Functions and Objectives of Business
Functions of business
A business is an organization of human, material and other intangible resources. It is created to offer satisfaction to its customers, owners, employees, managers and other stakeholders. Hence, the function of a business is to create, retain and satisfy profitable customers as a means of successfully achieving the desired ends of the enterprise. In the beginning, the profit concept was replaced by profit cum service. At present, the concept of profit through service is the popular and widely accepted basic objective of modern business.
- Organizing function: It helps to organize all the activities. It organizes men, Machine, materials, money and methods. It performs different activities and all activities are organized properly
- Financing function: It is related to money. It helps in maximum utilization of resources. Bank is a financial company. All the activities related to money are defined in this function.
- Production function: Production means converting raw materials into finished products to satisfy human wants. Hence, under it, different inputs like manpower, materials, machinery, capital, information and energy are transformed into specified outputs as demanded by the society.
- Distributing function: It helps in the transfer of goods/services from producers to customers. It transfers right product at right time in right place.
- Personnel function: It deals with human activities. It is related o the utilization of people to perform different activities. It is also called staffing function. It helps in management of resources.
- Managing function: It helps in management of business. It includes planning, organizing, controlling, coordinating, decision making and so on. It helps making activities of people effective.
- Research and development function: It helps in improvement of product. It works under the taste, desire and preference of the customers. In it various marketing, strategies, skills, knowledge and experts are used. Research and development is the main way to achieve profit with customer satisfaction
- Promotional function: Promotional function is related with the creation of new ideas, identification of business opportunities, detailed investigation, preparation of financial plan etc.
- Marketing function: The marketing function is able to satisfy the needs of the customers through consumption of goods or services. It helps to transfer those goods and services from producer to the end customer. It also helps in the fixation of price as well as sales promotion.
- Public relation function: Maintaining public relation is also an important function in a business house. To make public relation personal contact, publicity campaigns etc. are the major ways which help to increase the goodwill and image of business firm.
Objectives of business
To outline precisely the objectives of business is a difficult task. Generally it is believed that any business activity is carried on only for profit because it measures the effectiveness and soundness of business efforts and it is also the risk premium to cover the cost. It should also be kept in mind that the business is carried on to meet the needs of society by continuous supply of goods and services. Therefore, the main objective of the business should be to serve the society. The objective of a business enterprise can be classified into three categories.
The economic objective of a business is to earn sufficient profit to give reasonable reward to the investors of capital and to provide for further capital. This objective is related with earning of profits, production of goods, creating of market and using modern and latest technical knowledge for manufacture of goods. Economic objectives can be defined in terms of money too. Some of the major economic objectives are:
- Earning profit:
The main economic function of business is earning profit. It includes supply of quality goods and services to gain profit. T is done for the survival of business and it is also reward for the investors. It is required for expansion if business
- Production of commodities:
Production of goods and services are to be done according to the customer demand and desired. Supply of commodities is also to be done according to needs of customer.
- Creation of market:
Business can provide service only if demand of customers are fulfilled. When production is made according to the requirements of the customers then there is creation of new customer which creates new market. Creation of market helps in enlargement of production and promotes business expansion too
- Technical improvement:
Use of modern technology is the base for successful operation o business. When modern tools, techniques and technologies are used then there is production of quality goods. Changes are the basic factor for flexibility and changes in terms of working methods is the main objective of business
New ideas, methods, men, tactics and technology create the ways of better production and services. It helps in survival of business too.
A business is a part of society whose ethical and moral code of conduct should not be violated. Business does not exist in vacuum unless it meets the needs of the society. The philosophy of running a business should be in tune with what is considered right by the society. The social objectives include the supply of quality of goods, supply of goods at proper price that customer is willing to pay, providing employment, utilizing the scarce resources and avoiding social nuisance like air and water pollution etc. Some of the major social objectives of business are:
- Supply quality food: It provides better quality of goods and services by charging reasonable price. It provides right product at right time in right place. It involve in fulfillment of social objective.
- Utilizing resources: A business house can’t continue its operation without utilizing the resources available in the society. But there must be proper utilization of resources and no any destruction in name of utilization. Maintenance of environment is must.
- Providing employment: There are many people in the society. Human needs are the basic need for operation of business. Many personnel are require dot fulfill the job of a business. Therefore a business house without nepotism and favoritism must employ the human from the society and provide employment opportunities to the optimum level.
- Avoiding social stigma: Big industries are the cause of environmental pollution. Constant noise, smoke from the industries produces noise and air pollution. This is the social objective of the business to control pollution and wastages. There must be establishment of industries far from residential areas.
A business organization deals with two important parties of society: employees and customers. The business enterprise should treat them as human beings. The workers should be provided with good working condition and opportunities for development. The business should also try to satisfy the customers by providing different services and qualitative goods. The firm should also try to satisfy the shareholders by giving suitable return to them. Some of the major human objectives are
- Satisfaction of employees: The success of business depends on employees’ performance. It provides better working environment to satisfy the employees. It provides salary, bonus, provident funds and job security. It also provides financial and non financial supports.
- Payment to creditors: Creditors means supplier who supply goods and services. It is the objective to make duly payment. Satisfaction of creditors helps in further expansion of business.
- Satisfaction of customers: Production of goods and services are to be done according to the customer demand and desired. Supply of commodities is also to be done according to needs of customer. It provides better quality of goods and services by charging reasonable price
- Satisfaction of shareholder: It returns to investors the amount they have invested in business in the name of profit earn. They should be given reasonable returns of their investments. The objectives are to provide reasonable rate of return to shareholder. It also provides the information about plan of business.