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CH 5 Business Objectives and Stakeholder Objectives

Business objectives include survival, profit, returns to shareholders, growth, market share, and service to the community. Survival ensures the business continues operating, while profit and returns provide financial returns. Growth and market share help expand the business. Service to the community benefits society. Stakeholders like owners, workers, managers, customers, government, and community also have objectives that may conflict, such as owners seeking profit versus workers wanting job security. Understanding these objectives helps businesses meet stakeholder needs while achieving their own aims.

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412 views18 pages

CH 5 Business Objectives and Stakeholder Objectives

Business objectives include survival, profit, returns to shareholders, growth, market share, and service to the community. Survival ensures the business continues operating, while profit and returns provide financial returns. Growth and market share help expand the business. Service to the community benefits society. Stakeholders like owners, workers, managers, customers, government, and community also have objectives that may conflict, such as owners seeking profit versus workers wanting job security. Understanding these objectives helps businesses meet stakeholder needs while achieving their own aims.

Uploaded by

Fiona Tauro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Business objectives and

Stakeholder objectives
LO:
- To Understand the need for and importance of business objectives
- To Analyse the different business objectives

SC:
- I can define objective and give 2 benefits of it to the business
- I can explain 2 business objectives with examples
Objective
• aim or a target to work towards
Benefits of Business Objectives
• Set clear target to work
• Helps motivate employees.
• Helps in taking decisions
• Clear and measurable objectives help unite the whole business
towards the same goal.
• Compare business performance
Business Objectives
• business survival
• Profit
• returns to shareholders
• growth of the business
• market share
• service to the community
Survival
Lower prices in order to survive which can lead to decrease in profit

Conditions when business thinks about survival


• recently been set up
• economy is moving into recession
• Increase in competition
Reasons for making Profit
• pay a return to the owners of the business for the capital invested and
the risk taken
• provide finance for further investment in the busines
Returns to shareholders
• Increasing profit and the share of profit paid to shareholders as
dividends.
• Increasing share price
Growth
(measured by value of sales or output)
Benefits of growth
• make jobs more secure if the business is larger
• increase the salaries and status of managers as the business expands
• open up new possibilities and help to spread the risks of the business
by moving into new products and new markets
• obtain a higher market share from growth in sales
• obtain cost advantages, called economies of scale, from business
expansion.
Market share
Benefits of Good market share
• good publicity
• increased influence over suppliers
• increased influence over customers
Providing a service to the community
• Known as social enterprise- Profit is not their motive

• Three main objectives of social enterprise


• Social: to provide jobs and support for disadvantaged groups in
society, such as the disabled or homeless.
• Environmental: to protect the environment.
• Financial: to make a profit to invest back into the social enterprise
to expand the social work that it performs.
• https://padlet.com/fionatauro/e6wmacp7vphml4hd
Examples for business can change its
objectives
• A business set up recently has survived for three years and the owner
now aims to work towards higher profit.
• A business has achieved higher market share and now has the
objective of earning higher returns for shareholders.
• A profit-making business operates in a country facing a serious
economic recession so now has the short-term objective of surviva
Internal and external stakeholder
• owners
• workers
• managers
• consumers
• government
• the whole community
• banks.
Stakeholders Features Objectives
Owners - Invest capital - Return on investment
- Get a share of profit/ Losses - Increase in the value of investment
- Risk Takers

Workers - Employees of the business - Regular payment


- Follow instructions of managers - Job Security
- Full time/ Part time employees - Motivation
- May be redundant - Job Satisfaction
- Need to attend training - Employment contract

Managers - Employees of the business - High salary


- Take decisions of the business - Job security
- Control the workers - More status and power

Customers - Buyers of goods and services - value for money


- well-designed products of good quality
- reliability of service and maintenance
- Safe and reliable products

Government - Economic growth of the country - Pay taxes


- Pass laws to protect the consumers and workers - Improve the economy
- Follow the laws

Whole Community - Raise standard of living - Create jobs


- Provide safe environment - Protect the environment
- Produce safe products

Bank - Provide Finance - Pay interest


- Repay principle amount
Market Research
Research conducted by the business of what are the needs and wants
of the customer before producing a product
Objectives of public sector businesses
• Financial: Meet profit targets set by government.
• Service: Provide a service to the public and meet quality targets set
by government.
• Social: Protect or create employment in certain areas – especially
poor regions with few other business employers.
Conflict of stakeholders’ objectives

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