1.5 Business Objectives and Stakeholders

Summary

This video explores business and stakeholder objectives, emphasizing their importance for business direction and employee focus. It outlines common private sector objectives such as survival, profit, shareholder returns, growth, market share, and community service. The video also discusses how objectives evolve with business conditions and introduces stakeholders, differentiating between internal and external ones. It highlights potential conflicts between stakeholders' goals, like owners seeking maximum profit versus consumers wanting affordable products, and stresses the need for businesses to balance these interests for survival and success.

Takeaways

• 🎯 A business objective is the aim of the business, guiding its direction and informing employees' actions.
• 🏆 Common private sector business objectives include survival, profit, return to shareholders, business growth, market share, and service to the community.
• 💡 Businesses may adjust their objectives based on circumstances, such as shifting from survival to growth or focusing on service to the community.
• 🔄 Stakeholders are individuals or groups with an interest in a business, differing from shareholders as they can include a broader range of parties.
• 👷‍♂️ Internal stakeholders, like owners, workers, managers, and shareholders, are directly involved in the business operations.
• 🌐 External stakeholders include customers, government, community, banks, and are not directly involved but can be affected by business activities.
• 🤝 Stakeholder objectives can vary widely, from safe products to regular payments and legal compliance, reflecting diverse interests.
• 🚧 Conflicting objectives can arise between stakeholders, such as owners seeking maximum profit versus consumers looking for reasonable pricing.
• 🔄 Businesses must balance the needs of various stakeholders to ensure survival, as neglecting one group can lead to business failure.
• 🏛 Public sector objectives differ from private sector ones, focusing on financial targets set by government, service provision, quality, and social responsibilities like employment in certain areas.

Q & A

What is a business objective?

A business objective is the aim of the business, ensuring it moves in the right direction and that its employees and workers understand their roles in achieving the business's goals.

What are the most common objectives for private sector businesses?

The most common objectives for private sector businesses include survival, profit, return to shareholders, business growth, market share, and service to the community.

Why do businesses need to have objectives?

Businesses need objectives to guide their operations, ensure strategic planning, and align the actions of employees towards common goals.

How can a business ensure survival?

A business can ensure survival by creating a solid plan, possibly by lowering prices to compete effectively in the market.

What strategies can a business use to increase profit?

A business can increase profit by raising prices, improving efficiency, or expanding into new markets.

How can a business grow and make jobs more secure?

Business growth can be achieved by identifying customer needs, diversifying the business, or investing in innovation.

What is the significance of market share for a business?

Market share is significant for a business as it can lead to better publicity, increased influence, and potentially higher profits.

How can a business serve the community?

A business can serve the community by offering products at fair prices, protecting the environment, or participating in charitable activities.

How can external factors affect a business's objectives?

External factors such as economic downturns, changes in regulations, or global events like a pandemic can force a business to adjust its objectives, possibly shifting focus from growth to survival.

What is the difference between a stakeholder and a shareholder?

A shareholder is an owner of a part of the business, while a stakeholder is any person or group that has an interest in the business, which can include customers, employees, suppliers, and community members.

Why is it important for businesses to consider stakeholder objectives?

Considering stakeholder objectives is important because it ensures that the business maintains a balance between the interests of different parties, which can contribute to its long-term success and sustainability.

How can conflicting stakeholder objectives impact a business?

Conflicting stakeholder objectives can impact a business by creating tension and challenges in decision-making, potentially leading to unsatisfied stakeholders and negative consequences for the business.

What are the common objectives for public sector businesses?

Common objectives for public sector businesses include meeting financial targets set by the government, providing services, meeting quality targets, and contributing to social goals such as employment in certain areas.

Outlines

00:00

📈 Business and Stakeholder Objectives Overview

This paragraph introduces the concept of business objectives, which are the aims that guide a company's direction and operations. It explains that businesses require objectives to ensure they are progressing appropriately and that their employees are aligned with these goals. The video discusses various common objectives for private sector businesses, such as survival, profit, return to shareholders, growth, market share, and community service. Examples are provided to illustrate these objectives, and the importance of adapting these objectives based on the business's situation is emphasized. The paragraph also transitions into discussing stakeholders, who are individuals with an interest in the business, and differentiates between internal and external stakeholders. It uses the example of a nuclear power plant to demonstrate how stakeholders can be affected differently by business decisions.

05:02

🤝 Balancing Stakeholder Interests for Business Success

The second paragraph delves into the complexities of balancing the interests of various stakeholders. It highlights the potential conflict between the objectives of business owners, who may prioritize profit maximization, and consumers, who seek reasonable pricing and quality. The importance of businesses adapting their objectives to satisfy a diverse range of stakeholders is underscored, as relying solely on satisfying one group, such as owners, could lead to the dissatisfaction of others, like customers, and ultimately business failure. The video also contrasts private sector objectives with those of the public sector, which include financial goals set by the government, service provision, meeting quality targets, and social responsibilities like employment creation. The summary concludes by encouraging viewers to use the video in conjunction with their notes and textbooks for a comprehensive understanding of business objectives.

Keywords

💡Business Objectives

Business objectives are the specific goals that a company sets to achieve its vision and mission. They guide the direction of the business and help align the actions of employees with the overall strategy. In the video, it is mentioned that businesses need objectives to ensure they are moving in the right direction and that their employees understand their roles in achieving these goals. Examples from the script include survival, profit, return to shareholders, business growth, market share, and service to the community.

💡Stakeholder Objectives

Stakeholder objectives refer to the goals or interests of individuals or groups who have a stake in the business. These objectives can influence or be influenced by the business's actions and decisions. The video explains that stakeholders can have different objectives based on their relationship with the business, such as owners wanting high profits versus consumers wanting reasonable prices.

💡Survival

In the context of the video, survival is a business objective that focuses on the continuity and sustainability of the business. It is essential for businesses to have a plan for survival, which might involve strategies like lowering prices or increasing efficiency. The video uses survival as an example of a primary objective for businesses, especially in challenging times or when a business is new and establishing itself in the market.

💡Profit

Profit is a key business objective that represents the financial gain a company aims to achieve. It is a measure of the company's success and is essential for reinvestment, growth, and return to shareholders. The video mentions that businesses need to make a profit to pay owners and shareholders, and they might achieve this by increasing prices or improving operational efficiency.

💡Return to Shareholders

Return to shareholders is an objective that focuses on providing value to the company's investors. This can be in the form of dividends or capital gains from an increase in the share price. The video discusses how businesses might aim to increase profits and share prices to satisfy shareholders and potentially attract new investors.

💡Business Growth

Business growth is an objective that involves expanding the size, reach, or profitability of a company. It can be achieved through various strategies such as identifying customer needs, diversifying the product line, or entering new markets. The video highlights that growth can make jobs more secure and can be a way for businesses to increase their influence and market share.

💡Market Share

Market share refers to the proportion of the market that a business captures with its products or services. It is an important metric for businesses as it indicates their competitive position and potential for future growth. The video suggests that increasing market share can lead to better publicity and can be achieved through advertising and strategic business growth.

💡Service to the Community

Service to the community is an objective that reflects a business's commitment to social responsibility. It can involve activities such as providing jobs, supporting local charities, or engaging in environmental initiatives. The video explains that businesses might choose to focus on community service as a way to enhance their public image and contribute positively to society.

💡Stakeholders

Stakeholders are individuals or groups who have an interest or stake in a business. This can include internal stakeholders like owners, workers, and managers, as well as external stakeholders like customers, government, and the community. The video emphasizes the importance of understanding and balancing the interests of various stakeholders to ensure the business's success and sustainability.

💡Internal and External Stakeholders

Internal stakeholders are those who are directly involved in the business, such as owners, workers, managers, and shareholders. External stakeholders, on the other hand, are not directly involved but have an interest in the business's outcomes, such as customers, government, and the community. The video discusses how businesses must consider the objectives of both internal and external stakeholders to maintain a balanced and successful operation.

💡Public Sector Objectives

Public sector objectives differ from those of private sector businesses as they are often focused on meeting government-set targets and providing services to the public. The video mentions that common public sector objectives include financial goals, providing services, meeting quality targets, and social objectives like providing employment in certain areas. Understanding these objectives is crucial for businesses operating in the public sector.

Highlights

Business objectives are essential for businesses to ensure they are moving in the right direction and employees know their roles.

Private sector businesses commonly have objectives such as survival, profit, return to shareholders, business growth, market share, and service to the community.

Businesses may lower prices for survival or increase them for profit and shareholder returns.

Growth objectives can be achieved by identifying customer needs and diversifying the business.

Market share objectives can be pursued through advertising and growth strategies to increase influence and profit.

Service to the community can involve marketing products at fair prices, environmental protection, or charitable activities.

Business objectives can change over time based on the company's situation, such as shifting from survival to growth or profit.

Stakeholders are individuals or groups with an interest in the business, differing from shareholders.

Examples of stakeholders include owners, workers, managers, customers, government, community, banks, and shareholders.

Stakeholder objectives can vary, such as safe and reliable products, regular payments, legal compliance, and business growth.

Internal stakeholders are directly involved in the business, like owners, workers, managers, and shareholders.

External stakeholders, such as customers and government, do not directly benefit from the business and may not be affected if it fails.

Businesses must balance the objectives of different stakeholders to ensure survival and avoid conflicts, like between owners and consumers.

Adapting business objectives to suit various stakeholders is crucial for a business's survival and success.

Public sector businesses have different objectives, focusing on financial, service, and social aspects set by the government.

It's important to understand the different objectives for private and public sector businesses.

Transcripts

hello everyone in this video i'm going

to be looking at

unit 1.5 business objectives and

stakeholder objectives and we're going

to look at the following

points so business objective

a business objective is the aim of the

business and obviously businesses need

objectives to make sure that they are

going in the right direction

and that their employees and workers

know what they are doing for the

business

so we're going to look at the different

objectives that businesses might have

and how actually businesses do not have

the same objectives

for private sector businesses the

following objectives are the most common

survival profit return to shareholders

business growth market share and service

to the community

now here are some examples there are

much more examples in your textbooks as

well

but why do the businesses have the

objectives so obviously survival

to make sure that they have a plan for

the business and maybe they can do this

by lowering their prices

profit they need to pay return to the

owners maybe they can do this by

increasing their prices

return shareholders shareholders get

profits and they won't sell the shares

maybe it'll bring track to more

shareholders maybe they could do this by

increasing the profit

and increasing the share price for new

um

shareholders growth means businesses

have this objective to make jobs more

secure and maybe they can do this by

identifying customer needs or

diversifying their business

market shares can be good for good

publicity and

to increase their influence and they

might achieve this by

advertising and by growth and increase

of profit

maybe by providing service to community

they might want to help the market

uh market their product at a fair price

or maybe protect the environment or

maybe even for publicity

they could do this by recycling

providing jobs or even by giving to

charity

the business objectives always stay the

same now business owner has survived for

three years maybe they want to change

their business objective to

growth or to profit a business has

achieved higher market share

so maybe they have already achieved that

so maybe they want to move to service to

the community or giving back to

things like that a business is under

threat from code of 19

maybe they are moving from profit or

growth maybe back down to survival

because their business is under threat

so objectives always constantly change

depending on the situation

another thing that affects businesses is

stakeholders now

a stakeholder is different to a

shareholder a stakeholder is any person

has an interest in the business

for example there is plan for a nuclear

power plant to be built on natural land

five kilometers away from the city

centre and which stakeholders are

affected by this and why

now obviously the manager of the the

nuclear power plant

is someone who has a an internal

um an internal interest in the business

because they are involved in the

business

um and they would be interested in this

whereas maybe

the local government would not we would

be a bit worried about this because the

nuclear power plant is going to be so

close

to the natural land

now we have following stakeholder

examples owners

workers managers customers government

whole community banks and shareholders

we have got some stakeholder objectives

on the right hand side

now safe and reliable products which

stakeholders would want that

obviously maybe customers the owners

would also want that and maybe the

managers

maybe the whole community would want

that subjective regular payment

we are definitely the workers would like

regular payment managers as well

probably the shareholders too

firms to stay within the law i think the

government would definitely want that

uh growth of the business maybe the

banks would want that the whole

community maybe the managers

there's lots of different objectives

that different part people within

the company the stakeholders would be

interested in

now there are two different types of

stakeholders internal and external i've

got some examples here

internal external internal stakeholders

are people

oh pardon me internal are people who

are um intricately involved so it

actually does not include

customers it includes owners workers

managers and shareholders because they

are all relying

on the business directly for um for

things like wages and money whereas

external stakeholders

for example customers government

community banks i've got gospels twice

now

these are people who don't directly

benefit from the

business and if the business fails

they're not going to necessarily be

directly affected so internal is from

within and

external is from outside the business

now some businesses will have a um

stakeholders that disagree so let's look

at this example of an oil company

we've got the owners of the company

they're likely to want the business to

work towards as much profit as possible

now they are maybe going to be a in

conflict with the objectives of the

consumers

who will want reasonably priced products

of an appropriate quality or they may

buy goods from the competitors

so we need to make sure that businesses

they um

are fair to all of the stakeholders so

that they are able to

survive so businesses must adapt their

business objectives to suit different

stakeholders because they rely on a

variety of stakeholders to make sure

their business survives

so they can't just make sure that the

objectives of the owners are satisfied

because that might dissatisfy the

customers

and if no one buys their product then

obviously the business will fail

so just to remind you about private

sector objectives are these six

their public sector objectives are

slightly different

so public sector businesses the

following objectives are the most common

financial so meeting a profit set by the

government providing a service

meeting quality targets set by the

government and social providing quality

er precise providing employment in

certain areas

you need to know the different

objectives for private and public sector

businesses

that's the end of this video please use

this video in conjunction with your

notes and with your textbooks