← Internal operations of a large business

Capacity issues, and their impact on different stakeholders

A recurring task: capacity problems (unable to meet demand) affect different stakeholder groups in genuinely different ways.

How the SAME capacity problem hits each stakeholder differently

• SUPPLIERS: may receive rushed, larger, or less predictable orders as the business tries to catch up — straining the supplier relationship or requiring the supplier to hold more stock on the business's behalf.
• EMPLOYEES: face increased workload and pressure to meet demand with the same staffing, risking burnout, errors, and lower morale.
• CUSTOMERS: experience delays, stockouts, or lower quality as the business struggles to keep up — risking their trust and future loyalty.
• CREDITORS/LENDERS: may see cash flow strain if the business needs to finance rushed extra stock or overtime, raising concern about the business's ability to repay on time.

Worked example Explaining how capacity issues affect the customer relationship A furniture business cannot keep enough stock of its popular desk to meet unpredictable demand. Explain the problem for customers, and how it impacts their relationship with the business. THE PROBLEM: customers who want to buy the desk may find it out of stock, or face long wait times for it to be restocked or made to order. IMMEDIATE IMPACT: a customer with an urgent need (e.g. starting a new work-from-home job) may go to a competitor instead, losing that sale entirely. RELATIONSHIP IMPACT: repeated stockouts damage the customer's TRUST in the business's reliability — even a customer who waits this time may not return next time, weakening brand loyalty over the longer term. CONCLUSION: the immediate lost sale and the longer-term loyalty damage are two SEPARATE consequences worth naming — not just "the customer will be unhappy". ✓ A complete answer separates the IMMEDIATE effect (this transaction) from the RELATIONSHIP effect (future transactions/trust) — both are usually asked for across the two sub-parts of this question type. ✕

Naming a stakeholder's problem without tracing it to the relationship

Stating that a capacity issue "creates a problem" for a stakeholder is only half the task — the follow-up part specifically asks HOW it impacts that stakeholder's ONGOING RELATIONSHIP with the business (trust, loyalty, willingness to keep dealing with it), which is a distinct, forward-looking consequence beyond the immediate problem.

Stakeholder	Typical immediate problem	Typical relationship impact
Suppliers	Rushed, unpredictable orders	Strained trading terms, less willingness to prioritise the business
Employees	Increased workload with same staffing	Falling morale, higher turnover
Customers	Stockouts, delays	Loss of trust and repeat business
Creditors/lenders	Cash flow strain from rushed spending	Concern about repayment reliability

Practice for this standard covers the whole topic — flashcards and quiz.