Objectives of Business

Objectives of Business

Objectives of Business

It is generally believed that a business has a single objective, that is, to make profit. But it

cannot be the only objective of business. While pursuing the objective of earning profit,

business units do keep the interest of their owners in view. However, any business unit

cannot ignore the interests of its employees, customers, the community, as well as the interests

of society as a whole.

For instance, no business can prosper in the long run unless fair wages are paid to the

employees and customer satisfaction is given due importance. Again a business unit can

prosper only if it enjoys the support and goodwill of people in general. Business objectives

also need to be aimed at contributing to national goals and aspirations as well as towards

international well-being. Thus, the objectives of business may be classified as -

a. Economic Objectives

b. Social Objectives

c. Human Objectives

d. National Objectives

e. Global Objectives

Economic Objectives

Economic objectives of business refer to the objective of earning profit and also other

objectives that are necessary to be pursued to achieve the profit objective, which include,

creation of customers, regular innovations and best possible use of available resources. Let

us learn about these.

i. Profit earning

Profit is the lifeblood of business, without which no business can survive in a competitive

market. Infact profit making is the primary objective for which a business unit is brought into

existence. Profits must be earned to ensure the survival of business, its growth and expansion

over time. Profits help businessmen not only to earn their living but also to expand their

business activities by reinvesting a part of the profits.

In order to achieve this primary objective, certain other objectives are also necessary to be

pursued by business, which are as follows:

a) Creation of customers

A business unit cannot survive unless there are customers to buy the products and services.

Again a businessman can earn profits only when he/she provides quality goods and services

at a reasonable price. For this it needs to attract more customers for its existing as well as

new products. This is achieved with the help of various marketing activities.

b) Regular innovations

Innovation means changes, which bring about improvement in products, process of production

and distribution of goods. Business units, through innovation, are able to reduce cost by

adopting better methods of production and also increase their sales by attracting more

customers because of improved products. Reduction in cost and increase in sales gives

more profit to the businessman. Use of power-looms in place of handlooms, use of tractors

in place of hand implements in farms etc. are all the results of innovation.

c) Best possible use of resources

As you know, to run any business you must have sufficient capital or funds. The amount of

capital may be used to buy machinery, raw materials, employ men and have cash to meet

day-to-day expenses. Thus, business activities require various resources like men, materials,

money and machines. The availability of these resources is usually limited. Thus, every business

should try to make the best possible use of these resources. This objective can be achieved

by employing efficient workers, making full use of machines and minimizing wastage of raw

materials.

Social Objectives

Social objectives are those objectives of business, which are desired to be achieved for the

benefit of the society. Since business operates in a society by utilizing its scarce resources,

the society expects something in return for its welfare. No activity of the business should be

aimed at giving any kind of trouble to the society. If business activities lead to socially

harmful effects, there is bound to be public reaction against the business sooner or later.

Social objectives of business include production and supply of quality goods and services,

adoption of fair trade practices and contribution to the general welfare of society and provision

of welfare amenities.

i. Production and supply of quality goods and services

Since the business utilizes the various resources of the society, the society expects to

get quality goods and services from the business. The objective of business should be to

produce better quality goods and supply them at the right time and at a right price. It is not

desirable on the part of the businessman to supply adulterated or inferior goods which cause

injuries to the customers. They should charge the price according to the quality of the goods

and services provided to the society. Again, the customers also expect timely supply of all

their requirements. So it is important for every business to supply those goods and services

on a regular basis.

Adoption of fair trade practices

In every society, activities such as hoarding, black-marketing and over-charging are

considered undesirable. Besides, misleading advertisements often give a false impression

about the quality of products. Such advertisements deceive the customers and the

businessmen use them for the sake of making large profits. This is an unfair trade practice.

The business unit must not create artificial scarcity of essential goods or raise prices for the

sake of earning more profits. All these activities earn a bad name and sometimes make the

businessmen liable for penalty and even imprisonment under the law. Therefore, the objective

of business should be to adopt fair trade practices for the welfare of the consumers as well

as the society.

iii. Contribution to the general welfare of the society

Business units should work for the general welfare and upliftment of the society. This is

possible through running of schools and colleges for better education, opening of vocational

training centres to train the people to earn their livelihood, establishing hospitals for medical

facilities and providing recreational facilities for the general public like parks, sports complexes

etc.

Human Objectives

Human objectives refer to the objectives aimed at the well-being as well as fulfillment of

expectations of employees as also of people who are disabled, handicapped and deprived

of proper education and training. The human objectives of business may thus include economic

well-being of the employees, social and psychological satisfaction of employees and

development of human resources.

i. Economic well being of the employees

In business employees must be provided with fair remuneration and incentives for performance,

benefits of provident fund, pension and other amenities like medical facilities, housing

facilities etc. By this they feel more satisfied at work and contribute more for the business.

Social and psychological satisfaction of employees

It is the duty of business units to provide social and psychological satisfaction to their

employees. This is possible by making the job interesting and challenging, putting the right

person in the right job and reducing the monotony of work. Opportunities for promotion

and advancement in career should also be provided to the employees. Further, grievances

of employees should be given prompt attention and their suggestions should be considered

seriously when decisions are made. If employees are happy and satisfied they can put their

best efforts in work.

iii. Development of human resources

Employees as human beings always want to grow. Their growth requires proper training as

well as development. Business can prosper if the people employed can improve their skills

and develop their abilities and competencies in course of time. Thus, it is important that

business should arrange training and development programmes for its employees.

iv. Well being of socially and economically backward people

Business units being inseparable parts of society should help backward classes and also

people those are physically and mentally challenged. This can be done in many ways. For

instance, vocational training programme may be arranged to improve the earning capacity

of backward people in the community. While recruiting it staff, business should give preference

to physically and mentally challenged persons. Business units can also help and encourage

meritorious students by awarding scholarships for higher studies.

National Objectives

Being an important part of the country, every business must have the objective of fulfilling

national goals and aspirations. The goal of the country may be to provide employment

opportunity to its citizen, earn revenue for its exchequer, become self-sufficient in production

of goods and services, promote social justice, etc. Business activities should be conducted

keeping these goals of the country in mind, which may be called national objectives of

business. The following are the national objectives of business.

Creation of employment

One of the important national objectives of business is to create opportunities for gainful

employment of people. This can be achieved by establishing new business units, expanding

markets, widening distribution channels, etc.

ii. Promotion of social justice

As a responsible citizen, a businessman is expected to provide equal opportunities to all

persons with whom he/she deals. He/She is also expected to provide equal opportunities to

all the employees to work and progress. Towards this objective special attention must be

paid to weaker and backward sections of the society.

iii. Production according to national priority

Business units should produce and supply goods in accordance with the priorities laid down

in the plans and policies of the Government. One of the national objectives of business in our

country should be to increase the production and supply of essential goods at reasonable

prices.

iv. Contribute to the revenue of the country

The business owners should pay their taxes and dues honestly and regularly. This will increase

the revenue of the government, which can be used for the development of the nation.

v. Self-sufficiency and Export Promotion

To help the country to become self-reliant, business units have the added responsibility of

restricting import of goods. Besides, every business units should aim at increasing exports

and adding to the foreign exchange reserves of the country

Global Objectives

Earlier India had a very restricted business relationship with other nations. There was a very

rigid policy for import and export of goods and services. But, now-a-days due to liberal

economic and export–import policy, restrictions on foreign investments have been largely

abolished and duties on imported goods have been substantially reduced. This change has

brought about increased competition in the market. Today because of globalisation the

entire world has become a big market. Goods produced in one country are readily available

in other countries. So, to face the competition in the global market every business has

certain objectives in mind, which may be called the global objectives. Let us learn about

them.

i. Raise general standard of living

Growth of business activities across national borders makes available quality goods at

reasonable prices all over the world. The people of one country get to use similar types of

goods that people in other countries are using. This improves the standard of living of people.

ii. Reduce disparities among nations

Business should help to reduce disparities among the rich and poor nations of the world by

expanding its operation. By way of capital investment in developing as well as underdeveloped

countries it can foster their industrial and economic growth.

iii. Make available globally competitive goods and services

Business should produce goods and services which are globally competitive and have huge

demand in foreign markets. This will improve the image of the exporting country and also

earn more foreign exchange for the country.