Every human activity is motivated by some objectives of business being the most important human activity has defined objectives.
It is a general belief that profit-making is the main objective of the business.
There are two objectives of the business:
- Economic objectives
- Non-economic objectives
1) Economic Objectives of Business:
A) Earning profit: Business activities are undertaken primarily to earn a profit, which is the excess income over expenses.
Profit means the following:
I) Profit is the incentive for business activities.
II) Profit is essential for the survival of a business.
III) The growth and expansion largely depend on its amount of profit.
IV) Profit measures the performance of the business.
V) Profit brings reputation, goodwill, and prestige for the business.
B) Creation of Demand: Customers become the basis of sales and profits for business enterprises.
To create customers, a businessman must undertake marketing research and determine the needs, preferences and buying capacity of customers and produce goods and services accordingly.
Goods and services produced as per customers’ requirements can meet expectations of customers in a better way which ensures an assured market for such products and services.
C) Optimum use of Resources: Resources are always limited, so it is essential to utilize the available resources in the best possible way.
It should not be a shortage of resources also. The rate of wastage of resources should be minimized during the production process.
It needs the right man at the right job and a well-planned process for the optimum utilization of resources.
Production measurement shows how well the resources are utilized and how much they yield.
D) Innovation: It means to explore and discover ways and means of making existing products mad services more useful and produce new and sophisticated products and services.
Innovation doesn’t the only produce, searching for a new use of products, developing effective methods of distribution and advertisement.
Using a power loom instead of handloom for weaving cloth is an example of process innovation. Making laptop computers besides desk computers is an example of product innovation.
E) Market Standing: It aims at the production of a certain quantity of old and new products, expansion of market with a larger share of the total market by entering into new areas, improvement in the quality of products over it’s nearest and closest competitors, increase in the value of production for cost reduction.
2) Non-Economic Objectives of business:
A) Social Objectives of business: Business these days is recognized as a social venture. It has now been accepted as a social and economic organ of society.
Business is formed within the society, with the resources of society and satisfy the needs of society.
All factors of production are supplied by society to business. As such business owes it’s existence to the society and it’s thus expected to run with a socio-economic ideal view.
The society originates, sustains and manages the affairs of the business.
B) Human Objectives: Human objectives demand careful consideration and we’ll bring off the employees, consumers, suppliers and another interested group.
This objective is an attempt on the part of business firms to maintain a proper balance in the conflicting interest of the various concerning parties.
C) Organic objective: A business is run by the people and for the people. Generally business has the following objectives:
I) Survival: Survival of a business house is possible only when it can earn profit to pay for the factors of production.
II) Growth: Growth is a natural process and so every business must grow.
III) Earn recognition and prestige: A business house can earn recognition and prestige if it could meet the interest of all the concerns parties in a balanced way.
D) National Objectives: It requires the business people to take up and develop such lines of business that are needed by the country at a particular time and in a particular place.
I) Development of manpower: There should be contrast training and development programs to keep employees up to date and psychologically fit to adjust in any changing situation.
II) Better environment: No business can survive for long by playing with the life and health of the people. Businesses must not cause any kind of air, water or noise pollution.