Objectives
of Business
An objective is the starting point of
business. Every business is directed to the achievement of certain objectives.
Objectives refer to all that the business people want to get in return for what
they do. It is generally believed that business activity is carried out only
for profit. Business persons themselves proclaim that their primary objective
is produce or distribute goods or services for profit. Every business is said
to be an attempt on the part of business people to get more than what has been
spent or invested, or in other words, to earn profit which is the excess of
revenue over cost. However, it is being increasingly realised nowadays that
business enterprises are part of the society and need to fulfil several
objectives, including social responsibility, to survive and prosper in the long
run. Profit is found to be a leading objective but not the only one. Although
earning profit cannot be the only objective of business, its importance cannot
be ignored. Every business is an attempt to reap more than what has been
invested, and profit is the excess of revenue over cost. Profit may be regarded
as an essential objective of business for various reasons:
(i)
it is a source of income for
business persons
(ii)
it can be a source of finance for meeting
expansion requirements of business
(iii)
it indicates the efficient working of business
(iv)
it can be taken as the society’s approval of
the utility of business
(v)
it builds the reputation of a
business enterprise.
However, too much emphasis on profit to the
exclusion of other objectives can be dangerous for good business. Obsessed with
profit, business managers may neglect all other responsibilities towards
customers, employees, investors and society at large. They may even be inclined
to exploit various sections of society to earn immediate profit. This may
result in the non-cooperation or even opposition from the affected people
against the malpractices of business enterprises. The enterprises might lose
business and may be unable to earn profit. This is essential for its own
survival and prosperity.
Objectives
of Business
Objectives are needed in every area that
influences the survival and prosperity of business. Since a business has to
balance a number of needs and goals, it requires multiple objectives. It cannot
follow only one objective and expect to achieve excellence. Objectives have to
be specific in every area and sphere of business. Objectives also enable the
business to analyse their own performance and take steps as necessary to
improve their performance in future. Some of these areas are described as
follows.
(i)
Market standing: Marinating goodwill and reputation of ones’ business is paramount
to succeed and prosper. It helps in forming a distinct identity in the market
and is referred to as market standing in relation to its competitors. A
business enterprise must aim at standing on stronger footing in terms of
offering competitive products at reasonable prices to its customers and serving
them to their satisfaction.
(ii)
Innovation: Innovation is central to the growth of any business enterprise. It
helps business to scale up and give competitive edge to the enterprise in the
market. Innovation is defined as an introduction of new ideas or methods in the
way something is done or made. However, it does not imply that a new product is
to be manufactured. Any modification in the existing product to enhance its
operation also denotes innovativeness. There are two kinds of innovation in
every business, i.e., (i) innovation in product or services; and (ii)
innovation in various skills and activities needed to supply products and
services. No business enterprise can flourish in a competitive world without
innovation. Therefore, innovation becomes an important objective.
(iii)
Productivity: Productivity is ascertained by comparing the value of output with
the value of inputs. It is used as a measure of efficiency. In order to ensure
continuous survival and progress, every enterprise must aim at greater
productivity through the best use of available resources.
(iv)
Physical and
financial resources: Any business requires
physical resources, like plants, machines, offices, etc., and financial
resources, i.e., funds to be able to produce and supply goods and services to
its customers. The business enterprise must aim at acquiring these resources
according to their requirements and use them efficiently.
(v)
Earning profits: One of the objectives of business is to earn profits on the
capital employed. Profitability refers to profit in relation to capital
investment. Every business must earn a reasonable profit which is so important
for its survival and growth.
(vi)
Social responsibility: Social responsibility refers to the obligation of business firms
to contribute resources for solving social problems and work in a socially
desirable manner.
