Objectives and Stakeholders

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
 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 and
whether it is a public or private organisation.
● Types of objectives
– General objectives – identified and set by the top layer
of management. Outline main goals and aims.
(strategic objectives)
– Specific objectives – made in the light of general
objectives and are focused in their nature – they
identify how general objectives can be achieved.
 Objectives
● Survival ● Maximising profits
– For some businesses, – To make as a big a
this is the most profit as you can.
important goal. – This doesn't mean
– They may be that's all the
concerned about business wants to do
keeping the though.
business safe from
bigger businesses
taking over.
 Objectives
● Growth ● Sales maximisation
– Becoming larger may – Generating as much
enable a business t sales revenue as
take advantages of possible.
economies of scale – Popular with sales
and become more staff as they may
efficient through receive bonuses or
having lower costs. salaries according to
– Growth can reduce the sales made.
chance of failure.
 Objectives
● Managerial ● Image and Social
Objectives Responsibility
– Where ownership and – Improve its public image
control are and demonstrating
separated, corporate responsibility
managers within a through measures such
business may as sponsorship of
choose to pursue worthy causes or a
their own individual commitment to
aims. ecologically sound
– eg. to improve their practices.
position/salary.
 Objectives
● Provide a service ● Satisficing
– This is an objective a – Aim only to make a
charity or local certain level of profit
authority would which is sufficient to
have. keep all its
– For example, a school stakeholders happy.
has the objective to
provide an education
to its pupils.
 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 to
achieve objectives.
 Stakeholders
● A stakeholder is a person, company or group
of people who have an interest in an
organisations success.
Internal Stakeholders External Stakeholders
Owners Customers
Shareholders Trade Unions
Managers Banks and other lenders
Employees Suppliers
Volunteers The local community
Donors
Goverment
Pressure groups
Tax payers
 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 to
provide them with good dividends.
– Their influence – can vote for particular directors
and approving dividend payments at the AGM.
 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, job
satisfaction, job security & good working
conditions.
– Their influence – standard of their work and
industrial relations (they can go on strike, etc).
 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 discounts
offered.
● Inland Revenue
– Their interest – interested in the profit as tax is
payable on profits.
– Their influence – they determine the level of tax.
 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 employment
for them and generate wealth in the area.
– Their influence – can petition companies or make
complaints to their local authority.
 Conflict between stakeholders
● All of the stakeholders don't have the same
interests.
● The owner and managers might want to
maximise profits by increasing prices,
whereas the customer wants good products
at the lowers price possible.
● Therefore, not everyone can be happy with a
decision made by an organisation.
Summary of Stakeholders
 Questions
● Describe 1 interest each of the following
stakeholders has in an organisation's firm:
– Inland Revenue
– Employees
– Creditors. (3)
● Describe the ways in which shareholders influence

organisations. (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 strategic

objectives. (4)