The objectives of increasing profit and maintaining high customer satisfaction can often be in conflict. While increasing profit typically involves reducing costs and potentially lowering prices, this can sometimes negatively impact customer satisfaction. Reducing costs might involve using cheaper materials, which could compromise product quality. Lowering prices to attract more customers could lead to reduced profit margins.

For example, a company might decide to cut back on after-sales service to reduce costs and increase profit. This, however, would likely lead to dissatisfied customers who feel unsupported. Similarly, a company aiming for high profit margins might increase prices, potentially deterring price-sensitive customers and reducing sales volume. This demonstrates the trade-off between profitability and customer value.

Another example could be a company focusing on cost efficiency by reducing employee training. While this lowers labour costs and boosts profit, it could result in lower quality service and ultimately dissatisfied customers. Therefore, businesses must carefully balance these competing objectives to achieve sustainable success.

The following table outlines the key objectives of different stakeholders and potential areas of conflict:

This table demonstrates how the objectives of different stakeholders can sometimes be at odds, requiring businesses to carefully consider the interests of all stakeholders when making decisions.

Businesses operate within a complex web of external stakeholders, each with distinct expectations. Understanding and managing these expectations is crucial for long-term success.

Customers expect quality products or services at a reasonable price, good customer service, and ethical business practices. They want to feel valued and that their needs are met.

Suppliers expect timely payments, clear orders, and a stable, long-term business relationship. They need to be confident in the business's ability to fulfill its commitments.

Lenders/Banks prioritize financial stability, profitability, and a sound business plan. They require evidence of good financial management and a reasonable level of risk.

The Government expects businesses to comply with laws and regulations, contribute to the economy through taxes and job creation, and adhere to ethical standards. They may also have specific expectations related to environmental protection and social responsibility.

The Local Community expects businesses to contribute to the local economy through job creation, support local initiatives, and minimize negative impacts on the environment and community well-being. They often value businesses that demonstrate social responsibility.

Balancing these conflicting expectations is a significant challenge. A business might attempt this through:

• Transparent Communication: Regularly communicating with all stakeholders about the business's performance, plans, and challenges.
• Ethical Practices: Adhering to high ethical standards in all aspects of the business, building trust with stakeholders.
• Stakeholder Engagement: Actively seeking input from stakeholders through surveys, focus groups, or consultations.
• Corporate Social Responsibility (CSR): Implementing initiatives that benefit the community and the environment, demonstrating a commitment to social responsibility.
• Strategic Planning: Incorporating stakeholder expectations into the business's strategic plans and decision-making processes.

Ultimately, a successful business strives to find a balance that satisfies the needs of its key stakeholders, recognizing that the well-being of one stakeholder often impacts others.