the objectives of businesses in the private sector, public sector and social enterprises

1.4 Business Objectives – Private, Public and Social Enterprises

Learning Objective

Understand the range of objectives pursued by organisations in the private sector, public sector and social enterprises, and how these objectives relate to mission statements, aims, strategy, tactics, ethics, stakeholder interests and performance measurement.

Key Definitions

• Private sector: Companies owned by individuals or shareholders whose main purpose is to generate profit for owners.
• Public sector: Organisations owned and funded by the government that deliver services for the public good.
• Social enterprise: A hybrid organisation that combines commercial activity with a clear social or environmental mission.

SMART Objectives (All Sectors)

• Specific – clearly defined.
• Measurable – quantifiable or assessable.
• Achievable – realistic given resources.
• Relevant/Realistic – aligned with the mission and external environment.
• Time‑limited – set within a defined period.

Examples

• Private: “Increase market share in the UK smartphone market by 5 % within the next 12 months.”
• Public: “Reduce average patient waiting time in NHS outpatient clinics to ≤ 30 minutes by March 2026.”
• Social enterprise: “Provide 1,000 affordable solar kits to low‑income households in Kenya by the end of FY 2025.”

Typical Objectives by Sector

Stakeholder Relevance

Objectives are shaped by the interests of the sector’s key stakeholders:

• Private sector: shareholders (profit), customers (value & quality), employees (job security & development), NGOs & community (CSR).
• Public sector: taxpayers (value for money), citizens (access & quality), elected officials (policy compliance), unions & regulators (fair treatment & standards).
• Social enterprise: beneficiaries (social impact), investors / donors (financial sustainability), employees (ethical workplace), partners & NGOs (mission alignment).

From Mission to Tactics – The Objective Cascade

Mission → Aims → Objectives → Strategy → Tactics

• Mission: The long‑term purpose (e.g., “To enrich lives through innovative technology”).
• Aims: Broad statements of what the organisation hopes to achieve (e.g., “Become the market leader in premium smartphones”).
• Objectives: SMART targets derived from the aims (e.g., “Achieve a 10 % increase in global sales revenue by FY 2025”).
• Strategy: The overall plan for reaching the objectives (e.g., “Differentiate through design and ecosystem integration”).
• Tactics: Specific actions and projects (e.g., “Launch three new iPhone models, expand retail in Asia, invest £2 bn in R&D”).

Case illustration – Apple Inc. Mission: “To bring the best user experience.” → Aim: “Lead the premium device market.” → Objective: “Grow market share by 5 % in Europe within 12 months.” → Strategy: “Innovate hardware & services.” → Tactics: “Introduce Apple Watch Series 9, expand Apple Pay.”

Decision‑Making Flow‑Chart (Objectives & Business Decisions)

1. Identify the problem or opportunity (e.g., declining sales, new regulation).
2. Set or review objectives (apply SMART, consider stakeholder impact).
3. Generate alternative courses of action (e.g., product redesign, market diversification).
4. Evaluate alternatives against objectives, resources, ethics and risk.
5. Choose the best option and develop a detailed strategy.
6. Implement tactics (allocate budget, assign responsibilities).
7. Monitor & review performance (compare results with targets, adjust objectives if needed).

Objectives may evolve after step 2 (strategic review) or step 7 (performance review), especially in response to external shocks (e.g., economic recession, legislative change).

Ethics and Objectives

• Ethical considerations can reshape traditional profit‑oriented objectives (e.g., adopting fair‑trade sourcing may reduce short‑term margins but protect brand reputation).
• Public bodies must adhere to ethical standards such as equity, non‑discrimination and responsible stewardship of taxpayer money.
• Social enterprises embed ethics at the core, ensuring that profit does not compromise the social mission.

Translating Objectives into Targets & Budgets

• Quantitative targets – e.g., profit margin ≥ 12 %, patient satisfaction ≥ 90 %.
• Annual budgets – allocate resources to the activities required to meet each target.
• Performance dashboards – link each target to a responsible department or individual and show progress in real time.

Communicating Objectives to the Workforce

• Company‑wide statements (mission, vision, strategic objectives) shared via intranet, newsletters and town‑hall meetings.
• Departmental objectives cascaded through line‑manager briefings and KPI sheets.
• Regular feedback loops (performance reviews, scorecards) ensure staff understand progress and can suggest improvements.

Comparative Analysis

• Private firms prioritise economic profit but increasingly adopt CSR and stakeholder‑value thinking, creating a triple‑bottom‑line approach.
• Public organisations focus on service delivery, equity and fiscal prudence, with strong emphasis on transparency and environmental sustainability.
• Social enterprises balance social/environmental impact with financial viability, measuring success through both impact metrics and financial health.

Performance Measures

• Private sector: Profit margins, earnings per share, market share, ROI, CSR indicators (e.g., carbon footprint).
• Public sector: Service quality indices, cost‑benefit ratios, citizen satisfaction surveys, budget variance, compliance with statutory standards.
• Social enterprise: Social Return on Investment (SROI), impact metrics (e.g., number of beneficiaries), breakeven analysis, stakeholder feedback, environmental impact scores.

Case Study Summaries

1. Private – Apple Inc. Mission‑driven innovation, profit maximisation, and a growing CSR agenda (100 % renewable energy use, supplier responsibility program).
2. Public – NHS (National Health Service, UK) Provides universal health care, pursues equity, fiscal responsibility and continuous quality‑improvement programmes.
3. Social – The Big Issue Generates revenue through magazine sales, reinvests surplus to support homeless people, and measures success by the number of individuals moved into sustained employment.

Key Points to Remember

• Objectives reflect the underlying purpose, ownership structure, stakeholder interests and ethical stance of the organisation.
• Private firms are primarily driven by financial returns but are increasingly adopting CSR and stakeholder‑value thinking.
• Public bodies are accountable to taxpayers; they balance service quality, equity and budgetary constraints.
• Social enterprises blend commercial discipline with a mission‑oriented focus, measuring both impact and financial health.
• SMART objectives, ethical considerations, and clear communication link mission statements to day‑to‑day tactics.
• Performance measurement must align with the primary objectives of each sector.

Questions for Revision

1. Explain why profit maximisation is not the sole objective for public sector organisations.
2. How does a social enterprise measure success differently from a private company?
3. Identify two secondary objectives that are common to both private and public sector organisations and explain why they are important.
4. Discuss how corporate social responsibility (CSR) can influence the primary objectives of a private firm.
5. Describe how an objective is turned into a quantitative target and incorporated into an annual budget.
6. Outline the steps a manager should take to communicate new objectives to their team.

Further Reading (Suggested)

• Porter, M. E. (1996) “What is strategy?” – relevance to private sector objectives.
• OECD (2020) “Public sector performance measurement” – frameworks for public objectives.
• Emerson, J. (2003) “The blended value proposition” – concepts for social enterprises.
• UN Global Compact (2022) “Corporate sustainability reporting” – CSR and triple‑bottom‑line guidance.