higher business management - 4 - objectives and stakeholders
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Objectives and Stakeholders
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Objectives and Stakholders
Overview Objectives
General info
Survival, maximising profits, growth, etc Why objectives may not be achieved?
Stakeholders General info Owners, shareholders, customers, government, etc
Conflict between shareholders Questions
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Objectives
Objectives are goals that an organisation has. They are extremely important when a business
is making decisions. Objectives depend on the size of an
organisation, age, state of the economy andwhether it is a public or private organisation.
Types of objectives
General objectives identified and set by the top layerof management. Outline main goals and aims.(strategic objectives)
Specific objectives made in the light of generalobjectives and are focused in their nature they
identify how general objectives can be achieved.
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Objectives
Survival For some businesses,
this is the most
important goal. They may be
concerned aboutkeeping the
business safe frombigger businessestaking over.
Maximising profits To make as a big a
profit as you can.
This doesn't meanthat's all thebusiness wants to dothough.
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Objectives
Growth Becoming larger may
enable a business t
take advantages ofeconomies of scaleand become moreefficient through
having lower costs. Growth can reduce thechance of failure.
Sales maximisation Generating as much
sales revenue as
possible. Popular with sales
staff as they mayreceive bonuses or
salaries according tosales made.
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Objectives
ManagerialObjectives Where ownership and
control areseparated,managers within abusiness may
choose to pursuetheir own individualaims.
eg. to improve theirposition/salary.
Image and SocialResponsibility Improve its public image
and demonstratingcorporate responsibilitythrough measures suchas sponsorship of
worthy causes or acommitment toecologically soundpractices.
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Objectives
Provide a service This is an objective a
charity or local
authority wouldhave.
For example, a schoolhas the objective toprovide an educationto its pupils.
Satisficing Aim only to make a
certain level of profit
which is sufficient tokeep all itsstakeholders happy.
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Why Objectives May Not Be
Achieved They may not be achieved for a number of
reasons: Competition has made it too difficult or
unachievable. Environmental policies are in the way. Demand for your product from the public has
decreased.
Objectives were unrealistic in the first place. Demand of shareholders make it impossible toachieve objectives.
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Stakeholders
A stakeholder is a person, company or groupof people who have an interest in anorganisations success.
Internal Stakeholders External Stakeholders
Owners Customers
Shareholders Trade Unions
Managers Banks and other lenders
Employees SuppliersVolunteers The local community
Donors
Goverment
Pressure groups
Tax payers
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Stakeholders
Owners Their interest invested time, effort and finance
and have taken risks in setting it up. They want it
to succeed and produce profits. Their influence can make decisions about how it
is run (eg. Staff to hire/fire, etc) Shareholders
Their interest want the firm to be profitable toprovide them with good dividends. Their influence can vote for particular directors
and approving dividend payments at the AGM.
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Stakeholders
Managers Their interest receive salaries (and bonuses) so
want it to be profitable. They also want
responsibility. Their influence make important decisions
regarding staff, products, etc. Employees
Their interest want good salaries, jobsatisfaction, job security & good workingconditions.
Their influence standard of their work andindustrial relations (they can go on strike, etc).
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Stakeholders
Customers Their interest want best quality products at low
prices. Their influence they can choose whether or not
to buy the products/services. Suppliers Their interest want their customer to succeed so
they keep purchasing from them.
Their influence changing prices and discountsoffered.
Inland Revenue Their interest interested in the profit as tax is
payable on profits. Their influence the determine the level of tax.
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Stakeholders
Government Their interest wants businesses to succeed as
they provide jobs, generate wealth and provide
government with finance through taxes. Their influence legislation (environmental laws,
etc), economic policies also affect businesses(interest rates, etc).
Local Community Their interest organisations create employmentfor them and generate wealth in the area.
Their influence can petition companies or makecomplaints to their local authority.
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Conflict between stakeholders
All of the stakeholders don't have the sameinterests.
The owner and managers might want to
maximise profits by increasing prices,whereas the customer wants good productsat the lowers price possible.
Therefore, not everyone can be happy with adecision made by an organisation.
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Summary of Stakeholders
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Questions
Describe 1 interest each of the followingstakeholders has in an organisation's firm: Inland Revenue
Employees Creditors. (3)
Describe the ways in which shareholders influenceorganisations. (3)
Describe how 4 different stakeholders of the local
council could influence their future plans. (4) Explain internal factors which could be taken into
account prior to an organisation setting strategicobjectives. (4)