The difficulties associated with managing organisations with multiple objectives
To the level that an organisation faces a range of stakeholders then they also face multiple objectives. This wouldn't particularly be a problem if the multiple objectives were congruent but they normally are not. There are a numerous difficulties:
- Multiple stakeholders imply multiple goals- To the extent that they disagreement then compromises must be made. This will direct to potentially to opportunity costs in that maximisation of profitability will potentially be reduced.
- Responding to stakeholders other than shareholders engages costs either in management time or in directly responding to their needs.
- A few objectives are not clearly defined example what is actually meant by protecting the consumer? It will thus not always be clear to the organisation that they have met the needs of all of their stakeholders.
- A few of the objectives may actually be conflicting where compromise is not possible. Prioritisation and ranking will then have to take place. Then occur as to who is the most important stakeholder or what ranking should be assigned
- New stakeholder groups frequently emerge. This is able to create a problem of longer term strategic management in that plans can be diverted if new pressures arise. For instance environmental issues were not so important 20 years ago.
- Management of the organisation turn into complex when multiple objectives have to be satisfied. Every managerial decision is likely to face many constraints.