1.5 Business Objectives and Stakeholder Objectives | IGCSE Business

Homearrow_rightBusiness Studies arrow_right Revision Notes arrow_right IGCSE arrow_right Understanding Business Activity arrow_right Business Objectives And Stakeholder Objectives

Cambridge IGCSE Business (0264) syllabus reference: 1.5.1 and 1.5.2

Success criteria - by the end of this topic you can:

explain common business objectives and why they are important
identify internal and external stakeholders and their objectives
explain how stakeholder objectives can conflict

Business objectives

Key terms
Business objective - an aim or target that a business works towards.
Stakeholder - any person or group with an interest in, or affected by, the activities of a business.

Common business objectives

Objective	When it is likely to matter most
Survival	New businesses; during a recession or strong competition
Growth	Established businesses wanting economies of scale and security
Profit	Private sector businesses rewarding owners and funding investment
Market share	Businesses facing competitors; can lead to higher profit later
Social / ethical objectives	Social enterprises; businesses protecting their reputation

Why objectives are important: they give a target to work towards, focus decision-making, help motivate employees, and allow success to be measured. Objectives can change over time, e.g. from survival to growth.

Stakeholder groups

Stakeholders and their objectives

Stakeholder	Internal / external	Likely objectives
Owners / shareholders	Internal	Profit, dividends, growth in the value of the business
Managers	Internal	High salaries, job security, power and status
Employees	Internal	Good pay, job security, safe working conditions, training
Customers	External	Good quality, low prices, good service
Suppliers	External	Regular orders, prompt payment
Lenders / banks	External	Interest paid and loans repaid on time
Government	External	Jobs, taxes, legal behaviour, economic growth
Local community	External	Jobs, low pollution, safe roads, support for local facilities

Conflicting objectives

Owners want higher profit by cutting costs - employees want higher wages and job security.
A new factory gives the government jobs and tax - the local community faces pollution and traffic.
Customers want low prices - shareholders want higher profit margins.

Real-world example When a business automates a factory, shareholders may gain from lower costs while employees face job losses - a classic stakeholder conflict.

Exam tip

In conflict questions, name both stakeholder groups and explain what each wants and why the decision helps one but harms the other.

Analysis chains - use these to build 6 and 8-mark answers

New business [k] - high risk of failure [an] - survival is the main objective [an] - profit becomes the aim later [an].
Factory automation [k] - lower costs for shareholders [an] - but job losses for employees [an] - conflict between stakeholder objectives [an].

Check your understanding - exam-style practice

1. Identify two internal stakeholders. [2]
2. Explain two reasons why business objectives are important. [6]
3. Explain how the objectives of customers and shareholders might conflict. [4]
Write your answers, then check them against these notes and the Exam Technique Sheet.

📝 Practise this topic

Case Study 1 (Paper 1 style, 20 marks): Questions · Mark scheme · A* answers

Case Study 2 (Paper 2 style, 20 marks): Questions · Mark scheme · A* answers

End of Unit 1: Unit 1 Review case studies →

All Unit 1 topics← 1.4 Types of Business Organisation