Business Stakeholder Objectives
- Business objectives are the aims or targets that a business works towards.
Different business objectives
- The most common objectives for businesses in the private sector are to achieve:
- business survival
- Focuses on keeping cash flowing and covering basic costs to avoid going out of business.
- profit
- Total income of a business (revenue) less total costs.
- Private sector businesses aim to maximize or reach a target profit level to reqard owners and reinvest in the business.
- Profits are needed to pay a return to the business owners for the capital invested and the risk taken and to provide finance for further investment in the business.
- returns to shareholders
- A shareholder is any individual, group, or institution that owns at least one share of a company’s stock. They are the legal owners of a limited company.
- It is increased by increasing profit and increasing share price.
- growth of the business
- Expanding the business by opening new branches, increasing output, or hiring more staff.
- Growth allows a business to benefit from economies of scale (lower average costs) and reduce risk of being taken over by competitors.
- market share
- % of total market sales held by one brand or business.
- service to community
- A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.
- business survival
Importance of business objectives
- Direction. They give managers and employees a clear target which reduces confusion about what the business is trying to achieve.
- Motivation. Clear, achievable goals give employees something to work toward, increasing productivity.
- Measurement. They act as a benchmark. At the end of the year, a business can compare its actual performance against its initial objectives to see if it succeeded.
- Decision-making. They help prioritize resources. If the objective is growth, managers will approve budgets for expansion rather than saving cash.
Role of stakeholder groups
- A stakeholder is any person or group with a direct interest in the performance and activities of a business.
Internal and external stakeholder groups
| Stakeholder group | Classification | Primary objectives |
|---|---|---|
| Owners (sole traders, partnerships, shareholders) | Internal | High profits, strong returns on investment (dividends), and long-term business growth |
| Managers | Internal | Job security, high salaries, status, and opportunities of promotion |
| Employees | Internal | Fair wages, safe working conditions, job security, satisfaction, motivation |
| Customers | External | High-quality products, safe and reliable goods, value for money, reliability of service and maintenance |
| Suppliers | External | Regular orders, fair prices for their raw materials, paid on time |
| Lenders/banks | External | Repayment of loans on time and regular interest payments |
Conflict scenarios
- Profits against wages: Owners want to maximize profits and dividends. Employyes want higher wages. This increases the business’s costs and lowers overall profit.
- Growth against environment: Managers want to expand to achieve growth and boost status. The local community will object due to increased traffic, noise, air pollution, or destruction of natural spaces.
- Price against profit quality: Customers want the highest quality goods at the lowest possible prices. Owners want to keep production costs low and selling prices high to maintain healthy profit margins.