Objectives of Business
To outline precisely the objectives of the 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 through a continuous supply of goods and services. Therefore, the main objective of the business should be to serve 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 rewards to the investors of capital and to provide for further capital. This objective is related to earning profits, production of goods, creating the market and using modern and latest technical knowledge for the 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 a business is earning profit. It includes the supply of quality goods and services to gain profit. T is done for the survival of the business and it is also a reward for the investors. It is required for expansion if the 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 the needs of customers.
- Creation of market:
Business can provide service only if the demand for customers are fulfilled. When production is made according to the requirements of the customers then there is the creation of new customers which creates a 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 the production of quality goods. Changes are the basic factor for flexibility and changes in terms of working methods is the main objective of the business
New ideas, methods, men, tactics and technology create ways of better products and services. It helps in the survival of business too.
A business is a part of a society whose ethical and moral code of conduct should not be violated. Business does not exist in a vacuum unless it meets the needs of society. The philosophy of running a business should be in tune with what is considered right by 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 a reasonable price. It provides the right product at right time in the right place. It involves the fulfillment of social objectives.
- Utilizing resources: A business house can’t continue its operation without utilizing the resources available in society. But there must be proper utilization of resources and no destruction in name of utilization. Maintenance of the environment is a must.
- Providing employment: There are many people in society. Human needs are the basic need for the operation of a business. Many personnel is required 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 produce noise and air pollution. This is the social objective of the business to control pollution and wastages. There must be the 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 conditions and opportunities for development. The business should also try to satisfy customers by providing different services and qualitative goods. The firm should also try to satisfy the shareholders by giving suitable returns to them. Some of the major human objectives are
- Satisfaction of employees: The success of a business depends on employees’ performance. It provides a 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 a supplier who supplies goods and services. It is the objective to make duly payment. Satisfaction of creditors helps in further expansion of a 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 the needs of customers. It provides better quality of goods and services by charging a reasonable price
- Satisfaction of shareholder: It returns to investors the amount they have invested in the business in the name of profit earn. They should be given reasonable returns for their investments. The objectives are to provide a reasonable rate of return to shareholders. It also provides information about the plan of the business.
Similar to the above objectives, the National objective is also an important objective of business. It is the business’s responsibility to proper utilisation of national resources. It should focus on increasing the national capacity in national and international business i.e self-sufficient for the country. A business should also aim to create skilled human resources within the country. National objective of business are listed below:
- Utilisation of Resources: Each and every country has its own natural resources like minerals to utilize natural resources for their maximum extent. It has to contribute to the national development/improvement by proper utilisation of the available resource which helps to increase the living standard and per capita as well as the GDP of a country.
- Payment of Tax: Tax is the main revenue source of a country. Business organizations pay different taxes to the government. They are exercise duty, customs duty, income tax and sales tax etc. The taxes paid by the different business organisation help government in development activities.
- Generation of Employment Opportunity: Business activities help to generate employment opportunities in the country. The development and expansion of business require a large number of workers which provides employment opportunities. Unemployment problems can be solved through the development of big industries and the expansion of other auxiliary activities. Hence, it helps to reduce the unemployment problems of a country.
- Balanced Development of Nation: Business uses different resources from different parts of a country. Businesses can help to make balanced development of a nation by establishing industry and service sectors in different regions/areas.
- Earning foreign currency: The main source of earning foreign currency is business. Specially, industrial organizations produce various types of products that can be exported to foreign countries and foreign currency may be earned through it. Such foreign currency should be collected from the export of goods and can be utilized to import goods and services for the development of the nation.
- Good international relations: Business is one of the important means of maintaining a good relationship. With the development of industry and commerce, we can export and import of goods with other countries. People from different countries come into contact with each other. It creates mutual co-operation, understanding and maintains good relations among various nations.