Teaching Pack

AO2 Application
Understanding business
activity

Cambridge IGCSE™
Business 0450
This Teaching Pack can also be used with the following
syllabuses:
• Cambridge IGCSE™ (9–1) Business Studies 0986
• Cambridge O Level Business Studies 7115
Version 1
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Contents

Introduction..................................................................................................................................................... 4
AO2: Application.............................................................................................................................................. 5
AO Lesson: Applying business knowledge...................................................................................................... 6
Skill Development Lesson: Stakeholder groups............................................................................................ 7
Independent lesson: Stakeholder case studies.............................................................................................. 9
Worksheets and answers............................................................................................................................. 10

Icons used in this pack:

Assessment Objective (AO) lesson

Skill development lesson

Independent lesson
Teaching Pack: AO2 Application

Introduction

This pack will help you to develop your learners’ higher order thinking skills as defined by AO2.

Important note
Our Teaching Packs have been written by classroom teachers to help you deliver
lessons which develop higher order thinking skills. Use these materials to
supplement your teaching and engage your learners. You can also use them to help
you create lesson plans for other parts of the syllabus.

This is one of a range of Teaching Packs. Each pack is based on one assessment objective which
is contextualised within one area of the syllabus. The packs can be used in any order to suit your
teaching sequence.

The structure is as follows:

Assessment Objective (AO) Lesson (1 hour*)

This lesson is designed to develop your learners’ understanding of the skill being
developed. This should help them to gain maximum benefit from the subsequent
lessons.

Skill development lesson(s) (1 hour*)

These lessons further introduce and extend the focus skill(s).
It also reminds learners of any content needed to contextualise these.

Independent lesson (1 hour*)

This lesson consolidates and builds on the progress learners have made.
In most cases, it will allow learners to work independently in a novel setting to use
the skills they have developed.
* the timings are a guide only; you may need to adapt the lessons to suit your circumstances.

In this pack you will find the lesson plans, worksheets for learners and teacher resource sheets you
will need to successfully complete the lessons.

4 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

AO2: Application

This Teaching Pack focuses on AO2 Application – apply knowledge and understanding of facts,
terms concepts, conventions, theories and techniques

This Teaching Pack has links to the following syllabus content (see syllabus for detail):

 1.5.2 The role of stakeholder groups involved in business activity

The lessons cover the following skills, adapted from AO2: Application (see syllabus for
assessment objectives):

 Application of knowledge and understanding of stakeholder groups

 Application of knowledge and understanding to business situations, circumstances and
scenarios

Please note that analysis and evaluation will feature in some activities, but these skills are focused
on in more depth in other Teaching Packs and Scenario Packs.

Prior knowledge
Knowledge from the following syllabus topics is useful for the activities that follow

 1.5.2 The role of stakeholder groups involved in business activities

Teacher notes
The suggested activities are to help engage your learners as they develop the skill of applying their
business knowledge to a range of business scenarios and contexts.

Learners can find applying their business knowledge difficult. For example, the methods for
motivating the workforce in a car manufacturing plant will be different to those used to motivate a
team of sales people selling kitchens. Learners need to be able to take their business knowledge
and apply it in the context of different businesses and business scenarios.

It is also important to consider the context of the size of the business when applying knowledge.
For example, is it a ‘for profit’ or ‘not for profit’ business? Is the business is well established or a
start-up?

Learners need to focus on how to use the business knowledge they have in given situations. The
Assessment Objective (AO) lesson, skill development lesson and the independent lesson activities
will help them practice this.

Cambridge IGCSE Business Studies (0450) 5

Teaching Pack: AO2 Application

AO lesson: Applying business knowledge

Resources  PowerPoint presentation

 Worksheet A and Worksheet B

Learning By the end of the lesson:

objectives  all learners should be able to draft an answer to a given question
 most learners should be able to write a full model answer to a
given question
 some learners will be able to write a model answer to a given
question, using what they have learnt and without the model

Timings Activity
Starter
Introduce learners to the requirements of AO2 using the first slide. The whole focus
of this lesson will be for them to understand what we mean by application.

Ask learners to create a list with their partner of all of the ways that a company
could motivate its workers.

Now ask them to decide which of these would be most suitable for Company A and
Company B as described on the slide. You can use slide 5 to develop a classroom
discussion of some examples of motivational strategies and how they might relate
to both companies.

Main lesson
Learners should look at the four stakeholder statements on Worksheet A. They
have to decide if the statements have been applied in a business context. They
should record and explain their answers on the worksheet.

Give learners Worksheet B. This is a structure that they can use to help to develop
answers that are contextualised in a business setting. Read the case study and the
practise question.

Take your learners through steps 1-3 and ask them to make notes on Worksheet B
in the relevant boxes.

For step 4 give learners 10 minutes to write an answer in the box provided on
Worksheet B, using their notes from steps 1-3 to help them if they need it.

Plenary
Choose 3 or 4 learners to read out their answers and ask the class to comment on
how well they feel the information has been applied.

Show the possible answer so learners can self or peer-assess their answers. They
should spend some time making any necessary corrections so that they all finish
with a fully applied answer.

6 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Skill development lesson: Stakeholder groups

Resources  Worksheet C, Worksheet D, Worksheet E, Worksheet F and

Worksheet G

Learning By the end of the lesson:

objectives  all learners should be able to identify at least one objective for
each stakeholder group
 most learners should be able to identify a conflict of interest
between two stakeholder groups in a given situation
 some learners will be able to make recommendations in a given
scenario, which recognises why it is important for businesses to
satisfy stakeholder objectives

Timings Activity
Starter
There are two options for the starter activity. Explain to learners that both options
are activities designed to check / recap their knowledge and understanding of
elements of core content from section 1.5.2 of the syllabus.

Option 1
Give learners Worksheet C. They have to match the stakeholder to their objective.

Option 2
Give learners Worksheet D and explain that this activity is to check / recap their
knowledge and understanding of elements of from section 1.5.2 of the syllabus.
Your learners should select the correct answer to each question. They could mark
their own answers or each other’s. They can use the quiz to identify areas that they
need to develop.

Main lesson
Hand out Worksheet E. Introduce this activity by reminding learners that
stakeholder groups have their own objectives that may be in conflict with other
stakeholder’s objectives. As a result different stakeholders may not be in agreement
with each other on the decisions a business makes. Businesses do not want
stakeholder conflict and try to avoid it, but this is not always possible.

Stakeholders can influence business activity, and be affected by a business’

decision making positively and negatively.

Share the business scenario at the top of Worksheet E.

Your learners should complete the table by identifying at least one objective for
each FABRIX stakeholder.

Learners will then outline the effects that the change in location of the business’s
new factory might have on stakeholders. They should ensure that they consider
both positive and negative effects where relevant. This will encourage your learners
to use their application skills and develop a balanced response. Get learners to
feedback their answers.

Some suggested answers are provided to support class feedback.

Cambridge IGCSE Business Studies (0450) 7

Teaching Pack: AO2 Application

Skill development lesson: continued

Timings Activity
The next activity is based on the scenario of a new Gym opening in their local area
called FitToGo.

Learners should work in groups of 4-5. Each member selects a stakeholder card
from Worksheet F and assumes that role. Learners should be familiar with the
interests and objectives of their stakeholder in business activities from the earlier
task, but you could give them a minute or two to make notes on the back of their
card.

Introduce the groups to FitToGo by handing out and reading together the business
scenario on Worksheet F.

The aim is for learners to advise FitToGo on what they need to do to meet the
objectives of each stakeholder group and to explain why it is important for the
company to try and satisfy the objectives of each stakeholder. Learners should
record their ideas on the back of their cards.

Stakeholders from each group then seek out their equivalent stakeholder in the
other groups to discuss their recommendations. Together they should write a set of
recommendations for their stakeholder group on what FitToGo need to do to satisfy
their objectives and why each is important. They should do this using Worksheet G.
This set of recommendations will be put to the owner / shareholders of FitToGo
(you will assume this role) in the plenary.

Remind learners to apply their knowledge on stakeholders in the context of the

business and not to generalise their answers as learnt in the previous lesson.

Plenary
Each stakeholder group takes it in turn to present their recommendations to the
owner / shareholders of FitToGo.

8 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Independent lesson: Stakeholder case studies

Resources  Worksheet H, Worksheet I and Worksheet J

Learning By the end of the lesson:

objectives  all learners should be able to use at least one case study to
identify the key stakeholders and their objectives in that business
context
 most learners should be able to identify from case study material
which stakeholders may have conflicting objectives
 some learners will be able to justify whether the conflict between
two stakeholders is likely to occur

Timings Activity
Starter
The PastiPalace is a small chain of shops in the East of England that specialises in
making and selling different types of pasties (a pasty is a savoury food item
consisting of pastry folded in half with a savoury filling inside). They make the
pasties on site in each shop to sell direct to customers. They have a number of
business decisions to make and know that some of these decisions will affect their
stakeholders in different ways – some positively and some negatively. Your learners
will need to apply their knowledge and understanding of stakeholders to work out
which stakeholders are likely to be affected by the decisions and whether the impact
will be a positive or negative one.

Hand each learner a business decision-making statement from Worksheet H.

Learners have to decide which stakeholder(s) would be affected by the business

decision they have on their card, how it would affect them and whether it would
affect them in a positive way or a negative way. Ask learners to explain their
answers in the context of the business and its scenario.

Main lesson
Read the case study together on Worksheet I and then ask your learners to answer
the questions.

Hand learners Worksheet J. It introduces an individual task to enable learners to

practise the skill of applying their business knowledge and understanding.

Plenary
Ask learners to feedback their answers on Worksheet J. Try to engage all learners
by building up a final set of answers on the board by taking points from each of
them. You could use the suggested answer sheet for Worksheet J to help draw out
content for the answers.

Cambridge IGCSE Business Studies (0450) 9

Teaching Pack: AO2 Application

Worksheets and answers

Worksheets Answers

For use in assessment objective lesson:

A: Stakeholder statements 11 29

B: Applying business knowledge 13 –

For use in skill development lesson:

C: Card sort 15 31

D: Quiz 16 32

E: FABRIX 18 34

F: Stakeholder role play cards 21 37

G: Stakeholder recommendations 22 –

For use in independent lesson:

H: Business decision making 23 38

I: Case study application Activity 1 24 39

J: Case study application Activity 2 27 42

1 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Worksheet A: Stakeholder statements

Read the four stakeholder statements. For each of them, you should decide if they have been
made in context or not. You need to explain your answer.

Statement 1
The local residents of Winwell are not happy about the new ‘J&T’ depot being built in their town
due to the pollution and traffic congestion their lorries will bring.
“We are told the depot will be operating 24 hours a day, which means noise from the
lorries coming in and out of the depot could be disruptive for residents”.

I know this statement has / has not been made in a business context because
………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Statement 2
Businesses building new premises in a town might upset the local community.

I know this statement has / has not been made in a business context because

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

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Teaching Pack: AO2 Application

Worksheet A: continued

Statement 3
The workers will be more motivated if they are paid a decent wage and have good working
conditions.

I know this statement has / has not been made in a business context because
………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Statement 4
The workers at ‘The Bean Box’ coffee factory will be more motivated if they are paid a good and
fair wage for the work they do. From the information given, we can see that one of the things the
workers complained about was not having a pleasant environment to socialise in during their
breaks. If the working conditions are good and the staff room could be made to be a pleasant
environment in which to relax, the workers are likely to feel more valued and work more quickly.
This would increase productivity.

I know this statement has / has not been made in a business context because

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

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 Teaching Pack: AO2 Application

Worksheet B: Applying business knowledge

Use this worksheet to make notes as we go through the different elements of building an answer to
the question shown below:

Explain the impact on Paula's business if the price of silver was to rise.

Step 1 – Identify what the question is asking

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Step 2 – Context of the business

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

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Teaching Pack: AO2 Application

Worksheet B: continued

Step 3 – The content of your answer

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Step 4 – Your answer to the question

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

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 Teaching Pack: AO2 Application

Worksheet C: Card sort

Match each stakeholder from the selection below to the correct objective.

Stakeholder Stakeholder Objective(s)

Job security, promotion and career development, increase in

salary / bonuses, job satisfaction, successful departments

Employment opportunities, to minimise any negative impacts

such as pollution – clean environment

High profits as a reward for risking their investment – good

return on their investment, increase in the value of their
shares

Job security, Fair wage for what they do, pay rises, good
working conditions, promotion prospects

Repayments of loans to be paid on time – financial stability

Quality products, variety, value for money

Prompt payment, repeat orders, fair dealings when

negotiating prices with businesses they are supplying

To receive taxes on time

Owners / shareholders Lenders Employees

Managers Suppliers Government

Local community Customers

Copyright © UCLES 2019 Cambridge IGCSE Business Studies (0450) 15

Teaching Pack: AO2 Application

Worksheet D: Quiz

Select the correct answer for each question

1 What is a stakeholder?

 an individual or a group which has an interest in a business

 a person or a business who owns shares in a company
 someone who takes the financial risk of starting their own business
2 Which of the following is an example of an internal stakeholder?

 lenders
 suppliers
 owners / shareholders
3 Which of the following is an example of an external stakeholder?

 local community
 managers
 owners / shareholders
4 Which stakeholder has the objective of a fair wage, good working conditions and job security?

 suppliers
 employees
 government
5 Which stakeholder has the objective of wanting variety, good quality products and value
for money?

 lenders
 managers
 customer
6 Which of the following two stakeholders would have conflicting objectives if a new business
brought with it road congestion and air and noise pollution?

 suppliers would conflict with owners / shareholders

 owners / shareholders would conflict with the local community
 government would conflict with employees

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 Teaching Pack: AO2 Application

Worksheet D: continued

7 Which stakeholder might make the following statement?

‘We want businesses to pay taxes and to pay them on time and hope the business will provide
employment to help keep our spending on unemployment benefits to a minimum’

 government
 managers
 lenders
8 Which stakeholder might make the following statement?
‘We hope to get salary increases and the opportunity for promotion, career development and
our departments to be successful. If the business performs well we might get a bonus. We want
our jobs to give us status’

 employees
 owners / shareholders
 managers
9 Select which two stakeholder objectives conflict if one wants lower prices and the other higher
profits?

 owner / shareholder will conflict with employees

 customers will conflict with owners / shareholders
 customers will conflict with suppliers
10 Select which two stakeholder objectives conflict if one wants paying on time and the other
wants extended credit terms to delay payment?

 suppliers will conflict with owner / shareholder

 owner / shareholder will conflict with managers
 local community will conflict with suppliers

Copyright © UCLES 2019 Cambridge IGCSE Business Studies (0450) 17

Teaching Pack: AO2 Application

Worksheet E: FABRIX
Scenario

FABRIX is a business that manufactures cotton bags. FABRIX manufactures them for retailers to sell and they customise them to the retailers’
requirements. Due to the increased pressure to reduce the use of plastic bags, worldwide demand for their cotton bags has increased significantly.
FABRIX wants planning permission to build a new factory in your local area. A range of stakeholders will be affected by FABRIX’s location decision.
The business decisions and activities of FABRIX may have both positive and negative effects on its stakeholders.

1. Complete the table below identifying at least one objective for each FABRIX stakeholder and then outline the effects that the location of their
new factory might have. Remember the effects can be positive and negative. The first one has been done for you.

Stakeholder
Objective(s) How the stakeholder could be affected by FABRIX’s location decision
group
 tfigh profits As A rewArd for risking + PotenTIAl for increAsed profit in the long term As FABRIX exPAnds
their investment – In the short term some of the profits they mAy hAVe received As A
FABRIX owners /
shareholders  IncrEAse in the vAlue of their shAres dividend mAy be re-invested into the exPAnsion of FABRIX, but long
 Good return on their investment term profits should incrEAse As demAnd for cotton bAgs continues to rise.

……………………………………………… ………………………………………………………………………………………………
……………………………………………… ………………………………………………………………………………………………
FABRIX
managers ……………………………………………… ………………………………………………………………………………………………
……………………………………………… ……………………………………………………………………………………………….

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 Teaching Pack: AO2 Application
……………………………………………… ………………………………………………………………………………………………
……………………………………………… ………………………………………………………………………………………………
FABRIX workers
(employees) ……………………………………………… ………………………………………………………………………………………………
……………………………………………… ……………………………………………………………………………………………….

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Teaching Pack: AO2 Application Teaching Pack: AO2 Application

Worksheet E: continued

Stakeholder Objective(s) How the stakeholder could be affected by FABRIX’s location decision
group

……………………………………………… ………………………………………………………………………………………………
……………………………………………… ………………………………………………………………………………………………
Lenders (FABRIX
bank manager) ……………………………………………… ………………………………………………………………………………………………
……………………………………………… ……………………………………………………………………………………………….

……………………………………………… ………………………………………………………………………………………………
……………………………………………… ………………………………………………………………………………………………
FABRIX’S
suppliers ……………………………………………… ………………………………………………………………………………………………
……………………………………………… ……………………………………………………………………………………………….

……………………………………………… ………………………………………………………………………………………………
FABRIX
customers ……………………………………………… ………………………………………………………………………………………………
(think carefully
……………………………………………… ………………………………………………………………………………………………
here who their
customers ……………………………………………… ……………………………………………………………………………………………….
are)
……………………………………………… ………………………………………………………………………………………………
……………………………………………… ………………………………………………………………………………………………
The government
……………………………………………… ………………………………………………………………………………………………
……………………………………………… ……………………………………………………………………………………………….

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Teaching Pack: AO2 Application

Worksheet E: continued
Stakeholder Objective(s) How the stakeholder could be affected by FABRIX’s location decision
group

……………………………………………… ………………………………………………………………………………………………
……………………………………………… ………………………………………………………………………………………………
Local residents
(local community) ……………………………………………… ………………………………………………………………………………………………
……………………………………………… ……………………………………………………………………………………………….

2. Explain why the objectives of FABRIX shareholders / owners and FABRIX workers might be in conflict with each other.

……………………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………………

3. Which FABRIX stakeholders would be in conflict with each other if FABRIX made the following decisions? Give reasons why they would be in
conflict which each other.

a. Increase the selling prices of their bags to maximise profits

……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
b. Increase trade credit terms from 30 days to 90 days
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
c. New technology to increase production rates
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………

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 Worksheet F: Stakeholder role play cards

Scenario

FitToGo is a gymnasium which has recently opened. It is a multi-purpose centre which has some
of the latest gym equipment on the market. They also run a range of different fitness classes, offer
a personal trainer service and have a swimming pool. They have a small shop which stocks a range of
gym wear and health foods.

FitToGo stakeholders

FitToGo lenders FitToGo suppliers

FitToGo employees FitToGo customers

Copyright © UCLES 2019 Cambridge IGCSE Business Studies (0450) 21

Local residents
Teaching Pack: AO2 Application

Worksheet G: Stakeholder recommendations

Use this worksheet to record your recommendations to FitToGo based on the discussions of your
stakeholder group.

Recommendations to FitToGo
Stakeholder group

……………………………………………….................

How you can meet our objectives Why this is important

………………………………………………................. …………………………………………………............

…………………………………………………............. …………………………………………………............

…………………………………………………............. …………………………………………………............

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…………………………………………………............. …………………………………………………............

…………………………………………………............. …………………………………………………............

………………………………………………................ …………………………………………………............

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Worksheet H: Business decision making

Invest in new equipment to improve efficiency

Open up new PastiPalace shops in another region

Run a sales promotion every month

To stop producing certain pasties

Look at options to have a centralised production facility

To diversify into a new market

Increase PastiPalace employee wages by 5%

Copyright © UCLES 2019 Cambridge IGCSE Business Studies (0450) 23

Teaching Pack: AO2 Application

Worksheet I: Case study application Activity 1

Scenario

There is a new restaurant opening in your local area that will be selling cuisine from around the
world. It will be based on a self-service buffet style which has proved popular in the other areas
they already have established this style of restaurant.

The business is family run and owners Steve, Sarah, Jason and Lindsey, have been able to
expand due to the success of the other restaurants. This will be their eighth ‘Around the World
Cuisine’ restaurant. Each restaurant employs an average of 3 chefs and 10 servers, operating a
shift pattern of working.

They are open from midday to 11pm. So far the owners have located their restaurants in town
centres, but this new restaurant opening will be in a more built up residential area and they are
aware they need to keep the local residents happy. They have used some retained profit to help
with the financing of the new restaurant, and have taken out a small business loan from the bank
for the remaining amount needed.

They would like to continue to use the same supplier for most of the items they need, but some of
the stock for the new restaurant will be obtained from local suppliers. Providing customers with
variety and good value is important for the business. As they have done with the other restaurants,
they have carried out market research to help localise some of their dishes to meet customer
needs.

Please answer the questions below. Remember to apply your knowledge on stakeholders in the
context of the business and its circumstance.

1) Underline or highlight in the text above the ‘Around the Wold Cuisine’ stakeholders

2) Using the case study, outline two internal stakeholders

…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………

3) Using the case study, outline two external stakeholders ‘Around the World Cuisine’ has
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………
…………………………………………………………………………………………………………

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 Teaching Pack: AO2 Application

Worksheet I: continued

4) Make three suggestions to help the owners of ‘Around the World Cuisine’ to meet the
objectives of their employees.

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5) Make three suggestions to help the owners of ‘Around the World Cuisine’ to meet the
objectives of the local community.
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6) Select two stakeholders from the case study and explain how their objectives might be in
conflict with each other.
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Copyright © UCLES 2019 Cambridge IGCSE Business Studies (0450) 25

Teaching Pack: AO2 Application

Worksheet I: continued
7) How likely is the conflict between the two different stakeholder groups going to occur?
Please justify your answer.
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8) Why is it important for ‘Around the World Cuisine’ to minimise conflict with its
stakeholders?
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26 Cambridge IGCSE Business Studies (0450) Copyright © UCLES 2019

 Teaching Pack: AO2 Application

Worksheet J: Case study application Activity 2

Scenario

The BodyWorks is a sports therapy business started by two brothers 10 years ago – John and
Bradley Craven. They invested all their savings into their business venture. They specialise in
treating people with a range of sports related injuries. Their business has been a great success
allowing them to expand, offering their services in three other towns in the region.

They understand the importance of keeping their stakeholders happy. This can be difficult when
some stakeholder objectives can be in conflict with each other.

1) Consider an objective of each of the following stakeholder groups of The BodyWorks

One objective of owners (John and Bradley Craven)

…………………………………………………………………………………………………………
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One objective of their clients (customers)

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One objective of their employees

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…………………………………………………………………………………………………………
………………………………………………………………………………………………………….

Copyright © UCLES 2019 Cambridge IGCSE Business Studies (0450) 27

Teaching Pack: AO2 Application

Worksheet J: continued

2) Do you think there is conflict between the objectives of each of these stakeholder groups?
Justify your answer. This means putting an argument forward to support your answers.

…………………………………………………………………………………………………………
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…………………………………………………………………………………………………………

28 Cambridge IGCSE Business Studies (0450) Copyright © UCLES 2019

 Teaching Pack: AO2 Application

Worksheet A: Answers

Read the four stakeholder statements. For each of them, you should decide if they have been
made in context or not. You need to explain your answer.

Statement 1
The local residents of Winwell are not happy about the new ‘J&T’ depot being built in their town
due to the pollution and traffic congestion their lorries will bring.
“We are told the depot will be operating 24 hours a day, which means noise from the
lorries coming in and out of the depot could be disruptive for residents.”

I know this statement has / has not been made in a business context because
………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Statement 2
Businesses building new premises in a town might upset the local community.

I know this statement has / has not been made in a business context because

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Cambridge IGCSE Business Studies (0450) 29

Teaching Pack: AO2 Application

Worksheet A: Answers

Statement 3
The workers will be more motivated if they are paid a decent wage and have good working
conditions.

I know this statement has / has not been made in a business context because
………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

Statement 4
The workers at ‘The Bean Box’ coffee factory will be more motivated if they are paid a good and
fair wage for the work they do. From the information given, we can see that one of the things the
workers complained about was not having a pleasant environment to socialise in during their
breaks. If the working conditions are good and the staff room could be made to be a pleasant
environment in which to relax, the workers are likely to feel more valued and work more quickly.
This would increase productivity.

I know this statement has / has not been made in a business context because

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………..

30 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Worksheet C: Answers

Stakeholder Stakeholder Objective(s)

Job security, promotion and career development, increase in

MANAGers
salary / bonuses, job satisfaction, successful departments

Employment opportunities, to minimise any negative impacts

LoCAl community
such as pollution – clean environment

High profits as a reward for risking their investment – good

Owners / shAREholders return on their investment, increase in the value of their
shares

Job security, Fair wage for what they do, pay rises, good
Employees
working conditions, promotion prospects

Lenders Repayments of loans to be paid on time – financial stability

Customers Quality products, variety, value for money

Prompt payment, repeat orders, fair dealings when

Suppliers
negotiating prices with businesses they are supplying

Government To receive taxes on time

Cambridge IGCSE Business Studies (0450) 31

Teaching Pack: AO2 Application

Worksheet D: Answers
Select the correct answer for each question

1 What is a stakeholder?

 an individual or a group which has an interest in a business

2 Which of the following is an example of an internal stakeholder?

 owners / shareholders
3 Which of the following is an example of an external stakeholder?

 local community
4 Which stakeholder has the objective of a fair wage, good working conditions and
job security?

 employees
5 Which stakeholder has the objective of wanting variety, good quality products and
value for money?

 customer
6 Which of the following two stakeholders would have conflicting objectives if a
new business brought with it road congestion and air and noise pollution?

 owners would conflict with shareholders and the local community

7 Which stakeholder might make the following statement?
‘We want businesses to pay taxes and to pay them on time and hope the business will
provide employment to help keep our spending on unemployment benefits to a
minimum’

 government
8 Which stakeholder might make the following statement?
‘We hope to get salary increases and the opportunity for promotion, career development
and our departments to be successful. If the business performs well we might get a
bonus.
We want our jobs to give us status’

 managers

32 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Worksheet D: Answers

9 Select which two stakeholder objectives conflict if one wants lower prices and the other higher
profits?

 customers will conflict with owners / shareholders

10 Select which two stakeholder objectives conflict if one wants paying on time and the other
wants extended credit terms to delay payment?

 suppliers will conflict with owner / shareholder

Cambridge IGCSE Business Studies (0450) 33

 Worksheet E: Answers

FABRIX is a business that manufactures cotton bags. FABRIX manufactures them for retailers to sell and they customise them to the retailers’
requirements. Due to the increased pressure to reduce the use of plastic bags, worldwide demand for their cotton bags has increased significantly.
FABRIX wants planning permission to build a new factory in your local area. A range of stakeholders will be affected by FABRIX’s location decision.
The business decisions and activities of FABRIX may have both positive and negative effects on its stakeholders.

Stakeholder
Objective(s) How the stakeholder could be affected by FABRIX’s location decision
group
 tfigh profits As A rewArd for risking + PotentiAl for incrEAsed profit in the long term As FABRIX expANds
their investment – In the short term some of the profits they mAy hAVe received As A
FABRIX owners /
shareholders  IncrEAse in the vAlue of their shAres dividend mAy be re-invested into the exPAnsion of FABRIX, but long
 Good return on their investment term profits should incrEAse As demAnd for cotton bAgs continues to rise.
Teaching Pack: AO2 Application
 Job security + PromotionAl opportunities, incrEAsed stAtus, possible SALAry incrEAse
 Promotion And cAreer development – But if lAtest technology to mAnuFACture the bAgs is brought in And
FABRIX  IncrEAse in SALAry/bonuses rEPLACes some workers, likely to be less mAnAgers needed so little
managers
 Job sAtisFACtion – promotionAl opportunity And threAt of loss of jobs for FABRIX workers

successful depARTment on the production line.

 Job security + Job security if, possible promotionAl opportunities

 FAIr wAGe for whAT they do – But if LAtest technology is brought in to mAnufACture the bAgs, risk of
FABRIX workers  PAY rises job losses
(employees)
 Good working conditions
 Promotion prospects
 Teaching Pack: AO2 Application

Worksheet E: Answers

Stakeholder
Objective(s) How the stakeholder could be affected by FABRIX’s location decision
group
 Prompt/reliAble pAYment + More orders for rAW mATeriALs to mAKe the bAGs due to expANsion, meAning
 RepEAT orders incrEASed production
Lenders (FABRIX  Good relAtionship with FABRIX – Might incrEASe the bARgAIning power of FABRIX AS they will be increAsing
bank manager)
 FAIr dEALings when negotiAting the quANtity of rAW mATeriALs they purchASe

prices with FABRIX

 Good quAlity bAgs to sell on to + ChEAPer prices AS economies of sCALe could bring down the unit cost of EACH

FABRIX’S their customers BAg

suppliers  VAlue for money – PotentiAL opportunity for FABRIX to open A FACTory seconds shops Allowing

them to sell direct to the consumer

 To receive tAxes from FABRIX on time + More tAXATion if profits incrEASe

FABRIX
customers + More employment so less finANciAL support needed from the government in the
(think carefully form of unemployment benefit
here who their – If new technology is used ANd requires less workers in FABRIX FACTories,
customers
employment in the loCAL ArEA mAY be less thAN expected
are)
 Prompt/reliAble pAYment + More orders for rAW mATeriALs to mAKe the bAGs due to expANsion, meAning
 RepEAT orders incrEASed production

The government  Good relAtionship with FABRIX – Might incrEASe the bARgAIning power of FABRIX AS they will be increAsing

 FAIr dEALings when negotiAting the quANtity of rAW mATeriALs they purchASe

prices with FABRIX

Cambridge IGCSE Business Studies (0450) 35

Teaching Pack: AO2 Application

Worksheet E: Answers

Stakeholder Objective(s) How the stakeholder could be affected by FABRIX’s location decision
group
 LoCAL employment opportunities + Jobs for the locAl community (residents where FABRIX is locAting)

Local residents  To minimise ANy negATive impACTs + More money brought into loCAL AREA AS other businesses benefit from the
(local community) such As pollution – clEAN environment workers spending money with them - Noise, trAffic, Air pollution –
environmentAL impACT

2. Explain why the objectives of FABRIX shareholders / owners and FABRIX workers might be in conflict with each other.
ShAReholders/owners wANt profits to be mAXimised to incrEASe the dividend they get ANd workers wANt higher wAGes ANd good working conditions
which costs money

3. Which FABRIX stakeholders would be in conflict with each other if FABRIX made the following decisions? Give reasons why they would be in
conflict which each other
a. Increase the selling prices of their bags to maximise profits
Owners / shAReholders ANd mANAgers would be in conflict with customers.
FABRIX owners / shAReholders incrEASe the AMount of profit ANd therefore see their dividend incrEASe. FABRIX mANAGers ARe responsible for
the performAnce of the business – MAximised profits could meAn promotion, bonuses incrEAse in sALARy. FABRIX Customers (retAIlers) will not
wANt to pAY more for their stock AS this mEANs they will hAVe to either ABsorb the cost themselves reducing profit mARgins or pASs the cost on
to their own customers.
b. Increase trade credit terms from 30 days to 90 days
MANAGers ANd bANk would be in conflict with suppliers. IncrEASing the trAde credit terms would help with CASh flow which will plEASe FABRIX
mANAGers ANd FABRIX lenders, but FABRIX suppliers wANt prompt pAYments rATher thAn delAYed to reduce cAsh flow problems for themselves
c. New technology to increase production rates
Owners / sHAreholders would be in conflict with FABRIX workers. Owners / sHAreholders might believe this will mAximise profits And increAse
dividends, but the workers would be concerned About job losses on the production line.

36 Cambridge IGCSE Business Studies (0450)

Worksheet F: Answers

These are suggested ideas that learners might put on the back of their cards regarding how the
stakeholder objectives could be met and why this is important.

FitToGo suppliers
FitToGo lenders Provide us with repeAT orders And pAY
promptly.
MAKe loAN repAYments on time ANd hAVe
finAncIAl sTAbility And we mAy be Able to
Our success depends on your success As we
Assist you with further funding for exPAnsion
need repeAT orders from you And prompt
of FABRIX
pAYment for our cASh flow stABility ANd

surviVAl

FitToGo employees
TreAT us fAIrly, pAY us A good wAGe for the FitToGo customers
contribution we mAke to the business And
Provide us with good vAlue, A VAriety of
provide job security, And we will work hArd
services in your gym And excellent customer
for you increAsing the production rAte of
service, And we will stAy loyAl to you And
FABRIX bAgs
will come bACK

Local residents
Provide employment opportunities for us
And keep the locAl environment in which we
live in clEAn And minimise noise pollution.
MAny of the loCAl community will wAnt to
use your gym And will be your customers

Cambridge IGCSE Business Studies (0450) 37

Teaching Pack: AO2 Application

Worksheet H: Answers

Invest in new equipment to improve efficiency

Owners/shAreholders – IncrEASed production, mAXimises profits = bigger dividends
Employees (workers) – PotentiAl loss of jobs in the PAStiPALACE shops
Lenders – FinAncIAl sTAbility- pAY loAN repAYments on time
Open up new PastiPalace shops in another region
LocAl Community – employment for locAl people
Owners/shAreholders – short term reduction in profits due to investment, but long term increAse As
customer bASe widens
Lenders – Lending for expAnsion, long term increAsed profits = fiNAnciAl sustAiNAbility
Employees (workers) - promotionAL prospects – shop mANAGers
Customers – more choice ANd vARiety in their loCAL AREAS
Run a sales promotion every month
Owners/shAreholders – potenTIAl reduction in profit in short term due to reduced prices, but long
term AIm to ACHieve customer loyALty ANd incrEASe in profits
MANAGers ANd Employees – incrEASed job security due to incrEASe in sALes of pASties
Customers – better vALue for the sAMe quALity pASty they expect
Suppliers – bigger orders of ingredients ANd other stock, due to incrEASed sALes = bigger profits

To stop producing certain pasties

Customers – less choice of pASty
Owners/shAreholders – risk of loss of revenue if customers stArt buying from Another bAkery/shop
Suppliers – Reduced order of certAIn ingredients – potentiAl loss of revenue
Look at options to have a centralised production facility
LoCAL community – less jobs for locAl people, incrEASe in noise And AIr pollution AT the site of bigger
centrALised production fACility
Owners/shAreholders – improved efficiency = mAXimise profits, incrEASed dividends
Employees And MANAGers – loss of jobs locAlly, but promotion prospects in new fACility, but mAy
require re-locAtion
Customers – PASties mAY reduce in quALity AS not mADe freshly on site

To diversify into a new market

Owners/shAreholders – short potentiAL reduced dividends if reTAined profit ploughed BACk into the
business for diversificAtion. Long term incrEASed profit from ADditionAL source of revenue
Lenders – ADditionAL source of revenue, finANciAL stABility if costs ARe kept in check
Customers – More choice ANd vAriety of pASty for brAnd loyAl; customers
Suppliers – incrEASe in orders, helps with their own cAsh flow And profits
LocAl Community – jobs for locAl people
Increase PastiPalace employee wages by 5%
Employees – incrEASe in wAGes provides them with more disposABle income AS long AS inflATion is
running At A lower rAte

38 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Worksheet I: Answers
1) Underline or highlight in the text above the ‘Around the Wold Cuisine’ stakeholders
Owners Steve, SARAH, JASon And Lindsey
Employees (Chefs And Servers)
Residents in the locAl community
Suppliers of stock for the restAurAnts
Customers of the restAurAnt
BAnk which lent the owners money to for the eighth restAurAnt

2) Using the case study, outline two internal stakeholders

The owners Steve, SARAH, JASon And Lindsey
Employees (Chefs And Servers)

3) Using the case study, outline two external stakeholders ‘Around the World Cuisine’ has
Any two of the following, but not limited to:
 The bANk thAT hAVe lent the owners money to expAnd
 The suppliers who will supply the restAurAnt with ingredients And stock
 The locAl residents in the community
 The customers who will use the restAurAnt, some of which will be the locAl
community

4) Make three suggestions to help the owners of ‘Around the World Cuisine’ meet the
objectives of their employees.
Give them A FAir And decent wAge for the job they Are doing
PAY rises
Good working conditions
Promotion opportunities AS front of house supervisors, duty teAM leADers

5) Make three suggestions to help the owners of ‘Around the World Cuisine’ to meet the
objectives of the local community.
Keep noise pollution to A minimum, pARTiculARLy AFter 9pm
Keep the environment Around them cLEAn, disposing of wAste in the correct mAnner
Build positive relAtionship with them – support locAl chArities And events

Cambridge IGCSE Business Studies (0450) 39

Teaching Pack: AO2 Application

Worksheet I: Answers
6) Select two stakeholders from the case study and explain how their objectives might be in
conflict with each other.
Answers might include:
Owners Steve, SArAh, JAson And Lindsey And Employees (Chefs And Servers)
tfigh profits, profit mAximisAtion v higher wAges

Owners Steve, SArAh, JAson And Lindsey And locAl residents

StAying open After 9pm to meet customer needs v noise pollution, trAffic
congestion

Suppliers And Owners Steve, SArAh, JAson And Lindsey

Suppliers wAnt to secure repEAt orders And chArge A price giving them good
profit mArgins v owners wAnting A good dEAl with low prices

7) How likely is the conflict between the two different stakeholder groups going to occur?
Please justify your answer.

This Answer will depend on which two stAkeholders LEArners hAVe chosen but Answers
might include:

Owners Steve, SArAh, JAson And Lindsey And Employees (Chefs And Servers)
If the restAurAnts remAin successful then employees Are likely to get A PAy

rise As A rewArd for the contributions they hAVe mAde to the success of the
business. They Also get job security. If the business is not, then PAy rises,
promotion And job security will be threAtened.

Owners Steve, SARAH, JASon And Lindsey ANd locAL residents

The owners will wAnt to stAy open LAter on the weekends PArticulArly, but
thAt might bring noise pollution And more trAffic congestion for locAl
residents, depending on AVAilAble PArking. MAny of the locAl residents will
Also be customers so putting A notice up in the restAurAnt to Ask customers
to be respectful when leAVing the premises After 9pm could minimise this
potenTIAl conflict

40 Cambridge IGCSE Business Studies (0450)

 Teaching Pack: AO2 Application

Worksheet I: Answers

8) Why is it important for ‘Around the World Cuisine’ to minimise conflict with its
stakeholders?

Owners Steve, SArAh, JAson And Lindsey need to hAVe good rELAtions with All their
stAkeholders for the following rEAsons, And therefore keeping conflict to A minimum is
importAnt to the success of the business

Their employees (chefs And servers) Are providing the service the customers Are PAying

for. tfAVing A hAppy AN motivATed workforce helps provide good customer service

Suppliers supply the stock And ingredients the restAurAnt needs. They need good
qUAlity supplies thAt Arrive on time And At A good price. UnreliAble suppliers cAn
DAmAge the resTAurAnt, so forming good working relAtionships with them is imporTAnt

The BAnk Are likely to be the future lenders for further expAnsion

MAny of the locAl resident will use the new restAurAnt And the finAncIAl susTAinAbility
of it will rely on hAVing the restAurAnt full And lots of repeAt customers

Cambridge IGCSE Business Studies (0450) 41

Teaching Pack: AO2 Application

Worksheet J: Answers
Relevant points might include, but are not limited to:

1) Consider an objective of each of the following THREE stakeholder groups of The

BodyWorks

One objective of owners (John and Bradley Craven)

Invested SAVings to stArt the business, wAnt rewArds of profit AS A rewARD for the
finAncIAl risk. Will wAnt to provide A high quAlity service to their clients (customers)

One objective of their clients (customers)

Good qUAlity trEAtments thAt mAke A difference, vAlue for money And good customer
service

One objective of their employees

Good working conditions, pAy rises, high wAges in line with the contribution they mAke
to the success of the business. Job security And promotion prospects.

2) Do you think there is conflict between the objectives of each of these stakeholder groups?
Justify your answer. This means putting an argument forward to support your answers.
LEArners’ Answers should consider potentiAl conflicts between the stAkeholder groups
And whether the conflict between the different sTAkeholder groups is likely to occur.

Conflict points could include: employees will wAnt job security so they hAVe An income
in the form of their wAge working At The BodyWorks. This is likely to be the cAse if
the business continues to be successful, but if not At Any point, there is A risk of them
losing their jobs As the owners John And BrAdley try to reduce their costs.

42 Cambridge IGCSE Business Studies (0450)

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