Chapter 5
Business objectives and stakeholder objectives
2
Grade 9 British Lesson
Lesson Objectives
• What is meant by business objectives
• Describe type of objective of private sector
businesses
• Outline the reasons why business objective can
change
• Identify objectives of Public sector businesses
Importance of setting objectives
• Provide clear target.
• Business performance can be
analyzed.
• Make decision making easy.
Objectives of Private Sector
1. Survival
If a business does not survive, its owners lose everything. Therefore,
businesses need to focus on this objective the most when they are:
starting up, competing with other businesses, or in an economic
recession.
2. Profit
• Profit is what keeps a company going and is the main aim of most
businesses. Normally a business will try to obtain a satisfactory level of
profits so they do not have to work long hours or pay too much tax.
• Profits are needed to
• Pay return to the owners
• Provide finance for further investment
Objectives of Private Sector Businesses
3. Returns to Shareholders
• This is to discourage shareholders from selling their shares
and it helps managers to keep their jobs.
Return to shareholders are increased in two ways
• Increasing profit ( to give dividend)
• Increasing share price ( by growth in business)
Objectives of Private Sector
Businesses
4. Growth
• Growth can only be achieved when customers are
satisfied with a business.
When businesses grow
• They create more jobs and make them more secure.
• The status and salary of managers are increased.
• a business is able to spread risks by moving to other
markets,
• It gains a larger market share.
Objectives of Private Sector
5. Market share
Market share is the proportion of total market sales achieved by one business
Increased market share give a business
• Good publicity
• Increased influence over suppliers
• Increased influence over consumers
• 6. Providing a service to society
• A social enterprise has social objectives as well as an aim to make a profit to
reinvest back into the
business.
• Social entrepreneur has often three objectives
• To provide jobs
• and support for disabled and homeless
• To Protect environment
Why Business objectives could change
• When survival has achieved business may
works towards higher profits
• When high market share is achieved business
may work for higher return to shareholders
• Profit making business may set survival as
short-term objective if there is recession in
economy.
Objectives of public sector
businesses
• To provide service to the public and meet
quality targets set by government.(service)
• To protect or create employment in certain
areas.(Social)
• To meet profit targets set by government.
(financial)
