Different stakeholder and business objectives

Welcome to Your Guide on Business Objectives and Stakeholders!

Ever wondered why some businesses seem to have a clear plan while others just wander around? Or why a local coffee shop might care more about the community than a massive multinational corporation? That is what this chapter is all about! We are diving into Business objectives and strategy. By the end of these notes, you will understand how businesses set goals, why they change, and who the "stakeholders" are that watch their every move. Don't worry if some of the terms seem big—we will break them down into bite-sized pieces.

1. The Hierarchy of Objectives

Think of a business like a professional football team. Their ultimate "aim" is to be the best in the league. But to get there, they need specific plans for the season, for each match, and even for each training session. In business, we call this the Hierarchy of Objectives.

What are the different levels?

Organisational Aims: These are the long-term, "big picture" goals. They are often quite vague, like "to be the world's most customer-centric company."
Corporate/Business Objectives: These are specific goals for the whole company, like "increasing total profit by 15%."
Strategic Objectives: These are medium-to-long-term plans made by senior managers to achieve the corporate objectives.
Tactical Objectives: Short-term goals for specific departments (like Marketing or Finance).
Operational Objectives: Day-to-day targets for individual teams or workers.

Memory Aid: ASTO
Think of Aims (Top), Strategic, Tactical, Operational (Bottom). It flows from the big dreams at the top to the daily hard work at the bottom!

Quick Review: Why set these?

• They give the business direction.
• They act as a motivator for employees.
• They provide a way to measure success.

Key Takeaway: Objectives start broad at the top (Aims) and get more specific and short-term as you move down the hierarchy (Operational).

2. Making Objectives SMART

A goal like "I want to be rich" is hard to achieve because it's too vague. Businesses use the SMART criteria to make sure their objectives are useful.

S - Specific: Clear and easy to understand.
M - Measurable: It should involve a number so you can track progress.
A - Achievable: It must be possible to reach (don't set a goal to sell 1 billion items if you only have 5 staff!).
R - Relevant: It should match the overall aim of the business.
T - Time-bound: It needs a deadline.

Example: "Increase sales of chocolate bars in the UK by 10% within the next 12 months."
This is a SMART objective. "Sell more chocolate" is NOT.

Common Mistake to Avoid: Students often forget the "Time-bound" part in exams. Always check if there is a date or a duration mentioned!

3. Why do Objectives Change?

Business objectives aren't set in stone. Just like you might change your weekend plans if it starts raining, businesses change their goals because of the world around them.

Internal Reasons: A change in leadership (new CEO), the business has grown significantly, or financial difficulties.
External Reasons: Changes in the economy (like a recession), new laws from the government, or new technology (like the rise of AI).
Sector Differences: A Public Sector business (owned by the government, like the NHS) usually focuses on service delivery. A Private Sector business (like Apple) usually focuses on profit.

Key Takeaway: Businesses must be flexible. If the market changes, an objective to "expand" might change to an objective of "survival."

4. Who are the Stakeholders?

A Stakeholder is any person or group that has an interest in, or is affected by, the activities of a business. It is not the same as a "Shareholder" (who actually owns part of the company).

Internal Stakeholders (Inside the business)

• Owners/Shareholders: They want high profits and dividends.
• Employees: They want fair pay, job security, and good working conditions.
• Managers: They want career promotion and to meet their targets.

External Stakeholders (Outside the business)

• Customers: They want high quality and low prices.
• Suppliers: They want to be paid on time and receive regular orders.
• The Government: They want the business to pay taxes and follow laws.
• Local Community: They want jobs but don't want noise or pollution.
• Lenders (Banks): They want their loans repaid with interest.

Did you know? A business decision as simple as staying open 24 hours a day affects almost every stakeholder! Customers love it, the local community might hate the noise, and employees might struggle with night shifts.

5. Stakeholder Conflict

This is a big topic for your exams! Stakeholder conflict happens because different groups want different things. It is impossible to keep everyone happy all the time.

Classic Example: Raising Wages
• Employees will be happy (higher pay).
• Shareholders might be unhappy because higher wages mean higher costs, which leads to lower profit.

Example: Investing in Green Technology
• Local Community and Customers may be happy because the business is being ethical.
• Owners might be worried about the high cost of the new machinery affecting their return on investment.

How to Manage Conflict?

Businesses have to balance these needs. They might use communication to explain why a decision was made, or they might try to find a compromise (a "middle ground" where everyone gets a little bit of what they want).

Key Takeaway: Managing a business is often a "balancing act" between the needs of different stakeholders.

6. Corporate Social Responsibility (CSR)

CSR is when a business goes above and beyond what the law requires to act in an ethical and sustainable way. This is often a major strategic objective today.

The Conflict: Being "green" or "ethical" often costs more money in the short term, which can conflict with the objective of profit maximisation. However, it can improve the brand image and attract more customers in the long run.

Quick Review: The CSR Trade-off
Costs of CSR = Higher expenses, lower short-term profits.
Benefits of CSR = Better reputation, loyal customers, motivated staff.

Final Summary: Putting it All Together

1. Businesses set a Hierarchy of Objectives to stay on track.
2. All objectives should be SMART.
3. Stakeholders (internal and external) all have different goals.
4. These goals often conflict, and managers must decide whose needs are most important.
5. Modern businesses often include CSR as a key objective to stay competitive and ethical.

Don't worry if this seems like a lot of people to keep track of! Just remember: Everyone wants a "piece of the pie," but they all want a different flavor!