Association of Chartered Certified Accountants (ACCA) Certification Practice Test

In business terminology, who are primary stakeholders?

1. Community members

2. Those with a contractual relationship

3. Government agencies

4. Pressure groups

The correct answer is: Those with a contractual relationship

Primary stakeholders are those individuals or groups that have a direct contractual relationship with a business, playing a critical role in its operations and success. This typically includes shareholders, employees, creditors, and customers. These stakeholders have formal agreements or legal ties to the company, meaning their fortunes are directly connected to the company’s performance. For instance, shareholders invest capital into the business and expect a return, employees rely on the organization for their livelihood, and suppliers provide goods or services under specific contractual terms. As such, their interests must be prioritized in decision-making processes because the business's ability to function effectively hinges on the fulfillment of these contractual obligations. In contrast, community members, government agencies, and pressure groups, while important, represent secondary stakeholders. These groups may influence a company's operations and public perception but do not possess the same level of direct financial or contractual relationship with the business. Their influence is often more indirect and can vary in significance depending on the context and specific business activity.