Page 67 - Cambridge IGCSE Business Studies

5: Business objectives and stakeholder objectives

Objectives of stakeholder groups

Table 5.1 identifies the main objectives of internal and external stakeholders.

Stakeholder Objectives

Internal
Owners/stakeholders To receive high returns/dividends as reward for risking their investment in the business.
To benefit from an increase in share value.
Managers To have job satisfaction and status.
To receive salary increase and bonuses.
Employees To have job security.
To receive a fair wage that reflects their contribution to the business’s success.
External

Lenders To receive interest payments when due.
To have borrowing repaid by the due date.
Suppliers To receive prompt payment for goods supplied on credit.
To be treated fairly and not be forced to reduce their prices by businesses with strong buying
power.

Customers To receive quality goods and after sales service.
To be charged a fair price which gives value for money.
Government To be paid the correct amount of taxes on time.
To have minimal spending on unemployment benefits.
Local community To receive benefits for the local economy such as employment and subsidising community
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facilities.
To avoid the negative impact of business activities such as noise, air and traff ic pollution.
Table 5.1 Main objectives of business stakeholders

As you have already seen, the decisions and activities of a business may have

positive and negative effects on stakeholders. Stakeholders too have their own
objectives that they will want to achieve through their relationship with the
business in which they have an interest. You will not, therefore, be surprised to
learn that there is oft en conflict between two or more business stakeholders. Th is

is because it is often not possible for a business decision or activity to satisfy the

differing objectives of different groups of stakeholders. Sometimes a single business

decision or activity will have both positive and negative effects for the same
stakeholder.
ACTIVITY 5.4

Look at each of the following statements about the decisions and activities of diff erent businesses.

Statement A Statement B
A company decides to invest $5 million in A local supermarket has decided to expand
new technology. The investment will be the size of its store. It will now be able to add
funded from profits. The new technology an in-store bakery. The expansion will be
will mean it needs 30 fewer workers. financed through a long-term bank loan.