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SingaporeBusiness StudiesSyllabus dot point

What are businesses trying to achieve, who has a stake in them, and what happens when those groups want different things?

Explain the objectives a business may set, the meaning and aims of the main stakeholder groups, and how the objectives of stakeholders can conflict

A focused answer to the O-Level Business Studies outcome on objectives and stakeholders. Common business objectives, the aims of owners, workers, customers, suppliers, government and the community, and how stakeholder objectives can conflict.

Generated by Claude Opus 4.88 min answer

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  1. What this dot point is asking
  2. The answer
  3. Examples in context
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What this dot point is asking

This outcome wants you to explain the objectives a business may set, to describe the main stakeholder groups and what each wants, and to show how the objectives of different stakeholders can conflict. The central idea is that a business is not run for one group alone: many groups have an interest in it, and their aims do not always agree.

The answer

Business objectives

An objective is a target a business aims to achieve. Common objectives include:

  • Survival - especially for a new business in its early, risky months.
  • Profit - earning a surplus, the most common long-term objective for private firms.
  • Growth - increasing sales, market share or the size of the business.
  • Market share - selling a larger proportion of the total market than rivals.
  • Customer satisfaction and service - building loyalty and a good reputation.
  • Social and environmental aims - behaving responsibly toward people and the planet.

Objectives often change over time. A start-up may aim simply to survive, then shift to profit and growth once established.

Stakeholders and their objectives

A stakeholder is any person or group with an interest in a business. The main groups and their typical aims are:

  • Owners and shareholders - want profit and a good return on their investment.
  • Employees - want fair pay, job security and good working conditions.
  • Customers - want good-quality products at fair prices with reliable service.
  • Suppliers - want to be paid on time and to receive regular, growing orders.
  • Government - wants taxes paid, laws obeyed and jobs created.
  • Local community - wants jobs and few negative effects such as pollution, noise or heavy traffic.

Stakeholders can be internal (owners, employees) or external (customers, suppliers, government, community).

How stakeholder objectives conflict

Because stakeholders want different things, their objectives often conflict. One group's gain can be another's loss:

  • Owners want higher profit, but cutting wages to raise profit harms employees.
  • Customers want lower prices, but that can reduce the profit owners want.
  • Owners may want to expand a factory, but the local community may object to noise and traffic.
  • Paying suppliers faster helps them, but uses cash the owners would rather keep.

Managers must balance these competing aims. They cannot satisfy everyone fully, so they make trade-offs, and how they balance stakeholders affects the firm's reputation and long-term success.

Examples in context

Example 1. A new restaurant's changing objectives. When a restaurant first opens, its objective is usually survival: it must cover rent and wages and build a customer base before it runs out of cash. Once established and profitable, the owner may switch to growth, opening a second branch, and to building customer loyalty. This shows how objectives shift over the life of a business rather than staying fixed.

Example 2. A factory expansion and the community. A manufacturer that wants to expand its plant to grow profit may face objections from the local community over extra traffic, noise and pollution. The owner's growth objective conflicts with the community's objective of a pleasant, safe neighbourhood. The firm might compromise by limiting delivery hours or adding noise barriers, illustrating how managers must balance conflicting stakeholder objectives rather than ignore one side.

Try this

Q1. Define the term stakeholder. [2 marks]

  • Cue. A stakeholder is any individual or group with an interest in a business and its performance, such as owners, employees, customers, suppliers, the government and the local community.

Q2. State two objectives a newly opened business is most likely to have. [2 marks]

  • Cue. Survival (getting through the risky early period without running out of cash) and, closely linked, building enough sales and customers to cover costs; growth and higher profit usually come later.

Q3. Explain one way the objectives of owners and employees might conflict. [4 marks]

  • Cue. Owners want higher profit and may try to achieve it by cutting wages or reducing staff numbers. Employees want fair pay and job security, so a wage cut or redundancies directly oppose their objectives. The owners' gain in profit is the employees' loss in pay or jobs, a clear conflict that managers must manage carefully because unhappy workers can harm quality and service.

Exam-style practice questions

Practice questions written in the style of SEAB exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.

Original4 marksIdentify two stakeholder groups of a supermarket and state one objective each group is likely to have.
Show worked answer →

Any two stakeholders with a matching objective, for example:

Customers: want good-quality products at low prices and a wide choice.

Employees: want fair wages, job security and good working conditions.

(Other acceptable pairs: owners or shareholders want profit and a return on investment; suppliers want to be paid on time and receive regular orders; the local community wants jobs and minimal noise or traffic; the government wants taxes paid and laws obeyed.)

Markers reward two correctly named stakeholder groups, each paired with a realistic objective for that group.

Original8 marksA clothing manufacturer wants to cut its costs by moving production to a cheaper overseas factory. Discuss how this decision might affect different stakeholder groups, and whether their objectives conflict.
Show worked answer →

Identify affected stakeholders. Owners/shareholders, employees, customers, the local community and suppliers are all affected by moving production overseas.

Analyse the effects. Owners and shareholders benefit because lower costs raise profit, meeting their objective of a good return. Customers may benefit if lower costs mean lower prices, meeting their objective of value. However, local employees lose their jobs, which directly conflicts with their objective of job security, and the local community suffers from lost jobs and spending. Local suppliers may also lose orders.

Show the conflict. The objectives clearly conflict: the owners' aim of higher profit is achieved at the expense of the workers' aim of secure jobs and the community's aim of local employment. One group's gain is another's loss.

Reach a judgement. Whether the move is justified depends on how the business weighs these groups. A profit-focused owner may proceed, but it risks damaging its reputation and worker morale, and could face criticism for putting profit above people. A balanced judgement notes that the decision benefits some stakeholders and harms others, so there is a genuine conflict of objectives that management must manage, for example through redundancy support or phased change.

Markers reward identifying several stakeholders, analysing gains and losses, explicitly showing the conflict between profit and jobs, and a justified judgement.

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