Business Objectives and the Role of Stakeholders
- Providing a service
Profit is when a business just wants to make a lot of money from the products they sell, they may want to maximise their profits
Growth is when a business chooses to grow bigger, go national or even international, but this can also mean growth in terms of market share
Survival is used for business start ups or when the business is facing problems, it is usually only temporary
Providing a service can be linked to profit, if you treat the customers well then they will buy more of your products and hopefully increase profits
Conflicts in Business Objectives
Growth Vs Profit
For a business to grow, profit must be sacrificed to pay for a new outlet, or expanding market share by taking over another business, but either way profit must be used so they cannot both be objectives at the same time.
Growth Vs Service
A business may provide a good service because it is small and knows the customers well. With growth the business will lose touch with its customers and so the level of service could fail.
Survival Vs Profit
When a business has survival as its main objective it is unlikely to have profit or growth as an objective. However the business may see providing a good service as a way of surviving because it means they should keep their customers.
Business Objectives in the Public and Private Sect
The Private Sector
In the private sector all of the businesses are owned by individuals rather than the government. Objectives in the private sector are generally centred around growth and profit. This is mainly because an individual has to take a risk when starting up a business but the reward comes as the business becomes profitable and so the owner(s) will get all of the money.
The Public Sector
In the public sector all of the businesses are owned by central or local government. Businesses include: health, education, police, fire services and council services. It also includes national corperations like the BBC. Generally in the public sector the main objective of the business is to provide a good service. For example imagine the fire service having profit as their main objective!
Stakeholders in Business
A stakeholder can be an individual or a group who has an interest in a business, there are many different stakeholders and the often go beyond the business itself. This is because its not just the people in the business that care about the business it is also the people who live near by and the people that help the business do well.
Stakeholders In Business:
- Workers --- They rely on work for pay, if the business fails they have no job
- Managers --- Also rely on the business as a job, but may have to make redundency
- Owners --- Only interested in how well the business is doing for their dividends
- Pressure Groups --- Put pressure on businesses to be 'green'
- Suppliers --- If the business fails then they lose a customer to supply to
- Competitors --- Will want to see how well their rivals are doing and how to improve
- Local Community --- A business could improve their local area, or ruin it
- Customers --- Want to see low, competitive prices, recieve good service and quality