IB DP Business Management: Stakeholders – 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 – the IB holds copyright in its own papers. Use these alongside the official past papers available through your school or the IB store.

This set covers section 1.4 (Stakeholders) of Unit 1 in the IB Business management guide, first assessment 2024, for SL and HL. The two content points are internal and external stakeholders, and conflict between stakeholders. Every business and figure here is made up. Begin with the study guide when the ideas are unfamiliar, and the revision notes for a quick recap. Course pages: hub and checklist.

Questions

1. Define the term stakeholder. [2]

2. Distinguish between internal stakeholders and external stakeholders. [3]

3. Greyfell Cycles is a privately held company that assembles and sells bicycles. Identify two external stakeholders of Greyfell Cycles. [2]

4. Explain why the shareholders of a publicly held company might be classified as internal stakeholders by one writer and as external stakeholders by another. [3]

5. Greyfell Cycles has 120 employees, who earn an average of 27,000 each per year. The directors plan to close the frame-welding workshop and buy frames from an overseas supplier. The closure would remove 18 jobs.

(a) Calculate the percentage of the workforce whose jobs would go. [2] (b) Calculate the annual saving in wages from the closure. [1] (c) Explain how the closure could affect one external stakeholder of Greyfell Cycles. [3]

6. Mossgrave Dairy buys 2,500,000 litres of milk each year from local farms at 0.42 per litre. The farmers’ group asks for 0.46 per litre.

(a) Calculate the increase in Mossgrave Dairy’s annual milk cost if the request is met. [2] (b) Calculate the percentage increase in the price per litre, correct to one decimal place. [1] (c) Explain one reason why the request could lead to conflict between stakeholders. [2]

7. Lowrance Hotels is a company with annual profit after tax of 900,000. It normally pays 50% of profit after tax as dividends. Staff have asked for a bonus of 5% of the annual wage bill of 3,600,000. If the bonus is paid, it is deducted before the profit figure is used, and the 50% dividend rule still applies.

Analyse the conflict between shareholders and employees in this situation. [6]

8. Explain two reasons why a change such as moving to a new site could lead to conflict among stakeholders. [4]

9. Suggest one way in which a business could reduce stakeholder conflict when it announces a relocation. [3]

10. Halberry Print Works is a family-owned, privately held company with 240 employees. It plans to replace its older presses with a digital press costing 1,800,000. A bank would lend 1,200,000 of this. Loan repayments would be 300,000 per year. The new press would put 36 jobs at risk, and the average wage of those jobs is 28,000. Delivery time to customers would fall from 9 days to 4 days. The press would run a night shift, with lorries arriving at night through a residential street.

Discuss whether the investment is in the interests of Halberry Print Works’ stakeholders. [10]

11. Mossgrave Dairy (see question 6) sells 2,500,000 litres a year at 1.25 per litre. The farmers’ group has asked for 0.46 per litre, an extra 100,000 a year in total. The managers are considering raising the selling price to 1.30 per litre. Large supermarket customers are price sensitive, and a rival dairy sells at 1.22 per litre. The owners want to protect profit.

Recommend whether Mossgrave Dairy should accept the farmers’ request and raise its selling price. [9]

Answers

1. Any person or group [1] that a business’s activities affect, or that is able to affect them [1]. [2] Examiner insight: A strong definition names who counts (person or group) and states the link to the business. Writing “an owner of a business” describes a shareholder, not a stakeholder.

2. Internal stakeholders are individuals or groups inside the organization, such as employees or managers [1]. External stakeholders are outside the organization but affected by it or able to affect it, such as customers or suppliers [1]. The difference is where the group sits in relation to the organization, not how much it cares: both can have strong interests and influence [1]. [3] Examiner insight: With “distinguish”, an answer that describes each term in separate sentences without showing the difference may gain less credit than one that states the contrast directly.

3. Any two from: customers, suppliers, the bank or lenders, government, the local community, competitors, pressure groups [1] [1]. Both must be external. [2] Examiner insight: Naming “employees” or “directors” here would be an internal group. Check the question wording (“external”) before writing the list.

4. Shareholders own the company and can vote and appoint directors, so a writer may count them as internal [1]. In a large publicly held company, many shareholders buy shares through a stock exchange and never work in the business, so another writer may count them as external [1]. A clear choice with a reason matters more than the label [1]. [3] Examiner insight: Answers that simply assert “shareholders are internal” without a reason usually leave marks unclaimed. A one-sentence reason is what makes the point analytical.

5. (a) Percentage = 18 ÷ 120 × 100 [1] = 15% [1]. (b) 18 × 27,000 = 486,000 per year [1]. (c) Identify a group such as the overseas supplier or the local community [1]. The supplier gains new orders, so its revenue rises [1]. This may be at the cost of local frame suppliers or of the local economy, which loses 18 wage earners’ spending [1]. [6] Examiner insight: In a question about an external stakeholder, show the link from the decision to the group. A bare statement such as “the community will be upset” with no cause is usually too thin to develop.

6. (a) Increase per litre = 0.46 − 0.42 = 0.04 [1]. Extra cost = 0.04 × 2,500,000 = 100,000 per year [1]. (b) 0.04 ÷ 0.42 × 100 = 9.5% [1]. (c) Farmers want a higher income to cover their costs and keep farming [1]. Mossgrave’s owners want to protect profit, and 100,000 extra cost reduces profit unless the price to customers rises, so one group’s gain is another group’s loss [1]. [5] Examiner insight: A conflict explanation needs both sides named. Saying only that “costs will rise” shows a cost, not a conflict between groups.

7. Bonus = 5% × 3,600,000 = 180,000 [1]. Profit after bonus = 900,000 − 180,000 = 720,000 [1]. Dividend at 50% = 360,000, compared with 450,000 before, a fall of 90,000 or 20% [1]. Shareholders want dividends and a strong share price, so they lose [1]. Employees want reward for effort and may be more motivated and less likely to leave if they receive the bonus [1]. The bonus is 20% of profit, so it is large relative to profit; the clash is real, and a compromise such as a smaller bonus or a bonus linked to future profit growth could reduce the damage to both sides [1]. [6] Examiner insight: For analyse, calculations are only the first step. Credit comes for explaining what each group wants and why the figures create a conflict, not for the arithmetic alone.

8. Reason 1: a move shifts costs and benefits unevenly [1]. For example, owners may gain lower rent while employees face a longer journey or job loss, so their interests clash [1]. Reason 2: change creates uncertainty and the groups that lose may resist [1]. For example, a local supplier may lose its contract and complain publicly or look for other customers [1]. [4] Examiner insight: Two separate reasons are needed, each with some development. Two versions of the same point (for example, “staff are unhappy” and “workers dislike it”) are likely to be treated as one reason.

9. Consult employees and other affected groups before the decision is final [1]. This lets people raise concerns and may give managers ideas, such as phased moves [1]. The limit is that consultation takes time and it may not satisfy every group, so some conflict may remain [1]. [3] Examiner insight: Suggest questions reward a workable idea with a reason it helps. Naming “communication” alone, without saying what is communicated or to whom, stays vague.

10. Calculation: 36 × 28,000 = 1,008,000 saved in wages per year [1]. Less loan repayments of 300,000 gives 708,000, before other running costs [1]. Employees: 36 of 240 jobs is 15%, which brings insecurity for those remaining and loss of income for those leaving [1]. Owners (the family): savings raise profit and keep the business competitive [1]. The bank: it lends 1,200,000, two-thirds of the cost, and gains interest if repayments are made, but carries risk if the plan fails [1]. Customers: delivery falls from 9 to 4 days, a cut of 55.6%, which should please them and protect sales [1]. Residents: night lorries on a residential street bring noise and disturbance [1]. The main conflict is between owners and customers, who gain, and employees and residents, who lose [1]. Judgment: the investment is likely to favor the business’s long-term survival and the owners, but it is only in the interests of the stakeholders as a whole if the costs to staff and residents are reduced, for example through retraining or by changing the delivery route [1]. The answer also states who benefits most and what would change the view [1]. [10] Examiner insight: A discuss answer that lists effects without weighing them stays descriptive. The final judgment should say which groups matter most in this case and why, and what would change the view.

11. Raising the price from 1.25 to 1.30 is an increase of 4% [1]. If sales volume is unchanged, revenue rises from 3,125,000 to 3,250,000, a gain of 125,000, which more than covers the extra 100,000 milk cost [1]. This depends on volume staying the same, which is uncertain [1]. Farmers gain a higher and more stable income and may stay loyal suppliers [1]. Customers, especially price-sensitive supermarkets, face a higher price, and the rival at 1.22 offers an alternative, so sales could fall [1]. Owners want to protect profit, so they gain if the price rise sticks but lose if volume falls [1]. The conflict is between farmers and customers, with the owners between them [1]. Recommendation: accept the request and raise the price, ideally in a way that keeps the price close to the rival, such as a smaller rise or a partial rise [1] with a reason: loyal local suppliers matter for quality and continuity of supply, and the price rise covers the cost if the volume loss is small [1]. [9] Examiner insight: For recommend, a decision on its own earns little. The reasoning that links the figures to the decision and recognizes the group that loses is what carries the credit.

Where marks are usually lost

• Defining a stakeholder as “an owner”, which confuses it with shareholder.
• Listing stakeholders with no tie to the particular business in the stem.
• Naming a conflict without saying what each side wants.
• Writing about only one side of a conflict.
• Doing the calculation and stopping, instead of explaining what the figure means for each group.
• Ignoring the data in the stem when asked to discuss or recommend.
• Ending a discuss or recommend answer without a reasoned judgment.

Next steps

• Review the revision notes and the study guide.
• Go to the course hub and the checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

What is the difference between a stakeholder and a shareholder? A stakeholder is any person or group that a business’s activities affect, or that can affect them. A shareholder is one type of stakeholder: an owner of shares in a company.

What are common mistakes on stakeholder questions in IB Business Management? Students often define a stakeholder as “an owner”, list stakeholders with no tie to the business in the stem, name a conflict without saying what each side wants, and do a calculation without explaining what the figure means for each group. Ending a discuss or recommend answer without a reasoned judgement also loses marks.

How should you analyse a conflict between two stakeholder groups? State what each group wants, show how the decision affects each one, using figures from the case where given, and say what each group could do in response. Cover both sides rather than only one.

Which section of the IB Business Management guide covers stakeholders? Stakeholders is section 1.4 of Unit 1 in the IB Business management guide, first assessment 2024. It covers internal and external stakeholders and conflict between stakeholders, both at AO2.

Official syllabus

This set follows the Business management guide, first assessment 2024, published by the International Baccalaureate Organization, section 1.4 Stakeholders.