Stakeholders and objectives

Think of a business like a big, busy ant colony. Lots of different ants are doing different jobs, and lots of other creatures might live nearby or visit. All these different ants and creatures are stakeholders – people or groups who have an interest in, or are affected by, what the ant colony (the business) does.

Now, each of these stakeholders has something they want the ant colony to achieve. These are their objectives (their goals or what they want to happen). For example:

• The Queen Ant (the owner) might want the colony to grow bigger and stronger.
• The Worker Ants (the employees) might want good food and a safe place to live.
• The Ant Lion (a customer) might want easy access to food (the ants!).

So, stakeholders are all the people and groups connected to a business, and objectives are what those people and groups want from the business. It's all about who cares and what they care about!

Let's imagine a local bakery, 'Sweet Treats'. Many different people care about this bakery, and they all want different things:

1. The Owner, Mrs. Henderson: She's invested her money and time. Her main objective is to make a good profit so she can pay her bills and maybe open another shop one day. She also wants happy customers and a good reputation.
2. The Bakers and Shop Assistants (Employees): They work there every day. Their objectives include getting a fair wage, having good working conditions (not too hot, safe equipment), and maybe opportunities to learn new baking skills.
3. The Customers: They buy the delicious cakes and bread. Their objectives are tasty, fresh products at a reasonable price, good customer service, and a clean, friendly shop.
4. The Suppliers: These are the people who sell flour, sugar, and eggs to Mrs. Henderson. Their objective is to be paid on time and for 'Sweet Treats' to keep buying their ingredients regularly.
5. The Local Community: People who live near the bakery. Their objectives might be that the bakery doesn't cause too much noise or traffic, and maybe that it supports local events or charities.
6. The Government: They set rules and collect taxes. Their objectives are that 'Sweet Treats' follows health and safety laws, pays its taxes, and employs people (reducing unemployment).

See how everyone has a different 'wish list' for Sweet Treats? Mrs. Henderson has to try and keep as many of these people happy as possible!

Businesses deal with stakeholders and their objectives in a few key steps:

1. Identify the Players: First, the business needs to figure out who all its stakeholders are. This is like making a list of everyone who cares about your football team – players, coaches, fans, stadium owners, etc.
2. Understand Their Wants: Next, the business tries to understand what each stakeholder group wants. What are their objectives? The fans want to win, the players want to play well, the stadium owners want to sell tickets.
3. Spot the Conflicts: Often, what one stakeholder wants might clash with what another wants. For example, customers want low prices, but employees want high wages. This is a conflict of objectives.
4. Prioritise and Balance: The business can't make everyone 100% happy all the time. It has to decide which stakeholders are most important at a given time and try to find a balance. This is like a chef trying to make a meal that pleases different tastes.
5. Communicate and Act: Finally, the business needs to talk to its stakeholders and take actions that try to meet their objectives, even if it's not perfect for everyone. This builds trust and helps the business succeed in the long run.

We can sort stakeholders into two main groups, like sorting your toys into 'inside the house' and 'outside the house' toys:

• Internal Stakeholders: These are people or groups inside the business. They are directly part of the organisation. Think of them as the family living inside the house.

  • Examples: Owners (like Mrs. Henderson), Managers (people who run different parts of the business), and Employees (the workers).
  • Their objectives often relate to things like profit, job security, good working conditions, and business growth.

• External Stakeholders: These are people or groups outside the business, but who are still affected by it or affect it. They are like the neighbours, the postman, or the people who deliver groceries to your house.

  • Examples: Customers, Suppliers, Lenders (banks who lend money), Government, and the Local Community.
  • Their objectives vary widely, from good quality products (customers) to environmental protection (community) to tax collection (government).

It's rare for everyone to want exactly the same thing! This is where conflicts of objectives happen, like two friends wanting to play different games. Here are some common clashes:

• Owners vs. Employees: Owners might want to keep wages low to increase profits, but employees want higher wages and better benefits. (More money for one often means less for the other).
• Customers vs. Owners: Customers want low prices and high quality. Owners want to charge higher prices to make more profit. (Cheaper products can mean less profit).
• Business vs. Local Community: A business might want to expand its factory (to make more money), but the local community might worry about noise, pollution, or increased traffic. (Growth can cause disruption).
• Short-Term vs. Long-Term: A business might want to make a quick profit now (short-term objective) by cutting costs, but this might mean using cheaper materials that damage its reputation later (bad for long-term objectives like brand loyalty).

Businesses have to constantly weigh these conflicts and make decisions that try to balance the needs of different groups.

Here are some traps students often fall into and how to dodge them:

• ❌ Mistake 1: Confusing stakeholders with shareholders.

  • Why it happens: The words sound similar!
  • How to avoid it: Remember, shareholders are owners of a company (they own 'shares'). They are one type of stakeholder. Stakeholders is the much broader group, including everyone who cares, not just owners. Think of it like all dogs are animals, but not all animals are dogs. All shareholders are stakeholders, but not all stakeholders are shareholders. ✅

• ❌ Mistake 2: Only listing profit as an objective for all stakeholders.

  • Why it happens: Profit is a big deal in business, so it's easy to think everyone wants it.
  • How to avoid it: While owners definitely want profit, think about what else other groups want. Employees want good pay and conditions. Customers want quality and value. The government wants taxes and legal compliance. Always think from their perspective. ✅

• ❌ Mistake 3: Not explaining why a stakeholder has a certain objective.

  • Why it happens: Students just list objectives without connecting them to the stakeholder's role.
  • How to avoid it: Don't just say 'Customers want low prices'. Explain why: 'Customers want low prices because they want good value for their money and to save their own income.' Always add the 'because' or 'so that' to show you understand the underlying reason. ✅