, such as shareholders and employees both wanting the business to grow [1]. Link it to a decision, such as launching a new product [1]. Explain that success raises profit for dividends and creates jobs, so both gain from one decision [1]. [3] Examiner insight: Name the two groups and the decision; “needs can overlap” with no example shows the idea but not its application.

3. Extra cost = 3% x £1,800,000 = £54,000 [1]. New operating profit = £512,000 − £54,000 = £458,000 [1]. Margin = £458,000 / £6,400,000 x 100 [1] = 7.2% (7.16%, down from 8.0%) [1]. [4] Examiner insight: Show the formula and each stage so that a slip in one step does not hide the working that followed; state the unit as a percentage.

4. Reason 1: stakeholders can support or block a decision [1], for example staff resistance could stall a restructuring and so affect results [1]. Reason 2: considering them protects reputation and ethical aims [1], because ignoring a community or customers can damage the brand and make future recruitment or sales harder [1]. Other valid reasons include better information from those affected. [4] Examiner insight: Each reason needs a developed consequence; two bare labels such as “reputation” and “support” show knowledge but little reasoning.

5. (i) The planning committee has high power (5) and high interest (4), so it should be managed closely [1]. Stowbridge should engage early, for example by meeting committee members and offering a traffic and noise plan [1], because a refusal would block the extension [1]. (ii) The residents have low power (2) but high interest (5), so they should be kept informed and consulted [1], for example through an open evening and a clear route plan for lorries [1]. Their power could rise if they petition, use local media or lobby the committee, so their position should be reassessed [1]. [6] Examiner insight: Use the scores to justify each position, then say what Stowbridge would actually do; naming a box without an action leaves the analysis unfinished.

6. Communication passes information to stakeholders [1], usually one-way, such as a newsletter or email update [1]. Consultation asks for stakeholders’ views before a decision is made [1], so it is two-way, such as a staff meeting or customer survey [1]. [4] Examiner insight: Show a difference in direction or purpose; two separate descriptions that sound alike will not show the contrast.

7. (a) Cost of the rise = 5% x £2,700,000 = £135,000 [1]. Resident-weeks = 140 x 52 = 7,280 [1]. Weekly increase = £135,000 / 7,280 = £18.54 per resident (about 1.8% of the £1,050 fee) [1]. [3] (b) Staff want higher pay, which is a cost to the business [1]. Paying from fees raises costs for families, while paying from profit cuts the owners’ return [1]. Neither can be met fully without reducing another group’s outcome, though a compromise, such as a smaller rise, might partly meet each need [1]. [3] Examiner insight: In part (b), tie each group to the direction of its interest; saying “they want different things” with no link to money or care quality stays generic.

8. (a) Extending by 30 days means one extra month of purchases is unpaid [1], so Cleavehill funds an extra £150,000 [1]. [2] (b) Dependence: Cleavehill sells 60% of its output to Ormsdale, so it is in a weak position to refuse [1] and may accept longer terms despite the cash-flow pressure [1]. Alternatives: Ormsdale can switch to two other nurseries, which strengthens its position [1], but pushing too far could damage a supplier it relies on or hurt trust if Cleavehill’s finances fail [1]. Other valid influences include history and trust. [4] Examiner insight: Name the influence, then apply a figure or fact from the case to show who gains power; do not simply list influences from memory.

9. Shareholders’ case: the saving of £3.1m a year gives a payback of 4.4 / 3.1 = 1.4 years, about 17 months [1], which is attractive for investors seeking higher margins [1]. Shareholders have high power as owners and could press for change in the board [1]. Against: the 210 employees and the town lose their largest employer [1], and the closure may reduce morale and result in a loss of skills and local goodwill [1]. The “made in Britain” label is part of the brand, so customers may react and the saving could be offset by lost sales [1]. The bank has lent for five years, so it needs confidence that the business will remain stable; a damaged brand or lost sales would put repayments at risk [1]. Consultation or phased closure could reduce the harm [1]. Judgement [up to 4]: Shareholders’ needs deserve substantial weight because the decision cannot succeed without their support and the payback is short [1]. However, priority should not be absolute: if the brand relies on British production, the real cost may exceed the saving [1]. Weighing power against long-run effects, Vellmoor should give shareholders’ needs strong but not exclusive priority [1], because a managed approach, such as consulting staff and testing customer reaction, protects the long-term value that shareholders also want [1]. [12] Examiner insight: A strong evaluation weighs groups against each other using case evidence and reaches a conclusion that depends on stated conditions, not one that repeats earlier points.

10. Recommendation: consult before deciding [1]. The change directly affects working life, so employees have high interest [1], and the directors need their cooperation to make it work [1]. Consultation could reveal childcare problems the directors have not considered [1], so the plan can be adjusted, for example with alternative shift options [1]. It also builds trust and reduces the chance of resignations, which would be costly in a team of only 38 [1]. Against: consultation takes time, and the expected saving is 60% x £22,000 = £13,200 a year [1], so delay costs money but the sum is small compared with the cost of losing skilled staff [1]. Communication alone would be quick but could cause resentment [1]. [9] Examiner insight: A justified choice names the option, gives at least two reasons tied to the case, and shows why the rejected option is weaker.

Where marks are usually lost

• Defining “stakeholder” by listing examples only.
• Giving a number of stakeholders without saying what each wants from this particular decision.
• Calculating the cost but not interpreting it, such as stating the new margin with no comment on what it means.
• Mapping a group without stating the action that follows.
• Treating a group’s power as fixed when the case hints that it could change.
• Writing about overlap or conflict in general terms with no case evidence.
• Evaluating by repeating earlier points rather than weighing groups against each other.
• Ending with a conclusion that does not say what it depends on, such as time horizon or mission.

Next steps

• Revisit the study guide for worked examples.
• Use the revision notes for a quick recall check.
• Tick off the topic on the checklist and return to the course hub.
• Take the free 10-minute diagnostics to find your next weak area.
• Book a free trial class if you want help with evaluation answers.

Frequently asked questions

How should a stakeholder map be used in an answer? Place each group using evidence from the case, then state the action that follows, for example managing a high-power, high-interest group closely. Mapping a group without stating the action loses marks.

Is a stakeholder group’s power fixed? No. Power can change, for example when media coverage or a social media campaign raises a group’s effective influence. Answers that treat power as fixed when the case hints at change lose credit.

What should you do after a stakeholder calculation? Interpret the figure, for example by saying what a new profit margin means for the business and the groups affected, rather than only stating the result.

How should you end an evaluation about stakeholder priorities? Weigh the groups against each other using the case and reach a conclusion that says what it depends on, such as the time horizon or the business’s mission.

Official syllabus

AQA, AS and A-level Business (7131 and 7132) specification, subject content 3.2.3 Understanding the role and importance of stakeholders.