Chapter 5: Business Objective and stakeholder objective
What Are Business Objectives?
Business objectives are the aims or targets that a business works towards. They give purpose
and direction to all actions within a business.
Why Set Business Objectives?
Objectives are important because they:
Provide clear targets, helping managers and employees focus their efforts.
Help motivate workers by giving them goals to strive for.
Make decision-making easier — choices can be evaluated based on whether they help
reach objectives.
Allow performance measurement — comparisons can be made between results and
objectives.
However, just setting objectives doesn’t guarantee success. External conditions and internal
capabilities also matter.
Common Business Objectives
These objectives can vary depending on size, sector, market conditions, and ownership.
a) Survival
Most important for new or small businesses.
A business may focus on survival during intense competition or economic downturns.
Strategies might include reducing price or cutting costs.
b) Profit
Profit is total revenue minus total costs.
c) Returns to Shareholders
Particularly important for limited companies.
High profits and good financial performance mean higher dividends and increased
share value.
d) Growth
Growth helps a business to:
o Increase market presence
o Offer greater job security to employees
o Achieve economies of scale (lower average costs)
o Strengthen competitive advantage
e) Market Share
Market share is the business’s percentage of sales in the entire market.
Higher market share gives competitive strength and better market influence.
f) Service to the Community / Social Objectives
Some businesses (especially social enterprises) aim to benefit society — e.g.,
providing jobs for disadvantaged people or supporting environmental goals.
Business objectives can change over time depending on internal progress and external
circumstances. For example, a firm may switch focus from growth to survival in a
recession.
Who Are Stakeholders?
Definition:
A stakeholder is any person or group that has an interest in or is directly affected by
the activities and performance of a business.
Stakeholders can be internal (inside the business) or external (outside the business).
Internal Stakeholders & Their Objectives
Owners / Shareholders
Want a good return on their investment (profit/dividends).
Interested in long-term profit growth and increasing company value.
Workers / Employees
Objectives include:
A fair contract of employment
Regular wages/salaries
Job security
Job satisfaction and motivation
Managers
Objectives include:
Secure job status
Higher pay due to responsibility
Business growth (for career/professional status)
External Stakeholders & Their Objectives
Customers
Want good quality, safe and well-designed products at fair prices.
Government
Wants businesses to comply with laws, pay taxes, create jobs, and support economic
growth.
Banks / Lenders
Want businesses to be financially stable and able to repay loans with interest.
Local Community
Wants employment opportunities, minimal environmental harm, and social
responsibility from the business.
Public Sector vs Private Sector Objectives
Private Sector:
Profit, growth, survival, market share, returns to owners.
Public Sector / Social Enterprises:
Focus on service quality, social objectives, and meeting targets set by government
rather than profit maximization.