Stakeholders & Business Objectives
— Business · AS Level (9609) · Unit 1 —
★ Exam Tip: The definition of stakeholders is a classic 2-marker — learn it word for word. Also be ready to link different objectives ⇒ conflict.
1. What are Stakeholders?
Definition (2 marks):Stakeholders are groups of individuals who are connected to the business and they get affected by the business activity (and decisions) whether directly / indirectly / positively or negatively.
Common mistake: "stakeholders = shareholders". Shareholders ARE stakeholders but not the only ones. (Orange is a fruit, not the only fruit; black is a colour, not the only colour.)
Affected by business ACTIVITY
Example — Imtiaz Supermarket (Karachi, Tariq Road):
- Customers + cars + parking ⇒ traffic congestion ⇒ local community badly affected (−ve)
- No other big departmental store nearby ⇒ groceries & daily needs easily available (+ve)
- So local community = stakeholder (affected both ways)
Example — Multinational enters the economy:
- +ve: creates employment
- −ve: ecological damage, exploits resources
Remember: stakeholders are affected positively AND negatively — always mention both.
Affected by business DECISIONS
Not only activity/production — whenever management takes a decision, stakeholders are affected. (An ignored area — students don't discuss it!)
Example — College relocation:
College moves to a bigger campus in September (mid-session) ⇒ teachers get a longer commute, students & staff affected, parents' drop-off changes. ⇒ decision of the college affected everyone.Extra (not in syllabus): trees (deforestation for wood/paper), the ecological environment (factory pollution) and marine life (dumping waste in rivers/sea) can also be seen as "stakeholders". Syllabus only tests specific groups (next sections).
2. Types of Stakeholders
- Internal = found within the organisation / premises of the business
- External = outside the organisation / outside the business
3. Stakeholder Groups & Their Objectives
| # | Group | Type | Objectives (what they want) |
|---|---|---|---|
| 1 | Owner | I | Profit maximisation · efficiency |
| 2 | Manager | I | Expansion |
| 3 | Employees | I | Proper pay scale · safer working conditions · no discrimination |
| 4 | Banks | E | Interest |
| 5 | Suppliers | E | Fair prices · timely payments · regular orders |
| 6 | Shareholders | E | Higher dividends · increase in share price |
| 7 | Government | E | Laws implementation · taxes |
| 8 | Local community | E | No negative externalities · facilities · employment |
| 9 | Customers | E | Value-for-money products · prices ↓ |
| 10 | Pressure group | E | Same as local community |
Note (board): Government was numbered "9" by slip (it is the 7th group). "Proper pay scale" was written between the manager and employee rows — it fits employees (managers want pay too). "Fair prices" sits below the dotted line under Banks, so it belongs to suppliers.
4. Conflict Between Stakeholder Groups
Q: How might a conflict occur between two stakeholder groups?
A difference in objectives will lead to conflict between two different stakeholder groups.
5. What are Business Objectives?
Business objectives = purpose of existence! (aim / goals / targets)
Definition:Business objectives are the aims, goals and targets that a business sets to achieve over a period of time.
Objective vs Strategy
| Objective | Strategy |
|---|---|
| What to achieve? (destination) | How to achieve? (route) |
6. Importance of Setting Business Objectives
- To make an effective strategy
- To complete a business plan
- To review the progress / performance of the business
- To provide a sense of direction to management and targets to workers
- Helps in maximising efficiency and reducing wastage of resources
- To write down the mission statement
Mission statement:A written expression / statement that outlines the objective and communicates it with all the connected stakeholders.
7. Framework: SMART Objectives
Business objectives should be:
| Letter | Means | In other words |
|---|---|---|
| S | Specific | particular |
| M | Measurable | quantifiable — a number (10%, 15%) |
| A | Attainable | accessible |
| R | Realistic | time-period / accept(able) (as written) |
| T | Time-specific | deadline |
Example (SMART objective):
Increase market share by 30% in Asia by 2030 → a number (measurable) + a deadline (time-specific).8. Types of Business Objectives
| Private sector | Public sector |
|---|---|
| Survival ✓ · profit satisficing · expansion · increase market share · profit maximisation · CSR (corporate social responsibility) · increasing shareholder value | Needs · welfare · employment |
① Survival (short-term)
- Typical of start-ups / newly born businesses
- Facing negative forces; trying to get a foothold in the market
- Aim: reach break-even point = no profit, no loss
(Teacher ticked survival on the board as the first private-sector objective.)
② Profit satisficing
- Aim for a satisfactory profit (satisfaction), not the maximum
- Motivation to continue the business
- Return covers needs / standard of living
- Common in small businesses
③ Expansion / growth
- Size ↑, scale of operation ↑
- Can gain economies of scale ⇒ cost ↓ ⇒ cost benefit
- Brand image ↑ / customers ↑
④ Increase market share
Compare sales of the business with sales of the whole market.
Market share = Sales of XSales of whole market × 100 = %
= $20m / $100m × 100= 20%
- Number of customers ↑ ⇒ price reduction strategy is often used
- Market share ↑ = leadership! ⇒ price setter ⇒ can raise prices ↑
⑤ Profit maximisation
Heading only on the board — owners' objective of the highest possible profit (see owner in section 3).
⑥ Increase shareholder value
- For a PLC: performance ↑
- → profit ↑ ⇒ dividends ↑ ✓
- → share price ↑ ⇒ investment ↑ ✓
Note: CSR is listed on the board for private sector but not explained there.
9. Objectives Change Over Time
Business objectives do change over a period of time.
| Internal factors | External factors |
|---|---|
| Owner's willingness · change in management | Economic recession · pandemic · state of war |
10. Translation of Business Objectives
Big goals are broken down into smaller targets for each level.
11. Quick Recap — Cheat Sheet
✓ Stakeholders
- Groups connected to business, affected by activity + decisions, directly/indirectly, +ve/−ve
- Internal: owner, managers, employees · External: banks, suppliers, shareholders, govt, local community, customers, pressure groups
- Different objectives ⇒ conflict (e.g. manager long-term expansion vs shareholder short-term dividends)
✓ Business Objectives
- Aims/goals/targets over a period of time · objective = what, strategy = how
- SMART: Specific, Measurable, Attainable, Realistic, Time-specific
- Private: survival, profit satisficing, expansion, market share, profit max, CSR, shareholder value · Public: needs, welfare, employment
- Market share = sales of X ÷ sales of whole market × 100
- Objectives change: internal (owner, management) · external (recession, pandemic, war)