When a flood damaged workshops in a town, a group of carpenters created a limited company to rebuild affordable furniture for affected households. They each...
Question 1 Report
When a flood damaged workshops in a town, a group of carpenters created a limited company to rebuild affordable furniture for affected households. They each invested money and appointed a manager. The business aims to make a profit in the long term, but its immediate objective is to supply safe beds and tables quickly. Suppliers, employees, customers and investors all have an interest in its decisions.
(a) Identify one stakeholder named in the passage. [1]
(b) Explain what is meant by limited liability for an investor in this business. [2]
(c) Explain one possible conflict between customers and investors during the rebuilding project. [3]
Answer Details
(a) One stakeholder named is customers. [1] Suppliers, employees and investors are also named stakeholders.
(b) Limited liability means an investor's financial loss is normally limited to the amount invested in the company. [1] If the company cannot pay its debts, the investor's personal possessions are usually protected. [1]
(c) Customers may want furniture at the lowest possible price, particularly because they need affordable replacements after the flood. [1] Investors may prefer higher prices to increase profit or the return on their investment. [1] The manager must therefore balance affordability for customers against financial return for investors. [1]
Key distinction: Stakeholders can all benefit from a successful business, but their objectives may conflict when the same money or pricing decision affects them differently.
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