1.5.1b How stakeholders affect and impact business and their conflicts Quiz: Pearson Edexcel Business, Unit 5

The 20 questions

1. How might a business's decision to expand affect its local community?

   • It could create jobs and income, but may also increase traffic and noise
   • It has no effect on the local community because communities are not stakeholders
   • It always reduces local employment because expansion means automation
   • It forces local residents to buy shares in the business at a fixed price

2. Which of these is an example of a conflict between two stakeholder groups?

   • Managers wanting to hire staff while the local council wants to build a new road
   • Customers wanting a discount while local residents want the business to stay open late
   • Shareholders wanting higher dividends while employees want higher pay
   • Suppliers wanting prompt payment while the government wants to reduce taxes

3. How can a business's decision to cut prices affect its shareholders?

   • Lower prices always increase dividends because customers buy more goods
   • Lower prices remove the need for shareholders to vote on the company's decisions
   • Lower prices may increase sales volume but reduce profit margins and dividends
   • Lower prices have no effect on shareholders because they only affect customers

4. A business is accused of polluting a river. How might this affect its stakeholders?

   • Suppliers will be required to lend money to the business at no interest for the length of the dispute
   • Shareholders will benefit because pollution lowers the business's tax bill and so raises profit for them
   • Employees will always receive a pay rise because the business is under pressure to keep its staff happy
   • Pressure groups and local residents may campaign against it, damaging its reputation with customers

5. Why might a business need to balance the needs of different stakeholders?

   • Because the law requires every business to satisfy every stakeholder equally
   • Because shareholders are the only stakeholders who can ever be affected by a decision
   • Because stakeholders always have identical objectives and never disagree
   • Because meeting one group's objectives can reduce what is available for another

6. How might employees affect a business's decisions?

   • By voting on the business's dividend policy at the annual general meeting each year
   • By selecting the business's suppliers and negotiating their trade credit terms
   • By taking industrial action, such as strikes, if they are unhappy with pay or conditions
   • By setting the prices that customers are charged for the goods the business sells

7. A government introduces a new tax on sugary drinks. Which stakeholder is most directly affected?

   • Local residents who live near a school in the area that the tax applies to
   • Producers of sugary drinks, whose costs and sales may change
   • Suppliers of paper for printing school textbooks used in local classrooms
   • Pressure groups that campaign against the tax on sugary foods and drinks

8. Which of these is a way that customers can impact a business?

   • By voting on the business's appointment of its managing director at the AGM
   • By choosing to buy from a rival if they are unhappy with prices or quality
   • By setting the interest rate that the business pays on its bank loans each year
   • By being the owners of the business and receiving its dividends each year

9. Which stakeholder would be most affected by a business's decision to close a store in a small town?

   • Local residents and employees who rely on the store for jobs and access to goods
   • The pressure groups in the capital city that have no link to the town or the store
   • Shareholders in a different country who never visit the town where the store stands
   • The bank that set up the business's overdraft facility in a city far away

10. How might a business's decision to pay its suppliers late affect those suppliers?

    • They are not affected because they are not stakeholders in the business
    • They gain extra money from the late payments, so they benefit overall
    • They may face cash flow problems and may stop supplying the business
    • They are required to pay the business's taxes on its behalf

11. Which of these is most likely to create a conflict between managers and shareholders?

    • Managers wanting to pay tax while shareholders want to avoid tax altogether by law
    • Managers wanting to invest heavily in growth while shareholders want more dividends now
    • Managers wanting to buy shares while shareholders want to sell their shares in the market
    • Managers wanting a larger office while shareholders want a smaller office for costs

12. A business reduces its workforce to cut costs. Which stakeholders are affected by this decision?

    • Only shareholders, because all other stakeholders are unaffected by staffing changes
    • Only suppliers, because the business will need to buy fewer goods from them
    • Only the government, because the business will pay less tax on wages
    • Employees who lose their jobs and customers who may face slower service

13. How might a local community benefit from a new business opening in the area?

    • It will close the local school so that children can work in the business
    • It may create jobs and bring new spending to local shops and services
    • It will automatically reduce local house prices, which benefits all residents
    • It will prevent residents from using the local roads at certain times

14. Why might a business's shareholders and local residents have conflicting objectives?

    • Shareholders and residents both want the business to pay the highest possible wages
    • Shareholders want clean air while residents want the business to close down entirely
    • Shareholders want profit maximised while residents may want lower noise, traffic and pollution
    • Shareholders want to live in the local community while residents want to own shares

15. Which of these describes how stakeholders impact business activity?

    • Stakeholders can only impact business activity by setting the government's tax rates
    • Stakeholders can only impact business activity by lending money to the business itself
    • Stakeholders can influence decisions through their buying, voting, campaigning or working
    • Stakeholders have no influence on a business after it has been registered with the authorities

16. Why might a business consider the views of pressure groups when making decisions?

    • Because pressure groups have a legal right to own the business's assets
    • Because pressure groups set the business's dividend policy each year
    • Because pressure groups are the business's main suppliers of raw materials
    • Because negative campaigns can damage the business's reputation and sales

17. A business's suppliers are owed large sums and face bankruptcy. How might this affect the business?

    • The business may struggle to obtain stock, which could disrupt sales
    • The business will gain extra profit because suppliers no longer charge for goods
    • The business will automatically receive a government grant to pay the suppliers
    • The business will be legally required to sell its shares to the suppliers

18. Which stakeholder group is most affected by a business's decision to pay higher dividends?

    • Suppliers, who are required to lend money to the business
    • Employees, who lose their pay rise as a result
    • Customers, who are charged lower prices for goods
    • Shareholders, who receive more income from the business

19. What is the main reason a business should consider the impact of its decisions on local residents?

    • Residents are required by law to purchase the business's products whenever they are offered for sale
    • Residents set the business's tax rate, so their views on local issues determine the profits it makes
    • Residents can campaign, object to planning applications and influence the business's reputation
    • Residents own the business's assets and can sell them if they choose to in the event of a dispute

20. Which of these shows how a stakeholder can impact a business through legal means?

    • A customer chooses to buy from a competitor instead
    • A customer takes the business to court over faulty goods
    • A customer posts a positive review about the business online
    • A customer saves money for a future holiday by not buying the product

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