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Stakeholders and Stakeholder Conflict in ACCA BT

Updated 11 October 2026 · Fact-checked

A stakeholder is any person or group that affects, or is affected by, an organisation's activities. They are internal, connected or external. Their interests often clash. Mendelow's matrix plots them by power and interest to decide how to manage each group: keep satisfied, manage closely, keep informed or monitor.

Understand Stakeholders and Stakeholder Conflict

A stakeholder is anyone who has an interest in what an organisation does, or who can be affected by it. Shareholders are stakeholders, but so are employees, customers, lenders, suppliers, governments and local communities.

ACCA groups stakeholders into three types:

Internal: those inside the organisation, such as employees, managers and directors.
Connected: those with a direct commercial relationship, such as shareholders, lenders, customers, suppliers and competitors.
External: those outside the business with no direct commercial link, such as government, regulators, pressure groups, the local community, the media and trade unions.

Stakeholders want different things, so conflict is common. Shareholders want profit and dividends. Employees want pay and job security. Customers want low prices and quality. Lenders want safe repayment. The community wants low pollution. Paying staff more cuts profit. Cutting costs may harm quality or the environment. Management must balance these demands, and cannot satisfy everyone fully.

Mendelow's power-interest matrix helps management decide where to focus. It plots stakeholders on two axes: power (ability to influence the organisation) and interest (how much they care about what it does). This gives four groups, each with a suggested approach.

The matrix is a snapshot. A stakeholder's power or interest can change over time, for example when a scandal makes the media and regulators much more interested.

Key formulas to remember

Internal stakeholders: Employees, managers, directors; Work within the organisation.
Connected stakeholders: Shareholders, lenders, customers, suppliers, competitors; Direct economic or contractual link with the organisation.
External stakeholders: Government, regulators, pressure groups, community, media; Affect or are affected by the organisation without a direct commercial link. Trade unions are often placed here, but they represent employees.
High power, high interest: Key players → manage closely; Involve them in decisions. Example: major shareholders.
High power, low interest: Keep satisfied; Do enough to stop their interest rising. Example: a regulator in normal times.
Low power, high interest: Keep informed; Communicate and consult. Example: employees, local community.
Low power, low interest: Minimal effort / monitor; Watch for change in their position.

How to solve Stakeholders and Stakeholder Conflict questions

Use this method for any stakeholder question, whether it asks you to identify, classify, explain conflict or apply the matrix.

1Read the scenario and list every party named: who affects the business and who is affected.
2Classify each as internal, connected or external, using the stated definitions.
3State each party's main interest in one short phrase, such as pay, return, safety or price.
4Spot the conflicts: find two parties whose interests pull in opposite directions.
5Judge power (can they change the outcome?) and interest (do they care?) as high or low.
6Place each party in the matching Mendelow quadrant and give the strategy: manage closely, keep satisfied, keep informed or monitor.
7For objective test questions, match your conclusion to the single option that fits the exact wording and eliminate the rest.

Quickest way: Two-question shortcut

When to use it: For one- and two-mark objective test questions where you must classify a stakeholder or choose a strategy.

Ask: is this party inside the organisation? If yes, it is internal.
If not, ask: does it have a direct commercial or contractual link? If yes, connected. If no, external.
For the matrix, ask: can they block or force my plan? That sets power.
Then ask: do they care about this issue? That sets interest.
Map the pair: high-high manage closely, high power only keep satisfied, high interest only keep informed, neither monitor.

Common mistakes in Stakeholders and Stakeholder Conflict

Classifying shareholders as internal stakeholders.
Shareholders own the company, so it feels like they are inside it.
Fix: In ACCA's classification shareholders are connected. Internal means employees and managers working in the organisation.
Mixing up the strategies for the two middle boxes of the matrix.
Both boxes have one high and one low score, so they look alike.
Fix: High power, low interest means keep satisfied. Low power, high interest means keep informed. Power comes first in the name: power high means satisfy.
Treating the matrix as fixed.
Students memorise static examples.
Fix: Say that positions can change with events, so stakeholders should be reviewed regularly.
Assuming all stakeholders can be satisfied at once.
Students overlook the trade-offs between interests.
Fix: Identify the specific conflict, such as dividends versus wages, and say management must prioritise, often by power.
Ignoring the scenario and giving textbook lists.
Students recall a memorised list instead of reading the facts.
Fix: Use only the parties in the question and tie each interest to the facts given.

Worked examples

Example 1

A company plans to close a factory to cut costs. Identify one internal, one connected and one external stakeholder affected, and state one conflict.

Show the solution

Internal: factory employees, who face job loss.
Connected: shareholders, who may gain from higher profit after cost savings.
External: the local community, which loses jobs and local spending.
Conflict: shareholders want lower costs and higher returns, while employees and the community want the factory to stay open.

Answer: Internal: employees. Connected: shareholders. External: local community. Conflict: shareholders' profit interest against employees' job security.

Example 2

A government regulator has strong legal powers over a bank but currently shows little interest in its routine activities. Using Mendelow's matrix, how should the bank treat the regulator, and which option is correct? A Manage closely, B Keep satisfied, C Keep informed, D Monitor with minimal effort.

Show the solution

Power: the regulator has strong legal powers, so power is high.
Interest: it shows little interest in routine activities, so interest is low.
High power with low interest falls in the keep satisfied box.
Option A is for high-high, C is for low power, high interest, and D is for low-low, so all three are wrong.

Answer: B: Keep satisfied. The bank should meet regulatory requirements so the regulator's interest does not rise.

Exam tips

Learn the three stakeholder types with two examples each. Most classification questions are direct recall.
In multiple response questions, read how many options to select and check each against the definition separately.
Link power and interest to the scenario facts. A stakeholder is high power only if the question shows it can affect the outcome.
For conflict questions, name both parties and the exact interests that clash.
Do not spend long on a one-mark question. Classify, answer and move on.

Practice questions from The purpose and types of business organisation

Stakeholders and Stakeholder Conflict in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Stakeholders and Stakeholder Conflict: frequently asked questions

What are examples of internal, connected and external stakeholders?

Internal: employees and managers. Connected: shareholders, lenders, customers and suppliers. External: government, regulators, pressure groups, the community and the media.

How do I remember the Mendelow matrix?

Think power first. High power means you must at least keep them satisfied, and if interest is also high you manage them closely. Low power with high interest means keep informed. Low on both means monitor.

How do you manage conflicting stakeholder interests?

Identify who has most power and interest, then prioritise their needs while communicating with the others. Compromise, consultation and clear explanation of decisions help reduce conflict.

Can a stakeholder move between boxes in the matrix?

Yes. A group with low interest can become highly interested after a scandal or major decision. Management should review positions regularly.