1.5 Business objectives and stakeholder objectives Flashcards
What are business objectives?
Business objectives are aims or targets a business works towards to be successful. They provide a clear target to improve motivation, help in decision-making, and unite the business towards the same goal.
Why do businesses need objectives?
Businesses need objectives to have a clear target, improve motivation, guide decision-making, unify the team, and allow performance comparison.
What are some common objectives of private sector businesses?
Common private sector objectives include:
Survival
Profit generation
Returns to shareholders
Business growth
Market share
Why might business objectives change over time?
Business objectives can change due to changes in consumer tastes, technological advances, competition, or a crisis situation that requires a short-term objective like survival.
What are the objectives of social enterprises?
The objectives of social enterprises include:
Social: Provide jobs and support disadvantaged groups
Environmental: Protect the environment
Financial: Make a profit to reinvest in the business and expand its social work
What are the objectives of public sector businesses?
Public sector objectives include:
Financial: Meet profit targets for reinvestment or funding to the government
Service: Meet quality targets set by the government and provide services to the public
Social: Protect or create employment in certain areas
What are the two main types of stakeholder groups?
The two types of stakeholder groups are:
Internal Stakeholders: Owners, managers, and employees
External Stakeholders: Consumers, government, banks, suppliers, community, pressure groups, and competitors
What are the objectives of internal stakeholders (owners, managers, and employees)?
Internal stakeholders seek:
Payments or profits
Business growth
Increased value of investment
Higher status or power
What are the objectives of external stakeholders (customers, government, banks)?
Customers: Reliable products, value for money, good quality, and service
Government: Tax revenue, employment, and increased output
Banks: Profit from loans and interest repayment
How can stakeholder objectives conflict with each other?
Stakeholder objectives may conflict. For example, customers may want cheaper products, but employees may want higher salaries. Managers must balance these competing objectives.
How do the objectives of social enterprises differ from those of private sector businesses?
Social enterprises aim to make a profit to reinvest in social and environmental goals, whereas private sector businesses mainly focus on financial profit and business growth.
