Business objectives and stakeholder objectives

Business objectives: The aims or targets that a business works towards.

Benefits of setting objectives:
- Give workers and managers a clear target to work towards, helping to motivate people
- Making decisions will focus on whether it will help achieve the objectives.
- Help unite the whole business towards the same goal.
- Business managers can compare how the business has performed to the objectives and
if they were successful or not.
Business objectives of private sector:
- Survival
- Profit
- Return to shareholders
- Growth
- Market share
- Service to the community.
Survival: When a business is set up, when the economy is moving into recession, when new
competitors enter the market will make the business feel less secure. They could decide to
lower prices to survive.
Profit: One of the most important objectives.
Profits are needed to:
- Pay a return to the owners of the business
- Provide finance for more investment in the business
- Without profit businesses will fail.
Return to shareholders: Helps discourage shareholders from selling their shares and helps
managers keep their jobs.
Can be increased in two ways:
- Increasing profit
- Increasing share price. Can achieve it by making profits and putting in plans.
Growth: Usually measured by value of sales or output in order to:
- Make jobs more secure if the business is larger.
- Increase the salaries and status of managers.
- Open up new possibilities and help spread the risks by moving into new products and
new markets.
- Obtain a higher market share
- Obtain cost advantages, called economies of scale
- Achieved only if customers are satisfied.
Market share: The percentage of total market sales by one brand or business within their
industry.
Advantages of good market share:
- Good publicity as it can claim to becoming the most popular.
- Increased influence over suppliers
- Increased influence over customer (e.g. for setting prices)
-
Social enterprise: A business with mainly social objectives that reinvests most of its profits into
benefiting society rather than maximizing returns to owners
Stakeholder: Any person or group with a direct interest in the performance and activities of a
business.
Owners (internal)
Workers (internal)
Managers (internal)
Consumers (external)
Government (external)
The whole community (External)
Banks (external)

Owners feature and likely objectives:

Features:
- Put capital in to set up and expand the business
- Take a share of the profits
- Lose money they invested if business fails
Objectives:
- Take a share of the profits, to get a return on money they put into the business.
- Growth of the business so that the value of their investment increases

Workers features and likely objectives:

Features:
- Employed by the business
- Have to follow instructions of managers and may need training
- May be employed full time or part time
- Not enough work for all workers they may lose their job
Objectives:
- Regular payment for their work
- Contract of employment
- Job security
- Jobs that give satisfaction and provides motivation

Managers features and objectives:

Features:
- Also employees of the business and control the work of other workers
- They make important decisions
- Their successful decisions could lead to the business success and expansion.
- If they make poor decisions the business could fail
Objectives:
- High salaries because of the important work they do.
- Job security
- Growth of the business so they control a bigger and better known company. Giving them
more status and power.

Customers features and objectives:

Features:
- Buy the goods and services provided by a business.
- Without enough customers a business will fail.
- The most successful business find out what customers want before making goods and
providing services (market research)
Objectives:
- Safe and reliable products
- Value for money
- Well-designed products of good quality
- Reliability of service
Government features and objectives:
Features:
- Responsible for the economy of the country
- Passes laws to protect workers and customers
Objectives:
- Wants businesses to succeed so they will employ workers, pay taxes and increase the
country's output
- Expects all businesses to stay within the law

The whole community features and objectives:

Features:
- Greatly affected by business activity. E.g. dangers products might harm the population,
factories producing pollution
- Businesses create jobs and allow workers to raise living standards. Many products are
beneficial to the community.
Objectives:
- Jobs for the working population
- Production that doesn't damage the environment
- Sale of products that are socially responsible.

Banks:
Features: Provide finance for the business operations
Objectives: Expect businesses to be able to pay interest and reply capital lent

Objectives of public sector businesses:

- Financial - meet profit targets set by the government
- Service - provide service to the public and meet quality targets set by government
- Social - protect or create employment in certain areas
Conflict of stakeholders' objectives: Stakeholders objectives can conflict with each other.
Most businesses are trying to satisfy the objectives of more than one group. These objectives
can be in conflict with each other.