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ACCA Strategic Professional · Strategic Business Leader · Concepts of strategy

Orvane Pharma's board is split. Institutional shareholders want a 10% return on equity target, while the CEO has just announced a mission to 'improve global health access', which would involve selling some drugs near cost. Employees, regulators and patient groups each support different priorities. A director says the company cannot maximise every stakeholder's goals at once and must settle on a set of compromises. Which view of objective setting does this best reflect?

This reflects the pluralist stakeholder view. The director accepts that groups hold competing goals, so objectives result from bargaining and compromise, rather than from one shared goal, shareholder returns alone, or a top-down decision made solely by the CEO.

  1. AThe unitary view, where all stakeholders share one common goal
  2. BThe shareholder primacy view, where only owner returns matter
  3. CThe pluralist (stakeholder) view, where objectives emerge from bargaining and compromise between competing interestsCorrect
  4. DThe rational planning view, where objectives are set top-down by the CEO alone

Explanation

Recognising multiple groups with conflicting aims and settling on compromises is the pluralist view of objectives, as in Cyert and March's idea of coalitions and satisficing. A unitary view assumes shared goals, which contradicts the split. Shareholder primacy ignores other groups, and top-down rational planning ignores negotiation between them.

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