Unit 1.5 - business & stakeholder objectives

Question 1

What is a business objective?

Answer 1

A goal an organization work towards achieving in order to reach its long terms targets. It needs to be SMART (specific, measurable, achievable, realistic, timely).

Question 2

What is a business target?

Answer 2

An aim of a business expressed as a quantifiable number

Question 3

What is a mission statement?

Answer 3

Statement of the purpose & goals of an organization

Question 4

What is profitability?

Answer 4

The ability of a business to continually generate revenues that exceed its costs

Question 5

What are 4 common business objectives?

Answer 5

1. Survival - usually for small business in early years of operation that suffer from cash-flow problems.
2. Growth
3. Profit - needed for survival, growth, and to keep owners & shareholders happy. Achieved by increasing revenue or decreasing costs
4. Increase market share

Question 6

What is a social enterprise + objectives?

Answer 6

A business that aims to benefit society while still making a profit (to fulfill its social cause). Profitability is not its main objective; decrease in social inequality, reduce unemployment rates in particular area, benefit environment, support vulnerable communities etc. They can ask for money from governments or local communities if needed.

Question 7

What is a stakeholder?

Answer 7

Anyone who is interested in a business and its activity.Can be internal & external. They may influence business objectives and their interests may conflict with each other.

Question 8

What is a shareholder?

Answer 8

A person who owns shares in a limited company, making them one of the business’s owners.

Question 9

State 3 internal stakeholders + objectives

Answer 9

1. Employees - need to be motivated and paid for their time, effort & expertise. Want job to be secure.
2. Managers - need to understand needs of both owners and employees & feel motivated to direct employees
3. Shareholders - owners of the business (shares). They need to know that business is profitable, growing & competitive. Look for maximum profit from their shares. They finance business & make many important decisions.

Question 10

State 6 external stakeholders + objectives

Answer 10

1. Customers -good value & customer service. Good quality
2. Suppliers - regular orders & to be paid on time
3. Government - correct amount of tax & business provides employment
4. Competitors - doing better than business to win over consumers
5. Local community - wants business to benefit them, not to produce pollution, not to generate undisposable waste
6. Pressure groups/trade unions - protect employees and protest against unsafe working conditions, low pay & not acting sustainably

Question 11

Give 3 examples of common stakeholder conflict

Answer 11

1. Owners & pressure groups - owners want to maximise profit & grow, which pressure groups want business to act sustainably
2. Employees & owners - owners want to maximize profit, so reduce costs on training, wages, number of employees while employees want to be financially secure.
3. Competitors & owners - may be conflict due to too similar products or one holding monopoly over customers