1.5 Business Objectives and Stakeholder Objectives Flashcards
Unit 1: Understanding Business Activity
Objective
Aim or target to work towards
Why are objectives important?
Clear target to work towards
Focus for decision making
Motivates and guides employees
Measurement of success
Survival
Ensure the business doesn’t close down due to situations
Why?
- New business
- Recession
- Competitors
- Stay in business
Market share
Proportion of total market sales achieved by one business
Why?
- Increase customer loyalty
- Brand image
- Customer base
- Increased sales
Provide a service
Solve social and environmental business
Why?
- No to make a profit
- Help the local community
- Provide aid
Profit
Income of a business after deducting total costs
Why?
- Source of finance
- Returns to shareholders
- Growth
- Rewards for taking risks
Why do objectives change?
Previous objectives already met and need to set new ones
Change in economic conditions
Competition
Change in leadership
Stakeholders
A person or group that affect or is affected by the business
Shareholders/owners
Risk takers of the business that invest capital to expand and set up their business
Employees
Workers that are employed by the business and are directly involve in the activities
Managers
Take important decisions to run a business
Shareholders/owners objectives
Profit
Survival
Growth
Market shares
Employees objectives
Regular payments
Job satisfaction
Job security
Managers objectives
- Growth
- Higher salaries before profit
Customers
People buying products from the business
Customers objectives
Safe and reliable products
Value for money
Reliability of service
Good quality
Government objectives
Businesses pay their taxes
Success of businesses
Stay within the law
Increased employment
Provide a service
Government
Receive taxes from businesses and regulate their activities
Banks
Most businesses have taken bank loans to fund their business
Banks objectives
Pay off loans
Interest on the loan to make money
Community objectives
Jobs for population/employment
No damage to environment
Safe and responsible products
Provide a service
Public sector (government) objectives
Reinvest into the needs of society
Serve the public and meet quality standards
Protect employment in less well off areas
Stakeholder conflicts
When different stakeholders have different aims and objectives
Employees - higher pay and job security
Customers - lower prices and higher quality
Suppliers - charge higher price
Shareholders - higher dividends paid
Business can’t agree to all the objectives as it will require a lot higher costs
