Every business has certain objectives which govern its activities. Objectives of business may be classified into two broad categories as follows.
Business is an economic activity and its main purpose is to achieve economic results. The economic objectives of business are given below:
1. Earning profits:
A business is established for earning profits. It is the hope of earning profits that inspires people to start business. Profits are absolutely necessary for the survival and growth of every business enterprise.
The efficiency of business is also measured in terms of profits. However, profits must be earned by satisfying the wants to customers and after paying workers their dues.
In the words of Arvind Mafatlal, “no business or industry is run philanthropically. It has to make a profit for further growth. But this profit cannot be at the expense of labour and the community at large.”
2. Creating customers:
Profits are not created by God or by the force of nature. They arise from the businessman’s efforts to satisfy the needs and wants of customers. A businessman can earn profits only when there are enough customers to buy and pay for his goods and services.
In the words of Drucker, “there is only one valid definition of business purpose: to create a customer. The customer is the foundation of business and keeps it in existence.
It is to supply the customer that society entrusts wealth-producing resources to a business enterprise.” No business can succeed without providing customers value for their money.
Business exists to satisfy the wants, tastes and preferences of customers. In order to earn profit, business must supply better quality goods and services at reasonable prices. Therefore, creation and satisfaction of customers is an important economic objective of business.
Business is an organ of dynamism and change. In these days of competition a business can be successful only when it creates new designs, better machines, improved techniques, new varieties, etc. Modern science and technology have created a great scope for innovation in the business world.
Innovation is not confined to the invention of a new machine. It comprises all efforts made in perfecting the product, minimising the costs and maximizing benefits to customers. It involves improvements in management, production, selling servicing, methods of personnel and accounting, etc.
Business does not exist in a vacuum. It is a part of society and it can achieve its economic objectives only by having deep roots in the society. According to Henry Ford, “The primary aim of business should be service and subsidiary aim should be earning of profit.
The purpose of business is not only earning profits but also discharging responsibility towards society.” Business is not merely an economic activity; it is also a social institution. The social objectives of business are as follows:
1. Services to employees:
Employees work day and night to ensure smooth functioning of business. Therefore, it is the duty of employers to provide social justice to their employees in the following ways.
(a) Fair wages:
Employees must be given fair compensation for their work. In addition to the minimum wages prescribed by law, a reasonable part of profits should be distributed among employees in recognition of their contribution. Such sharing of profits will help to increase the motivation and efficiency of employees.
(b) Good working conditions:
It is the obligation of business to provide healthy and safe work environment for employees. Good working conditions are beneficial to the organisation because these help to improve the productivity of employees and thereby the profits of business.
(c) Employee welfare:
Business is expected to make adequate and satisfactory provision for medical, educational, housing and other welfare facilities for workers. This is because the Government is not in a position to take care of all these activities. Employee welfare facilities will help business to secure the dedication and loyalty of workers.
(d) Development and promotion:
Business should provide reasonable opportunities for training, growth and promotion of employees. Business can facilitate self development of employees by encouraging creativity and innovation among them.
This will create a sense of satisfaction and self-confidence among workers. They can bear higher responsibilities and assist in the growth of business itself.
(e) Partnership in business:
Employees should be allowed to work with honour and job satisfaction. For this purpose, their participation in the ownership and management of business is necessary. They should be considered as partners in business rather than as servants.
2. Services to society:
Business is expected to serve the society in the following ways:
(a) Employment Generation:
Business can provide opportunities for gainful employment to members of the society. In a country like India employment has become a serious problem and the Government is unable to offer jobs to all. Therefore, provision of adequate and full employment opportunities is a significant service to society.
(b) Standard of living:
Business should raise the living standards and material well- being of people by providing high quality products and services at cheaper prices. This can be done through mass production and distribution.
(c) Pollution free environment:
Rapid industrialisation has resettled in air, water and noise pollution. Business is responsible for reducing the adverse effect of business on the quality of life. It must make proper arrangements for the disposal of smoke, effluents, wastes, etc. to protect the health and life of people, animals and birds.
(d) Investor satisfaction:
Business should ensure safety and appreciation of the money invested by shareholders and creditors. A reasonable return in the form of dividends, interest, etc. should be paid to them regularly and in time. They should be kept informed of the financial health and future prospects of business.