Different stakeholder and business objectives

Welcome to the Roadmap of Business!

Ever wondered why some businesses seem to have a clear plan while others just drift along? In this chapter, we’re looking at the "map and compass" of a business: its aims and objectives. We’ll also meet the stakeholders—the people who care about what the business does. Don't worry if some of the terms feel a bit "corporate" at first; we'll break them down using everyday examples to make sure you're exam-ready!

1. Understanding Business Aims and Objectives

Think of a business aim as a destination (e.g., "I want to be a professional athlete"). The objectives are the specific steps you take to get there (e.g., "I will run 5km every morning this month").

The Hierarchy of Objectives

Businesses use a hierarchy of objectives. This is like a pyramid where the big goals at the top are supported by smaller, more specific goals at the bottom.

Organisational Aims: These are long-term, high-level goals. They are often "visionary" and broad, such as "To be the world's most customer-centric company."

Corporate / Business Objectives: These are specific goals for the whole company to achieve over a set period (usually 1-5 years), like "Increasing total market share by 5%."

Strategic Objectives: These are the long-term plans designed to achieve the corporate objectives. They are usually set by senior management.

Tactical Objectives: These are medium-term goals focused on how to implement the strategy. For example, the Marketing department might have a tactical objective to "Launch a social media campaign by June."

Operational Objectives: These are the "day-to-day" targets for individual teams or workers, such as "Answering all customer emails within 2 hours."

Setting SMART Objectives

To be effective, objectives shouldn't be vague. They need to be SMART. This is a classic "must-know" for your exam!

• S - Specific: Clear and easy to understand.
• M - Measurable: Includes a number so you can track progress.
• A - Agreed / Achievable: The people doing the work believe it can be done.
• R - Realistic / Relevant: It fits the business's resources and overall aim.
• T - Time-bound: It has a deadline.

Example of a SMART objective: "Increase sales revenue by 10% (Measurable/Specific) by the end of December (Time-bound)."

Quick Review Box:
Why bother with objectives? They provide focus, motivation for staff, and a way to measure success at the end of the year.

2. Factors Affecting Objectives

Objectives aren't "one size fits all." They change based on where the business operates and what is happening in the world.

The Sector Matters

Private Sector: Businesses owned by individuals (like Apple or a local cafe). Their main objective is usually profit or growth.

Public Sector: Organisations owned by the government (like the NHS). Their objective is usually service delivery and meeting quality targets within a budget.

Third Sector: Charities and non-profits. Their objective is usually to support a cause or maximise social benefit.

Why Objectives Change

A business might change its goals because of:
1. External Changes: A new law, a recession, or a new competitor.
2. Performance: If a business is failing, its objective might change from "growth" to "survival."
3. New Leadership: A new CEO might have a different vision for the future.

Key Takeaway: Objectives must be communicated clearly. If employees don't know the goal, they can't help the business reach it! Mis-communication leads to confusion, wasted money, and low staff morale.

3. Stakeholders: Who Are They?

A stakeholder is any individual or group that has an interest in or is affected by the activities of a business.

Internal vs. External Stakeholders

Internal Stakeholders (Inside the business):
- Owners / Shareholders: They want high profits and dividends.
- Managers: They want bonuses, status, and career progression.
- Employees: They want fair pay, job security, and good working conditions.

External Stakeholders (Outside the business):
- Customers: They want high quality at a low price.
- Suppliers: They want to be paid on time and receive regular orders.
- Government: They want the business to pay taxes and follow the law.
- Local Community: They want jobs but don't want noise or pollution.
- Banks / Lenders: They want to be sure the business can pay back its loans.

Did you know? A shareholder is always a stakeholder, but a stakeholder is not always a shareholder! A local resident is a stakeholder (they care about traffic), but they don't own shares in the company.

4. Stakeholder Conflict

This is a big topic for exam questions! Because different stakeholders want different things, they often "clash." This is called stakeholder conflict.

Common Conflicts

Example 1: Shareholders vs. Employees.
Shareholders want to cut costs to increase profit (more money for them!). Employees want a pay rise (higher costs for the business). It’s hard to do both at the same time!

Example 2: Customers vs. Shareholders.
Customers want the lowest prices possible. Shareholders want higher prices to increase the profit margin.

Example 3: Local Community vs. Owners.
A business wants to build a giant 24-hour factory to grow. The local community is worried about noise and traffic at 3:00 AM.

Managing Conflicts

A business cannot keep everyone 100% happy all the time. To manage conflict, they must:
1. Prioritise: Decide which stakeholders are most important right now (e.g., during a financial crisis, the Bank is the priority).
2. Communicate: Explain why decisions are being made.
3. Compromise: Find a middle ground (e.g., giving a smaller pay rise but adding an extra day of holiday).

Memory Aid: Use the "Win-Win" trick. When evaluating a business decision, ask: "Who wins from this, and who loses?" If the "losers" (like angry customers) have too much power, the business might fail.

Summary: Putting it All Together

Businesses set aims and objectives to give themselves direction. These goals are shaped by the sector the business is in and the stakeholders it needs to satisfy. Because stakeholders often want different things, successful managers are the ones who can balance these conflicting objectives effectively. In your exam, always think about the "knock-on effect"—how a decision to reach an objective (like cutting costs) will impact different groups of stakeholders!