Business objectives and stakeholder objectives

Welcome to Your Guide on Business and Stakeholder Objectives!

Ever wondered why some businesses seem so focused on making money, while others seem more interested in helping the community? Or why your local corner shop has different goals than a massive company like Apple? That is exactly what we are going to explore today!

Think of objectives as a "GPS" for a business. Without them, the business would be driving around aimlessly. In this chapter, we will learn what these goals are, who cares about them, and what happens when different people want different things. Let’s dive in!

1. What are Business Objectives?

An objective is simply a goal that a business wants to achieve. Having clear objectives is vital for any business, no matter how small.

Why are objectives so important?

• Direction: They give the business a clear path to follow.
• Motivation: They give managers and employees something to work toward.
• Measurement: They allow the business to check if they are successful. ("Did we reach our goal of selling 100 bikes this month?")
• Decision Making: They help owners make tough choices by asking, "Will this help us reach our goal?"

Common Business Objectives

Businesses often change their objectives over time. A brand-new shop might just want to "stay alive," while an older shop might want to get bigger.

1. Survival
This is the primary goal for new businesses or businesses during difficult times (like a recession). It means having enough money to keep the doors open and pay the bills.

2. Profit
For most private businesses, this is the big one! Profit is the money left over after all costs are paid.
\( \text{Profit} = \text{Total Revenue} - \text{Total Costs} \)
Profit is important because it rewards the owners for their hard work and risk.

3. Growth
This means making the business bigger. This could be by opening more shops, hiring more people, or selling more products. Growth is often a goal because it makes the business more secure and well-known.

4. Market Share
This is the percentage of total sales in a market that one business has.
Analogy: Imagine the whole market is a giant pizza. Market share is how many slices of that pizza belong to your business. The more slices you have, the more powerful you are!

Social Enterprises

Don’t worry if this term sounds fancy! A Social Enterprise is a business that still wants to make money, but they use that money to help society or the environment.
Example: A coffee shop that uses all its profits to build schools in developing countries. Their objectives are usually about providing a service to the community rather than just getting rich.

Key Takeaway: Objectives give a business a target. They can change from survival when starting out to growth and profit once the business is established.

2. Stakeholders: Who are they and what do they want?

A stakeholder is any person or group that has an interest in how a business is doing. They are "invested" in the business’s success or failure, even if they don't own it.

Internal Stakeholders (People INSIDE the business)

• Owners / Shareholders: They want high profits so they can get a return on their investment.
• Managers: They want the business to grow so they can get promotions, higher pay, and more status.
• Employees: They want job security, fair pay, and good working conditions.

External Stakeholders (People OUTSIDE the business)

• Customers: They want high-quality goods at low prices.
• Government: They want the business to succeed so people have jobs and the business pays taxes.
• Banks / Lenders: They want to make sure the business can pay back any loans.
• Local Community: They want the business to provide jobs but not cause noise, pollution, or traffic.

Quick Review: Can you remember the difference? Internal = inside (workers/owners). External = outside (customers/government).

3. Stakeholder Conflicts

Here is where things get tricky! Because different stakeholders want different things, they often conflict (disagree). It is impossible to make everyone 100% happy all the time.

Examples of Conflict:

1. Employees vs. Owners: Employees want higher wages. However, if the business pays higher wages, the costs go up, which means profits for the owners go down.
2. Customers vs. Owners: Customers want the lowest prices possible. Owners want higher prices to make more profit.
3. Local Community vs. Managers: Managers might want to expand the factory to grow the business. The local community might hate this because it creates more smoke and noise pollution.

Did you know? Managers often have to find a "middle ground" to keep as many stakeholders happy as possible to avoid strikes or losing customers.

Key Takeaway: Different groups have different goals. When these goals crash into each other, it creates conflict.

4. Private Sector vs. Public Sector Objectives

Remember from the last chapter that the Private Sector is owned by individuals, and the Public Sector is owned by the government.

Private Sector Objectives:

• Mainly focused on Profit.
• Focus on Growth and Market Share.
• Compete with other businesses to be the best.

Public Sector Objectives:

• Mainly focused on Service (providing what the public needs, like hospitals or police).
• Accessibility: Making sure the service is available to everyone, not just those who can pay.
• Staying within budget: They don't try to make a profit, but they must not waste taxpayers' money.

Key Takeaway: Private businesses want to make money; Public organizations want to provide a service to the people.

Summary Checklist - Are you ready?

Before you move on, make sure you can:
• Explain why a business needs objectives (Direction, Motivation).
• List four common objectives (Survival, Profit, Growth, Market Share).
• Define what a stakeholder is.
• Identify Internal and External stakeholders.
• Explain why stakeholders might conflict (e.g., Wages vs. Profit).
• Show the difference between Private and Public sector goals.

Don't worry if this seems like a lot to remember! Just keep thinking about who the people are and what would make them happy. If you were a worker, you'd want a raise. If you were the owner, you'd want the profit. It’s all about perspective!