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.

Outlines

00:00

📈 Business Objectives and Stakeholder Interests

This paragraph introduces the topic of business objectives and their importance for business success. It explains that objectives are specific aims and targets that guide a business's operations and decision-making. The speaker emphasizes the motivational aspect of objectives for employees and managers, and how they facilitate easier decision-making and reduce conflicts within a business. The paragraph also touches on the variance in objectives among different businesses based on size, sector, and other factors, with private sector businesses typically focusing on survival, profit, growth, market share, and service to society as their main objectives.

05:02

💼 Stakeholder Groups and Their Impact on Business

The second paragraph delves into the concept of stakeholders, defining them as individuals or groups with an interest in or affected by a business's performance. It highlights both internal and external stakeholders, providing examples such as employees, managers, shareholders, customers, and the government. The paragraph underscores the importance of understanding stakeholders' interests, as they can influence and be influenced by business activities. It also notes that businesses, especially large ones like Apple, can affect stakeholders' motivation and job security, and that stakeholders' objectives can change over time in response to market conditions and business development.

10:05

🤝 Aligning Business Objectives with Stakeholder Expectations

This paragraph discusses the various objectives of different stakeholders within a business, such as shareholders seeking profit maximization, workers desiring job security and satisfaction, and managers aiming for higher salaries and business growth. It also mentions the role of customers, who are vital stakeholders with their own objectives for affordable prices, quality products, and safety. The speaker stresses the potential for conflicts among stakeholders due to differing aims and the need for businesses to balance these interests to achieve overall success.

15:06

🏦 Government and Financial Institutions as Key Stakeholders

The fourth paragraph focuses on the government and financial institutions as stakeholders with distinct objectives. The government aims to protect workers and customers, ensure business compliance with regulations, and benefit from economic growth and tax revenues. Banks, as providers of financial support, seek repayment with interest and may also aim to support businesses for mutual profit. The local community, another stakeholder group, desires job opportunities and environmental protection, expecting businesses to contribute positively to the local economy and environment.

20:09

🏛 Public Sector Objectives and Community Service

This paragraph contrasts the objectives of public sector businesses with those of the private sector, highlighting that public sector entities aim to provide services that meet community needs and government standards rather than maximizing profits. The speaker explains that profits generated by public sector businesses are typically reinvested to support social services and meet societal needs, emphasizing the importance of quality targets and community aid as central objectives for government-run organizations.

🔄 Stakeholder Conflicts and the Need for Balance

The final paragraph addresses the inevitable conflicts of interest that can arise among stakeholders due to their unique objectives. It provides examples of such conflicts, such as between workers and shareholders over salary versus profit distribution, or between directors and shareholders regarding executive compensation. The speaker also mentions potential clashes between the local community's environmental concerns and shareholders' profit maximization goals. The paragraph concludes by emphasizing the importance of understanding and managing these conflicts to ensure business success and stakeholder satisfaction.

Keywords

💡Business Objectives

Business objectives refer to the aims and targets that a business sets to help it run successfully. In the video, these objectives are described as the steps needed for a business to be successful and include survival, profit, growth, market share, and service to society. They are crucial for increasing motivation, aiding decision-making, reducing conflict, and aligning the business towards a common goal.

💡Stakeholder Groups

Stakeholder groups are individuals or entities that have an interest in or are affected by a business's activities. The script mentions various stakeholders, including shareholders, employees, managers, customers, and the government. Understanding these groups is essential as they have different objectives that can sometimes conflict with one another, impacting the business's operations and decisions.

💡Profit Maximization

Profit maximization is a primary objective for many businesses, especially in the private sector, as it indicates the business's financial success and ability to generate returns for shareholders. The video explains that profits are necessary for further investment and paying returns to shareholders, highlighting the importance of this objective in driving business growth and stability.

💡Market Share

Market share is defined in the script as the proportion of the total market sales achieved by one business. A higher market share can lead to increased customer loyalty, better brand image, and economic benefits for the business. It is one of the objectives businesses aim to increase to become more competitive and influential in their respective markets.

💡Service to Society

Service to society represents a business's commitment to contributing positively to the community, beyond just profit-making. The video mentions that some businesses have social objectives, such as providing environmental and financial aid, which align with their mission to better society. This concept underscores the social responsibility aspect of businesses.

💡Public Sector Businesses

Public sector businesses are those owned and controlled by the government, with objectives that differ from private sector businesses. Instead of maximizing profits, these businesses aim to meet profit targets set by the government and reinvest earnings into the community. The script emphasizes that their main goal is to provide services that meet the quality standards set by the government and aid the community.

💡Conflict of Stakeholders

Conflict of stakeholders arises when the interests or objectives of different stakeholder groups clash. The video provides examples, such as workers wanting higher salaries versus shareholders wanting higher profits, illustrating how satisfying one group's objectives might compromise another's. This conflict is a complex issue that businesses must navigate carefully.

💡Economic Resession

Economic resession, mentioned in the context of a business changing its objectives, refers to a period of temporary economic decline during which trade and industrial activity are reduced. The script suggests that a firm facing a serious economic resession might shift its objectives from profit maximization to short-term survival, reflecting the need for businesses to adapt to economic conditions.

💡Job Security

Job security is highlighted in the script as an important objective for employees and managers within a business. It implies the likelihood of continued employment and is influenced by the business's stability and growth. A business that is growing and successful can offer greater job security, which is a significant factor for workers and contributes to their motivation and loyalty.

💡Economies of Scale

Economies of scale are a concept discussed in the script, referring to the cost advantages that a business obtains due to expansion and the ability to produce goods and services at a lower per-unit cost. The video suggests that a larger business can benefit from higher market share and economies of scale, which can lead to increased efficiency and cost savings.

💡Local Community

The local community is identified in the script as a stakeholder group with interests in how a business operates, particularly in terms of employment opportunities and environmental impact. The community's objectives include the desire for businesses to hire local employees and to ensure that their production processes do not harm the environment, reflecting the importance of local economic and social considerations.

Highlights

Business objectives are aims and targets that help a business run successfully.

Setting objectives can increase motivation among employees and managers by providing clear targets.

Objectives facilitate easier and less time-consuming decision-making by providing a basis for decisions.

Objectives help reduce conflict and unite the business towards a common goal.

Business performance can be compared to objectives to make necessary changes.

Private sector businesses often aim for survival, profit, growth, market share, and service to society.

For new or small firms, survival is usually the primary objective before profit-making.

Profit is essential for further investment and returns to shareholders.

Business growth can lead to greater job security, higher salaries, and economies of scale.

Increased market share can enhance customer loyalty and brand image.

Some private sector businesses have social objectives, such as providing environmental and financial aid.

Business objectives can change over time to reflect market conditions and business development.

A stakeholder is anyone interested in or affected by a business's performance or activity.

Shareholders aim for profit maximization and business growth for higher returns on their investment.

Workers seek regular payment, job satisfaction, job security, and a motivating work environment.

Managers, as stakeholders, aim for job security, higher salaries, and business growth.

Customers, as stakeholders, want affordable prices, quality products, and reliability.

The government, as a stakeholder, seeks business growth for economic benefits and adherence to regulations.

Banks, as stakeholders, aim to recover loans with interest and support businesses for profit.

The local community expects businesses to provide jobs, support the environment, and contribute positively.

Public sector businesses aim to meet profit targets set by the government and provide services to the community.

Conflicts of stakeholder interests are common and can occur when trying to satisfy one stakeholder's objectives over another's.

Transcripts

hello and welcome to cents business

YouTube channel and since business code

at UK website and today's tutorial we'll

be talking about 1.5 business objectives

and stakeholder objectives of a business

as you know it's IGCC business studies

so in this video we'll cover business

objectives stakeholder groups and their

objectives we will also talk about

public sector businesses and we'll cover

conflicts of stakeholders so let's begin

I hope you're gonna enjoy I'm gonna try

and make this class as energetic as

possible just like every other class so

make sure you watch the 1.1 1.2 1.3 1.4

this is 1.5 and then continue watching

so that you get a good taste in your I

do CC business okay great let's start I

will listen the first thing I'm going to

talk about is business objective so

business objectives are aims and targets

that a business works towards to help it

run successfully all thought the sitting

of objectives does not always guarantee

the success of business what helps

benefit it so aims and targets are all

business objectives it's the little

steps that need to be taken for a

business to be successful an objective

is something that they want to achieve

so if a business has objectives they

want to achieve something and they have

got some lists of steps they will need

to follow to achieve that certain

activity or project or whatever it might

be setting objectives increased

motivation as employees and managers

have clear targets to work towards so

they know what they need to achieve they

just go ahead and start working towards

it it motivates it a lot of people find

it more motivating if they have

something clear to work towards so it

motivates tough decision making will

become easier and less time-consuming as

there are set targets to base decision

on you have targets and your decision

become very clear and short because if

your decisions are not related to these

targets you will not take them so you

will find an alternative so you make a

decision that benefits your overall

target and objective so decision will be

taken in order to achieve the business

objectives setting objectives reduce

conflict and it helps unite the business

towards reaching the same goal so it

helps businesses achieve its overall

goal in a brings everybody together

under one umbrella managers can compare

the business performance to its

objectives and to make any changes in

its activity if required so businesses

can check their performance to see if

they are heading towards the overall

business objectives and if they are not

they can well they will need to start

making amendments and start making

changes to help them achieve the overall

objectives so objectives vary with

different business due to its size

sector and money or the factors however

many businesses in private sector aim to

achieve the following objectives as you

know in the previous video we talked

about private businesses private

businesses or businesses that are born

privately so they have the control some

time limited and some have unlimited

liabilities make sure that you watch the

previous video if you would like to know

about that purpose of setting objectives

our survival profit growth market share

service to society overall objective of

a business existing so survival for new

or small firms usually their main

objective will be to survive and then

there'll be profit so after they have

balanced selves and they can make enough

sales then they go on to their second

target which is to make profit because

after all all business is open for a

reason and that reason is to make profit

so private sector firms usually have

profit making as a primary of

Actives this is because profits profits

are required for further investment into

the business as well as for the payment

of returns to the shareholders orders of

the business for the time that they have

invested into the business so their

objective is to get some profit out of

it

growth is another objectives once the

businesses have passed their survival

strategy objectives sorry and they have

started making profit they think about

growing in and maximizing their profit

aiming for business growth can be very

beneficial a large business can ensure

greater job security and salaries for

employees so everybody would want to

work for a company that has huge of

number of stores big business because

some people feel motivated being part of

a big brand for example Apple workers

will be very motivated because they know

that they work for the world's top brand

and of course their salary also

increases because of the size of the

organization is because of the job they

do a larger business can ensure greater

job security salaries for employees like

I said earlier the business can also

benefit from higher market share and

economies of scale there is a video on

economy of scale on my channel make sure

that you watch that because it is very

comprehensive it has a lot of

information in there market share this

can be defined as proportion of total

market sell achieved by one business

increased market share can bring about

money benefits to business such as

increased customer loyalty setting or

brand images so the bigger the market

share you have the bigger you the bigger

you become in the market in the sector

and people respective and they start by

your product because they know that

you're the only competitor in the entire

market service to society is another

objective that some businesses or

organization will have some

operations in the private sector such as

social objectives they aim to better the

society by providing social

environmental and financial aid so there

are different purposes and different

companies will have different objectives

as their main primary objectives and

then they will also have some secondary

objectives that will help them achieve

their main aim but as we know we live in

a world where nearly all businesses main

objective is to make profit and to

survive now business objectives do not

remain the same forever so you need to

keep making all of that so a business

can never stay the same they can change

its objectives as and when they want it

as and when it suits them better as

market situation change and as the

business itself develops its objective

will change to reflect its current

market and economy position for example

a firm facing serious economic

rescission could change its objectives

from profit maximization to short-term

survival does that make sense so

businesses can change its overall

objectives to make sure that they meet

overall objective they'll have to put

some small aims and objectives in place

in order to meet the long-term goal I

hope that was clear let's get on to

stakeholder groups fantastic I don't

have a joke on this video for you so

unfortunately you'll have to bear in

mind with me while trying to find your

funny joke to keep you energetic and to

keep you going with these tutorials

because after all we want to get an aid

do we not so stakeholder groups a

stakeholder is anyone or any group that

is interested in our N or directly

affected by the performance or activity

of a business these stakeholder groups

can be external groups that are outside

the business or they can be internal

these groups that work for or on the

base

I've listed some of the stakeholders

below you will be able to see it we'll

talk about some stakeholders so

basically who is stakeholder anybody

that's affected or interested or want to

know about the business so that's the

newspapers the government the local

school the local council the customers

the workers the managers the directors

these are all the stakeholders there's

unlimited number of stakeholders a

business can have special a big brands

like Apple could have newspapers media

televisions investor competitors these

all will be stakeholders of a company

internal stakeholder would be

shareholders in honors these are the

risk takers of the business they invest

capital into the business to set up and

expand it these shareholders are liable

to a share of the profit made by the

business so objectives of shareholders

our elders are entitled to rate of

return on the capital they have invested

into the business and will therefore

have profit maximization as an objective

so the shareholders main aim is to

maximize the profit the objective d1 or

they focus on most is to maximize the

profit because they have invested some

money they want to get as much money as

possible on the money they have invested

business growth will also be one of

their objectives so the shareholders

will objective will be to maximize the

business growth to make as big as

possible because the bigger the business

is it is usually not always but

sometimes it means more profit for the

shareholders and then we have

stakeholders like workers workers or

people that work within the business so

these are also stakeholders because they

are interested in the business these are

people that are employed by the business

and are directly involved in its

activities their objectives are so a

business will have an objective the

share

voters will have an objectives and now

the workers also have objectives so

contract of employment that states all

the rights and responsibilities to end

of the employee so they want to have a

clear objective which is to have a

contract of employment that states what

they need to do in order to achieve the

maximum results and get the pay that was

advertised on the job so regular payment

for the work done by the workers will

want to benefit from job satisfaction so

their objective would be to go to a

workplace that is motivational and that

has something good about it

the employees will want job security so

they are objective will be to make sure

that the job that they are end doesn't

disappear tomorrow your job that is

available for them for as long as they

want to be there

managers are also stakeholders and they

are also the employees but managers

control the work of all those managers

are in charge of making key business

decision so managers are also workers

but these people are also in charge of

in controlling the workers and making

decisions to benefit the business some

managers will make good decision which

will benefit the business and some money

just might make bad decision that will

bring the business down it depends on

the managers and objectives of managers

is like regular employees so the

managers to will aim towards a secure

job so they will want to come to a word

that is always available for them and

there is no goodbyes the following day

so higher salaries because managers cope

with a lot of squares and Ric they have

better skills and they put a lot of

effort and they make lots of huge

decision so their objective is to have

huge salary or higher salary managers

will also wish for business growth as a

bigger business means that managers can

control a bigger and well-known business

of an organization who are stakeholders

there like I said alien

customers are also stakeholders

customers are a very important part of

every business they purchase and consume

the goods and services that the business

produced and provides successful

businesses use market research to find

out customer preferences before

producing their goods so customers are

stakeholders who basically give both

business they affect the business

directly so these are the very important

the core stakeholders of any business

whether they're in service or brought it

to what sector they are it is not matter

because these customers are the main

stakeholders of any business customers

like everyone else also have objectives

and their objectives are prices that

reflect the quality of goods so they

want prices that are affordable and

products that are of good quality so

that is customers objectives customers

objective is that the product they

purchase it needs to be safe and

reliable for example there most will not

be any false advertisement of the

product so they cannot have an

advertisement saying that you can have a

TV with a CD but then the TV turns up

and CD never turns up or for example you

could have a three and one product but

it never has three different ingredients

in it it just has one so does that make

sense I hope it is the product must be

well-designed and of good quality so

they want a product that's well designed

and is to satisfy them basically their

objective is that we as a business meet

their needs that is one of their

objectives government is also a

stakeholder of a business the role of

the government is to protect the workers

and customers from the business

activities and safeguard their interests

so government also have objectives the

government will want the business to

grow and survive as they will bring a

lot of benefit

to the economy and they'll be paying

lots of tax on the goods they produced

and sell a successful business will help

increase the total output of the country

it will improve employment as well as

increase government revenues through

payments of taxes just like I said

earlier so the better business does the

better the government wants it to do

because the Gemara sorry the mora

business is independent the mora

business is doing well the happier the

government is and they will possibly

provide some sort of support to help

them they will expect the firms to stay

within the rules and regulations set by

the government another objective of the

government is that they want the

business is to stay within health and

safety rules with all the regulations

that's been set out by the local

government national or international

government because at the end of the day

no government will want a business to go

ahead and just do whatever they want

they need to follow the guidelines so

that is an objective of the government

who is also a stakeholder of a business

now that banks banks are also

stakeholders these banks provide

financial help for businesses

the biros objective is that if they have

paid the business that they get the

repayment of the amount that has been

given to the business so their main

objective is not on growing the business

or not anything with making profit or

not the bank's objective is that they

get their money back with interest

so that is their biggest objective of

Bank but them I also have another

objective of supporting businesses in

return for some sort of profits the

local community this is also a staple

that this consists of all stakeholder

groups groups especially the third

parties that are affected by business

activities so these could be people or

businesses that are around the business

their objective is that the business

must offer jobs and employ local

employees

so the community 101a business coming up

starting up and then getting workers

from a foreign country for example or a

business in the UK starting off

employing 100 percent of people from

India or Bangladesh or Afghanistan or

any only other place in the world

vice-versa so a business opening in

Afghanistan and then employing people

from India Japan England USA so local

communities will not want that they will

want businesses to open open and employ

the local people so they have job they

have a better community and grow the

community to a better place the

production process of business must in

no way harm the environment so the

community the local communities main

objective or second objective is that

the business that's been opened does not

harm anything their objective is to make

sure that they are not killing the trees

and not releasing any toxic waste that

could later on harm people or the local

villagers or community or what have you

government owned and controlled

businesses do not have the same

objective as those in private sector

because the private sector is mostly

focused on surviving and making profit

the objectives of public sector

businesses or businesses that are

controlled by the government are to do

not aim to maximize their profit they

will have to meet the profit target set

by the government so the public sector

businesses will need to meet the targets

set by the government this is so that it

can be reinvested into the business for

meeting the needs of the society so they

will have to meet a target of making

certain amount of profit so then it can

be reinvested into the communities and

to the social services and to the public

services and to the term support and so

on services the main aim of

the government organization or the

public sector is to provide service to

the community that most meet the quality

targets set by the government so they

will need to provide a service that has

high standards

most of these social enterprises are set

up in order to aid the community this

can be by providing employment to local

citizens providing good quality goods

and services at an affordable rate so

the government aims or the public sector

organization will aim to provide social

funds that can help local community

build and focus on things that really

matters within that community so that

couldn't be one of their objectives

great stuff now our final topic that is

complex of stakeholders and objectives

as all stakeholders have their own aims

they would like to achieve it is natural

that conflicts of stakeholders interests

could occur

therefore if a business tries to satisfy

the objectives of one stakeholder it

might mean that another stakeholders

objective could be unfulfilled so as as

you know the above of a Lea we talked

about so many different stakeholders not

all of them have the same stakeholders

so some of them will clash clash means

like some of them will not come together

they have different aims and they will

not like each other in a sample way for

example where cuz objectives will be to

aim towards earning higher salaries

shareholders on other hand may not want

this to happen as being higher salaries

could mean that less profit will be left

over for the payment of return to the

shareholders does that make sense so the

workers might want lots of money or a

better salary that's one stakeholder

another stakeholder is shareholder

so the shareholder my want more profit

so if the worker wants more money for a

salary for the time they're put invested

into the business then that will mean

that the shareholders who have invested

money into the business will get less

profit returned on the money they have

invested so there will be conflict and

they will clash with each other so

another example would be the directors

and the shareholders because the

directors will want to get a huge amount

of money salary or bonuses but the

shareholders will not want that because

one to get better rates on the money

they have invested into the business so

another example of conflict between

stakeholders can be that the local

community and the business or if they if

the local community expects the business

to do really well and not produce any

rubbish products whereas the

shareholders might they don't care about

if the company's making rubbish products

or not they just want to maximize their

profit so the community might clash with

the shareholders I hope you enjoyed this

video and thank you very much for

watching please make sure that you

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