1.5 Business Objectives and Stakeholder Objectives IGCSE business studies

Summary

This tutorial video from the Cents Business YouTube channel delves into the critical aspects of business objectives and stakeholder interests. It explains the importance of setting business objectives for success, motivation, and decision-making, while also highlighting the potential for conflicts among various stakeholders, such as shareholders, employees, and the community. The video also distinguishes between private and public sector business objectives, emphasizing the unique goals of each and the need for balance to ensure overall business health and societal contribution.

Takeaways

• 😀 Business objectives are the aims and targets that a business works towards for successful operation, including survival, profit, growth, market share, and service to society.
• 😇 Setting clear objectives can increase motivation, simplify decision-making, reduce conflict, and help align a business towards a common goal.
• 🤔 Objectives are not static and can change over time as market conditions and business development evolve, reflecting the current market and economic position.
• 👥 Stakeholders are individuals or groups with an interest in or affected by a business, including internal and external parties such as shareholders, employees, customers, and the government.
• 💰 Shareholders primarily aim for profit maximization and business growth, seeking returns on their investment and the expansion of the business.
• 👷 Workers, as stakeholders, seek job security, regular payment, job satisfaction, and a clear contract of employment outlining their rights and responsibilities.
• 👨‍💼 Managers, who are also stakeholders, aim for job security, higher salaries, and business growth, as they are responsible for key business decisions.
• 🛍️ Customers, a crucial stakeholder group, expect products that are affordable, of good quality, safe, reliable, and well-designed, reflecting their needs and preferences.
• 🏦 Banks, as financial stakeholders, seek repayment of loans with interest and support businesses for potential profits, focusing on financial stability over business growth.
• 🏛️ The government, as a stakeholder, aims to protect workers and customers, ensure business compliance with rules and regulations, and support economic growth through taxation.
• 🌳 The local community expects businesses to provide local employment opportunities, maintain environmental standards, and contribute positively to the community's well-being.
• 🤝 Public sector businesses differ from private ones in that they aim to meet targets set by the government, focusing on providing services that meet community needs and quality standards rather than maximizing profits.

Q & A

What are business objectives?

Business objectives are the aims and targets that a business works towards to help it run successfully. They are the steps needed to be taken for a business to be successful and can include survival, profit, growth, market share, and service to society.

How do business objectives benefit a company?

Business objectives benefit a company by increasing motivation among employees and managers, making decision-making easier and less time-consuming, reducing conflict, and helping to unite the business towards a common goal.

What is the primary objective of private sector businesses?

The primary objective of private sector businesses is usually profit maximization, as profits are required for further investment into the business and for the payment of returns to shareholders.

What are the main objectives of shareholders in a business?

The main objectives of shareholders are to maximize profit and ensure business growth, as this can lead to higher returns on their investment.

What are the objectives of workers in a business?

Workers' objectives include having a clear contract of employment, regular payment for work done, job satisfaction, and job security.

What is the role of managers in a business and what are their objectives?

Managers are in charge of making key business decisions and controlling the work of other employees. Their objectives include job security, higher salaries, and business growth.

Why are customers considered important stakeholders in a business?

Customers are important stakeholders because they purchase and consume the goods and services provided by the business. Their preferences and satisfaction directly affect the success of the business.

What are the objectives of the government as a stakeholder in a business?

The government's objectives as a stakeholder include ensuring the business grows and survives to benefit the economy, paying taxes, improving employment, and adhering to health and safety regulations.

How do the objectives of public sector businesses differ from those in the private sector?

Public sector businesses do not aim to maximize profit like private sector businesses. Instead, they aim to meet profit targets set by the government to reinvest into the business and meet the needs of society, focusing on providing high-quality services.

What is meant by conflicts of stakeholders in a business?

Conflicts of stakeholders occur when the objectives of one stakeholder group clash with those of another. For example, workers may want higher salaries, which could reduce the profits available to shareholders.

How can a business manage conflicts between stakeholders with differing objectives?

A business can manage conflicts by balancing the needs and interests of all stakeholders, ensuring transparency in decision-making, and finding solutions that align with the overall goals and values of the company.