Chapter 5 business objectives and stakeholders objectives
03332617860 Page 1
Business objectives and stakeholder
Business Objectives are the aims or targets that a business works towards.
Importance of setting objectives
Provide clear target.
Business performance can be analyzed.
Make decision making easy.
Objectives of Private Sector
If a business does not survive, its owners lose everything. Therefore, businesses need to focus on this
objective the most when they are: starting up, competing with other businesses, or in an economic
Profit is what keeps a company going and is the main aim of most businesses. Normally a business
will try to obtain a satisfactory level of profits so they do not have to work long hours or pay too much
Profits are needed to
Pay return to the owners
Provide finance for further investment
3. Returns to Shareholders
This is to discourage shareholders from selling their shares and it helps managers to keep their jobs.
Return to shareholders are increased in two ways
Increasing profit ( to give dividend)
Increasing share price ( by growth in business)
Growth can only be achieved when customers are satisfied with a business.
When businesses grow
They create more jobs and make them more secure.
The status and salary of managers are increased.
a business is able to spread risks by moving to other markets,
It gains a larger market share.
It gains cost advantages, called economies of scale.
5. Market share
Market share is the proportion of total market sales achieved by one business.
03332617860 Page 2
Increased market share give a business
Increased influence over suppliers
Increased influence over consumers
6. Providing a service to society
A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the
business. Social entrepreneur has often three objectives
To provide jobs and support for disabled and homeless
To Protect environment
To make a profit ( to invest back into the social enterprise to expand the social work)
Why Business objectives could change
When survival has achieved business may works towards higher profits
When high market share is achieved business may work for higher return to shareholders
Profit making business may set survival as short-term objective if there is recession in economy.
Objectives of public sector businesses
To provide service to the public and meet quality targets set by government.(service)
To protect or create employment in certain areas.(Social)
To meet profit targets set by government.(financial)
A stakeholder is any person or group with a direct interest in the performance and activities of a
Stakeholders can be internal or external.
03332617860 Page 3
Main Features Most likely objectives
Owners Risk takers
Lose of money in loss
Get share of profits
Profit, return on capital.
Growth, increase in value of business.
May get redundant
May be part or full time
Managers Take important decisions
Employees and control
Responsible for success or
failure of business
Growth of business so they get more
power, status, and salary.
Customers Important for business
Dissatisfaction leads to failure
Value for money.
Reliability of service and maintenance.
Government Responsible for economy
National output/GDP increase
Community Affected by business activity
May get jobs and beneficial
Business does not pollute the
03332617860 Page 4
Safe products that is socially responsible.
Banks Provide finance Repayment of principal amount
Repayment of interest
Conflict of Stakeholders Objectives