Higher Business management - 4 - Objectives and Stakeholders

8/7/2019 Higher Business management - 4 - Objectives and Stakeholders

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Objectives and Stakeholders


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Objectives and Stakholders

Overview Objectives

General info

Survival, maximising profits, growth, etc Why objectives may not be achieved?

Stakeholders General info Owners, shareholders, customers, government, etc

Conflict between shareholders Questions


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Objectives

Objectives are goals that an organisation has. They are extremely important when a business

is making decisions. Objectives depend on the size of an

organisation, age, state of the economy andwhether it is a public or private organisation.

Types of objectives

General objectives identified and set by the top layerof management. Outline main goals and aims.(strategic objectives)

Specific objectives made in the light of generalobjectives and are focused in their nature they

identify how general objectives can be achieved.


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Objectives

Survival For some businesses,

this is the most

important goal. They may be

concerned aboutkeeping the

business safe frombigger businessestaking over.

Maximising profits To make as a big a

profit as you can.

This doesn't meanthat's all thebusiness wants to dothough.


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Objectives

Growth Becoming larger may

enable a business t

take advantages ofeconomies of scaleand become moreefficient through

having lower costs. Growth can reduce thechance of failure.

Sales maximisation Generating as much

sales revenue as

possible. Popular with sales

staff as they mayreceive bonuses or

salaries according tosales made.


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Objectives

ManagerialObjectives Where ownership and

control areseparated,managers within abusiness may

choose to pursuetheir own individualaims.

eg. to improve theirposition/salary.

Image and SocialResponsibility Improve its public image

and demonstratingcorporate responsibilitythrough measures suchas sponsorship of

worthy causes or acommitment toecologically soundpractices.


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Objectives

Provide a service This is an objective a

charity or local

authority wouldhave.

For example, a schoolhas the objective toprovide an educationto its pupils.

Satisficing Aim only to make a

certain level of profit

which is sufficient tokeep all itsstakeholders happy.


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Why Objectives May Not Be

Achieved They may not be achieved for a number of

reasons: Competition has made it too difficult or

unachievable. Environmental policies are in the way. Demand for your product from the public has

decreased.

Objectives were unrealistic in the first place. Demand of shareholders make it impossible toachieve objectives.


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Stakeholders

A stakeholder is a person, company or groupof people who have an interest in anorganisations success.

Internal Stakeholders External Stakeholders

Owners Customers

Shareholders Trade Unions

Managers Banks and other lenders

Employees SuppliersVolunteers The local community

Donors

Goverment

Pressure groups

Tax payers


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Stakeholders

Owners Their interest invested time, effort and finance

and have taken risks in setting it up. They want it

to succeed and produce profits. Their influence can make decisions about how it

is run (eg. Staff to hire/fire, etc) Shareholders

Their interest want the firm to be profitable toprovide them with good dividends. Their influence can vote for particular directors

and approving dividend payments at the AGM.


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Stakeholders

Managers Their interest receive salaries (and bonuses) so

want it to be profitable. They also want

responsibility. Their influence make important decisions

regarding staff, products, etc. Employees

Their interest want good salaries, jobsatisfaction, job security & good workingconditions.

Their influence standard of their work andindustrial relations (they can go on strike, etc).


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Stakeholders

Customers Their interest want best quality products at low

prices. Their influence they can choose whether or not

to buy the products/services. Suppliers Their interest want their customer to succeed so

they keep purchasing from them.

Their influence changing prices and discountsoffered.

Inland Revenue Their interest interested in the profit as tax is

payable on profits. Their influence the determine the level of tax.


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Stakeholders

Government Their interest wants businesses to succeed as

they provide jobs, generate wealth and provide

government with finance through taxes. Their influence legislation (environmental laws,

etc), economic policies also affect businesses(interest rates, etc).

Local Community Their interest organisations create employmentfor them and generate wealth in the area.

Their influence can petition companies or makecomplaints to their local authority.


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Conflict between stakeholders

All of the stakeholders don't have the sameinterests.

The owner and managers might want to

maximise profits by increasing prices,whereas the customer wants good productsat the lowers price possible.

Therefore, not everyone can be happy with adecision made by an organisation.


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Summary of Stakeholders


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Questions

Describe 1 interest each of the followingstakeholders has in an organisation's firm: Inland Revenue

Employees Creditors. (3)

Describe the ways in which shareholders influenceorganisations. (3)

Describe how 4 different stakeholders of the local

council could influence their future plans. (4) Explain internal factors which could be taken into

account prior to an organisation setting strategicobjectives. (4)

Higher Business management - 4 - Objectives and Stakeholders

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