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    Chapter 5

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    Fathik Fouzan
    The document discusses business objectives and stakeholder objectives. It defines business objectives as the aims or targets a business works towards, such as survival, profit, growth, and market share. Stakeholders include owners, workers, customers, and the community, who each have their own objectives like profit, job security, quality products, and jobs/environmental protection. The objectives of different stakeholders can sometimes conflict, like when increasing profits reduces jobs. Managing these conflicts is challenging for businesses.

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    Chapter 5

    Uploaded by

    Fathik Fouzan
    6 views17 pages
    The document discusses business objectives and stakeholder objectives. It defines business objectives as the aims or targets a business works towards, such as survival, profit, growth, and market share. Stakeholders include owners, workers, customers, and the community, who each have their own objectives like profit, job security, quality products, and jobs/environmental protection. The objectives of different stakeholders can sometimes conflict, like when increasing profits reduces jobs. Managing these conflicts is challenging for businesses.

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    The document discusses business objectives and stakeholder objectives. It defines business objectives as the aims or targets a business works towards, such as survival, profit, growth, and market share. Stakeholders include owners, workers, customers, and the community, who each have their own objectives like profit, job security, quality products, and jobs/environmental protection. The objectives of different stakeholders can sometimes conflict, like when increasing profits reduces jobs. Managing these conflicts is challenging for businesses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    6 views17 pages

    Chapter 5

    Uploaded by

    Fathik Fouzan
    The document discusses business objectives and stakeholder objectives. It defines business objectives as the aims or targets a business works towards, such as survival, profit, growth, and market share. Stakeholders include owners, workers, customers, and the community, who each have their own objectives like profit, job security, quality products, and jobs/environmental protection. The objectives of different stakeholders can sometimes conflict, like when increasing profits reduces jobs. Managing these conflicts is challenging for businesses.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    of 17

    Chapter 5

    BUSINESS OBJECTIVES
    AND STAKEHOLDER
    OBJECTIVES

    CHAPTER 5 - BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Need for and importance of business objectives

    An objective is an aim or a target to work towards.

    All businesses should have objectives. They help to make a business successful –
    although just setting an objective does not ‘guarantee success’.

    Business objectives are the aims or targets that a business works towards. 

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Benefits of setting objectives

     They give workers and managers a clear target to work towards and
    this helps motivate people.
     Taking decisions will be focused on ‘Will it help achieve our
    objectives?’
     Clear and measurable objectives help unit the whole business.
     Business managers can compare how the business has performed to
    their objectives.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Different business objectives
    The most common objectives for businesses in the private sector are to
    achieve:
    • Business survival
    • Profit
    • Returns to shareholders
    • Growth of the business
    • Market share
    • Service to the community

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    SURVIVAL
    A recently set up business, or when the economy is moving into a
    recession, or when a business feels less secure due to new
    competitors a business would aim to survive.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    PROFIT
    It is the main aim of businesses owned by private individuals.

    Profit is total income of a business (revenue) less total costs.

    Profits are needed to:


    • Pay a return to the owners for the capital invested, risk taken
    • Provide finance for further investment in the business.

    Without any profit at all, the owners are likely to close the business.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    RETURNS TO SHAREHOLDERS
    Shareholders own limited companies. The managers of companies will
    often set the objective of ‘increasing returns to shareholders’ to discourage
    them from selling their shares and helps managers keep their jobs.

    Returns to shareholders are increased in two ways:


    • Increasing profit
    • Increasing share price

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    GROWTH
    The owners and managers of a business may aim for growth in the size
    of the business in order to:
     To make jobs more secure
     To increase salaries and status of managers and the business
     To enter new markets and develop new products
     To obtain higher market share and achieve economies of scale.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    MARKET SHARE is the percentage of total market sales held by one brand or
    business.

    Market share % = Company sales x 100


    Total market sales
     
    Increased market share gives a business:
    • Good publicity
    • Increased influence over suppliers
    • Increased influence over customers

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    PROVIDING A SERVICE TO THE COMMUNITY – the objectives of social
    enterprises

    A social enterprise has social objectives as well as aim to make a profit to


    reinvest back into the business.

    Social enterprise often set three objectives for their business:


    • Social – to provide jobs and support for disadvantaged groups in society, such
    as disabled and homeless.
    • Environmental – to protect the environment
    • Financial – to make profit to invest back into the social enterprise to expand
    the social work that it performs.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Why business objectives could change:
    It is most unusual for a business to have the same objective forever! Here
    are some examples of situations in which a business might change its
    objective.
    1. A business set up recently has survived for a few years and now aims
    to work towards higher profit.
    2. A business has achieved higher market share and now has the
    objective of earning higher returns for shareholders.
    3. A profit-making business operates in a country facing a serious
    economic recession so now has the short-term objective of survival.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    The main internal and external stakeholder groups and their objectives
    The following groups of people are involved in business activity in one way or
    another, or are affected by it:
     
    INTERNAL EXTERNAL
    • Owners • Consumers
    • Workers • Government
    • Managers • The whole community
    • Banks

    A stakeholder is any person or group with a direct interest in the performance and
    activities of a business.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Stakeholder Main features Most likely objectives
    group

    Owners • Invest capital • Gain a return(share of profits) on


    • Take a share of profits their investment
    • Take risks • Growth of the business

    Workers • They are employed • Regular payment


    • Follow instructions • Job Security
    • Job Satisfaction & motivation
    Managers • Take important decisions • High salaries
    • They are also employees • Job security
    • Growth of the business

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Stakeholder Main features Most likely objectives
    group
    Customers • Buy goods or services • Safe and reliable products
    • Value for money
    • Well –designed products of good
    quality
    Government • Responsible for the economy • Wants businesses to succeed
    of the country • Expect firms to stay within the law
    • Passes laws
    The whole • Is affected by businesses • Jobs for working population
    community activity • Production that does not damage the
    • Create jobs and raise living environment
    standards • Safe products that are socially
    responsible

    Banks • Provide finance • Repay capital lent with interest

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


    Objectives of a 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.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


      
    Conflict of stakeholder objectives
    Example:
    - It could be that a cheaper method of production increases profits
    but causes more pollution.
    - A decision to expand the plant could lead to a dirtier, noisier
    local environment.
    - A decision to introduce new machines could reduce the jobs at a
    refinery but lead to higher profits.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES


      
    Conflict of stakeholder objectives
    Most businesses are trying to satisfy the objectives of more than one
    group, as the diagram below shows.
    Example: A decision to introduce new machines could reduce the jobs at
    a refinery but lead to higher profits.

    CHAPTER 5 BUSINESS OBJECTIVES AND STAKEHOLDER OBJECTIVES

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