Business objectives and stakeholders - Business Studies IGCSE Study Notes
Overview
Imagine you're playing a game, like football or a video game. You wouldn't just start playing without knowing what you're trying to achieve, right? You need a goal! Businesses are exactly the same. They need **objectives** (their goals) to know what they're trying to do and how to win. But it's not just about the business itself. Think about your school play. There are the actors, the director, the people who make costumes, and even your parents who come to watch. Everyone has an interest in the play, but they might want different things from it. These people are like **stakeholders** in a business – they are all affected by what the business does, and they often have their own ideas about what the business should achieve. Understanding business objectives and stakeholders helps us see why businesses make the decisions they do. It's like understanding the rules of the game and who the players are, which makes the whole business world much easier to understand!
What Is This? (The Simple Version)
Let's break down these two big ideas:
-
Business Objectives: Think of a business objective as the target a business is trying to hit. Just like when you set a goal to save money for a new game, a business sets goals for itself. These aren't just vague wishes; they are clear, measurable things the business wants to achieve.
- Example: A small bakery might have an objective to "sell 100 cupcakes every day." This is clear and they can easily check if they reached it.
- Why are they important? Objectives give businesses a direction (a path to follow) and help them know if they are being successful (doing well).
-
Stakeholders: Imagine a big tree in a park. Who cares about that tree? The people who sit under it, the birds that live in it, the park rangers who look after it, and even the people who live nearby and enjoy seeing it. All these different groups are stakeholders of the tree.
- In business, stakeholders are any people or groups who are affected by what the business does, or who can affect the business itself. They have an 'interest' in the business.
- Example: For a toy company, stakeholders include the people who buy the toys (customers), the people who work there (employees), the people who own the company (owners), and even the government that makes rules about toy safety.
- Why are they important? Different stakeholders often want different things from the business, and the business needs to try and keep them all reasonably happy to succeed.
Real-World Example
Let's use a real-world example: a local pizza restaurant called 'Pizza Palace'.
Business Objectives for Pizza Palace:
- Objective 1: Make a Profit. Their main goal might be to earn more money than they spend. This is called profit (the money left over after paying all the costs).
- Objective 2: Grow the Business. They might want to open a second Pizza Palace in another town next year.
- Objective 3: Be the Best. They could aim to be known for making the tastiest pizza in the city, getting lots of good reviews.
Stakeholders for Pizza Palace:
- Owners: They want to make a lot of profit and see the business grow.
- Employees (the chefs, waiters, delivery drivers): They want good wages, a safe place to work, and perhaps opportunities to get promoted.
- Customers (you!): You want delicious pizza, good service, and fair prices.
- Suppliers (the people who sell them flour, cheese, tomatoes): They want to be paid on time and have regular orders from Pizza Palace.
- Local Community (people living near the restaurant): They might want the restaurant to be clean, not too noisy, and perhaps even sponsor a local sports team.
- Government: They want Pizza Palace to pay its taxes and follow health and safety rules.
See how everyone has a different 'wish' for Pizza Palace? The business needs to balance all these different wishes while trying to achieve its own objectives!
How It Works (Step by Step)
Here's how businesses usually think about objectives and stakeholders: 1. **Step 1: Set the Main Goal.** The owners or managers decide on the big picture objective, like "make a profit" or "become the market leader" (sell more than anyone else). 2. **Step 2: Break It Down.** They then create smal...
Unlock 3 More Sections
Sign up free to access the complete notes, key concepts, and exam tips for this topic.
No credit card required · Free forever
Key Concepts
- Business Objective: A specific, measurable goal that a business aims to achieve, providing direction and a way to measure success.
- Stakeholder: Any individual or group who is affected by or can affect a business's actions, decisions, and performance.
- Profit Maximisation: The business objective of earning the largest possible profit, meaning more money left over after all costs are paid.
- Survival: A business objective, especially for new or struggling businesses, focused on simply staying in operation and avoiding failure.
- +6 more (sign up to view)
Exam Tips
- →When asked to 'identify' objectives, provide clear, distinct goals (e.g., 'to increase profit,' 'to grow market share').
- →If a question asks about 'stakeholders,' make sure to name specific groups (e.g., 'employees,' 'customers,' 'owners') and then explain what *each* group wants.
- +3 more tips (sign up)
More Business Studies Notes