Every business enterprise has certain objectives which regulate and generate its activities. Objectives are needed in every area where performance and results directly affect survival and prosperity of a business. Various objectives of business may be classified into four broad categories as follows:
1. Economic Objectives:
Business is basically an economic activity. Therefore, its primary objectives are economic in nature. The main economic objectives of business are as follows:
(i) Earning profits:
A business enterprise is established for earning some income. It is the hope of earning profits that inspires people to start business. Profit is essential for the survival of every business unit.
Just as a person cannot live without food, a business firm cannot survive without profit. Profits enable a businessman to stay in business by maintaining intact the wealth producing capacity of its resources.
Profit is also necessary for the expansion and growth of business. Profits ensure continuous flow of capital for the modernisation and extension of business operations in future. Profit also serves as the barometer of stability, efficiency and progress of a business enterprise.
(ii) 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 creates customers through advertising and salesmanship. It satisfies the needs of customers by producing the required goods and services and by creating utilities.
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 firms invest money, time and efforts in Research and Development (R&D) to introduce innovations.
They develop new technology, introduce new designs and new tools and processes to minimise costs and to satisfy ever increasing wants of customers. In order to create customers business has to explore new markets and attract more customers. It has also to retain old customers by providing better services to them.
2. Social objectives
Business does not exist in a vacuum. It is a part of society. It cannot survive and grow without the support of society. Business must therefore discharge social responsibilities in addition to earning profits.
According to Henry Ford, “the primary aim of business should be service and subsidiary aim should be earning of profit.” The socials objectives of business are as follows:
(i) Supplying desired goods at reasonable prices:
Business is expected to supply the goods and services required by the society. Goods and services should be of good quality and these should be supplied at reasonable prices. It is also the social obligation of business to avoid malpractices like boarding, Black marketing and misleading advertising.
(ii) Fair Remuneration to employees:
Employees must be given fair compensation for their work. In addition to wages and salary a reasonable part of profits should be distributed among employees in recognition of their contributions. Such sharing of profits will help to increase the motivation and efficiency of employees.
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.
Employees work day and night to ensure smooth functioning of business. It is, therefore, the duty of employers to provide hygienic working and living conditions for workers.
(iii) Employment Generation:
Business should provide opportunities for gainful employment to members of the society. In a country like India unemployment 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. If unemployment problem increases, the socioeconomic environment cannot be congenial for the growth of business activities.
(iv) Fair return to investor:
Business is expected to pay fair return to shareholders and creditors in the form of dividend and interest. Investors also expect safety and appreciations of their investment. They should be kept informed about the financial health and future prospects of business.
(v) Social welfare:
Business should provide support to social, cultural and religious organisations. Business enterprises can build schools, colleges, libraries, dharam shalas, hospitals, sports bodies and research institutions. They can help non-government organisations (NGOs) like CRY, Help Age, and others which render services to weaker sections of society.
(vi) Payment of Government Dues:
Every business enterprise should pay tax dues (income tax, sales tax, excise duty, customs duty, etc.) to the government honestly and at the right time. These direct and indirect taxes provide revenue to the Government for spending on public welfare.
Business should also abide faithfully by the laws of the country. Thus, businessmen should pursue those policies and take those actions which are desirable in terms of the objectives and values of our society.
3. Human Objectives
Business is run by people and for people. Labour is a valuable human element in business. Human objectives of business are concerned with the well-being of labour. These objectives help in achieving economic and social objectives of business. Human objectives of business are given below:
Business must recognise the dignity of labour and human factor should be given due recognition. Proper opportunities should be provided for utilising individual talents and satisfying aspirations of workers. Adequate provisions should be made for their health, safety and social security. Business should ensure job satisfaction and sense of belonging to workers.
ii. Developing human resources:
Employees must be provided the opportunities for developing new skills and attitudes. Human resources are the most valuable asset of business and their development will help in the growth of business.
Business can facilitate self- development of workers by encouraging creativity and innovation among them. Development of skilled manpower is necessary for the economic development of the country.
iii. Participative management:
Employees should be allowed to take part in decision making process of business. This will help in the development of employees. Such participation will also provide valuable information to management for improving the quality of decisions. Workers’ participation in management will usher in industrial democracy.
iv. Labour management cooperation:
Business should strive for creating and maintaining cordial employer employee relations so as to ensure peace and progress in industry. Employees should be treated as honourable individuals and should be kept informed.
4. National Objectives
National objectives of business are as follows:
(i) Optimum utilisation of resources:
Business should use the nation’s resources in the best possible manner. Judicious allocation and optimum utilisation of scarce resources is essential for rapid and balanced economic growth of the country.
Business should produce goods in accordance with national priorities and interests. It should minimise the wastage of scarce natural resources.
(ii) National self-reliance:
It is the duty of business to help the government in increasing experts and in reducing dependence on imports. This will help a country to achieve economic independence. This requires development of new technology and its application in industry.
(iii) Development of small scale Industries:
Big business firms are expected to encourage growth of small scale industries which are necessary for generating employment. Small scale firms can be developed as ancillaries, which provide inputs to large scale industries.
(iv) Development of backward areas:
Business is expected to give preference to the industrialisation of backward regions of the country. Balanced regional development is necessary for peace and progress in the country.
It will also help to raise standard of living in backward areas. Government offers special incentives to the businessmen who set up factories in notified backward areas.