stakeholder objectives

Stakeholder Objectives

Stakeholder Objectives (based on their needs / expectations, might include:Stakeholder Objectives (based on their needs / expectations, might include:

Owner Wealth, profits, growth, reputation.

Summary of Stakeholder Objectives

ObjectivesObjectivesStakeholderStakeholder

Shareholder Capital gain on shares; regular, secure / high dividends; a say in the business.

Directors & Managers

Job security, status, personal power, high rewards; organisational profitability / growth; lack of interference in decisions.


Objectives Objectives StakeholderStakeholder

Employees High / fair play, interesting work, job security, promotion, training opportunities, safe working environment, fair treatment, a say in decisions.



Customers &

Consumers

Quality / value for money; functional safe products; clear, accurate product / service information; accessibility to product / service; choice; credit facilities; high standards of customer choice.



Suppliers Secure, regular & profitable contracts; discounts; timely payment; good working relationship; fair terms of trade;organisational growth.



Creditors Timely payment, good security.



Competitors Fair and ethical competition.



Government Job creation; payment of taxes; compliance with environment, health, safety and environmental legislation.



Local Residents

Employment; investment and sponsorship in local events; minimum noise, congestion and pollution.



Trade Unions Protection of employee rights, eg fair and equal treatment.



Pressure Groups

Minimisation of waste, pollution; re-cycling and respect for the natural environment; equal opportunities; maintenance of standards and codes of practice.



Some insist on corporate responsibility:demand improvements in working conditions, control of emissions, waste; influence decisions over suppliers.

Some insist on corporate responsibility:demand improvements in working conditions, control of emissions, waste; influence decisions over suppliers.

How Stakeholder Objectives Affect the Behaviour and Decisions of the Firm Owners and Shareholders

Others:influence business to take most profitable option, (regardless of the effect on society).

Others:influence business to take most profitable option, (regardless of the effect on society).

How Stakeholder Objectives Affect the Behaviour and Decisions of the Firm Owners and Shareholders

May have their own agenda eg increased pay, power, status – make business decisions which

help achieve these goals, rather than the owner(s).

May have their own agenda eg increased pay, power, status – make business decisions which

help achieve these goals, rather than the owner(s).

Directors and Managers

How Stakeholder Objectives Affect the Behaviour and Decisions of the Firm

Higher expectations: demand better working conditions, better quality of working life, want to be consulted.

Higher expectations: demand better working conditions, better quality of working life, want to be consulted.

Employees


Forces business to look for ways of attracting and retaining staff, particularly if high competition for staff, eg by offering:

Forces business to look for ways of attracting and retaining staff, particularly if high competition for staff, eg by offering:

Employees


• attractive rewards packages• a chance to participate• flexible working arrangements.

How Stakeholder Objectives Affect the Behaviour and Decisions of the Firm Employees

Generally more educated, experienced – higher expectations, different objectives to previous generations.

Generally more educated, experienced – higher expectations, different objectives to previous generations.

Customers / Consumers


Force firm to adopt a more customer orientated approach – led to ‘customer care’ departments / policies / charters, plus increased provision of ‘after sales’ services.

Force firm to adopt a more customer orientated approach – led to ‘customer care’ departments / policies / charters, plus increased provision of ‘after sales’ services.

How Stakeholder Objectives Affect the Behaviour and Decisions of the Firm Customers / Consumers

Want profit and / or organisational growth – timely payment important.

May offer discounts – influence a business to ensure payment is made on time.

Want profit and / or organisational growth – timely payment important.

May offer discounts – influence a business to ensure payment is made on time.

Suppliers


Government macro economic objectives include: Government macro economic objectives include:

Government

• Stable economic growth• Low inflation • Low unemployment• A healthy balance of payments.


General ways these objectives benefit business: General ways these objectives benefit business:

• Stable economic growth – greater income to spend on goods / services – greater sales, profits, better cashflow.

How Stakeholder Objectives Affect the Behaviour and Decisions of the Firm Government


Government

• Stable prices / low inflation – helps ensure workers don’t become concerned about wage levels and forceful about pay increases (above rate of inflation).



• Low unemployment – helps keep steady demand for a firm’s products as consumers have a regular income.


To achieve objectives government use: To achieve objectives government use:

• Monetary policy: the money supply, rates of interest, exchange rates, amount of credit available, to control the level of spending within the economy.


Monetary policy: Monetary policy:

Eg if inflation – the government will increase interest rates to

reduce demand.



• Fiscal policy: The use of government taxes to control level of consumer spending and business activity


Fiscal policy: Fiscal policy:

Eg if low demand (resulting in unemployment) – Govt will

lower taxes – people more money to spend.



• Exchange rate / trade policy: The price at which one country’s currency is converted into another.



Fixed – central bank buys when market pressures are forcing the value down, (and vice versa). Freely floating – central bank does not intervene.



• Supply side policies: Those designed to encourage the free working of markets, including labour, capital, land


Supply side policy:Supply side policy:Eg restricting union activities,

reducing unemployment benefit (labour);

Ending monopoly controls + restrictive practices (capital).


Policies used have a direct and indirect influence eg: Policies used have a direct and indirect influence eg:

• increase in interest rates – may make an investment too costly.

• Changes in corporation tax or VAT – impinge on profit, encourage business to reinvest.


Policies used have a direct and indirect influence eg: Policies used have a direct and indirect influence eg:

• Government grants and subsidies (supply side policies) – persuade a business to locate in one area over another.


Pressure Groups

May force a business to pursue an environmental objective to avoid negative publicity, and subsequent fall in sales.

May force a business to pursue an environmental objective to avoid negative publicity, and subsequent fall in sales.


Overall, the influence the various stakeholders have will depend upon: Overall, the influence the various stakeholders have will depend upon:

• the nature of the business’s activities. • its size, type of legal structure.



• the amount of capital invested and position held within the business (where applicable).

• government legislation.



• degree of media attention given to a particular stakeholder’s cause.


Businesses who recognise the influence stakeholders can have on their business, especially their image and reputation, and take into account their objectives when setting business objectives / deciding how to meet them, are likely to be the most successful.

Businesses who recognise the influence stakeholders can have on their business, especially their image and reputation, and take into account their objectives when setting business objectives / deciding how to meet them, are likely to be the most successful.


- END -


2871: Businesses, Their Objectives and Environment

OBJECTIVES & STRATEGY

stakeholder objectives

Documents

business decisions

waste influence decisions

firm owners

working conditions

safe working environment

firm higher expectations

firm forces business

firm employeesgenerally