Objectives of Business, Economic & Social Objectives of Business

Mon, 09/10/2012 - 03:44 -- Umar Farooq

Objectives of business refer to purpose for which business is established.  Generally objective of business is to make profit and avoid loss. No doubt profit is driving force in undertaking any business activity but not the only objective of business.  Urwick says “earning of profit cannot be the objective of a business any more than eating is the objective of living”. Following are the main objectives of business

  1. Economic Objectives of Business
  2. Social Objectives of Business
  3. Human Objectives of Business
  4. National Objectives of Business

Economics Objectives of Business

Business is an enterprise which makes, distributes or provides any goods or services to the community and as a result earns profit. These two major activities constitute economic objectives of a business, these are divided into the following points.

Normal Satisfactory Profit. It is a common belief that money chasing is the only objective of a business. True maximization is the common prevailing norm among the whole business community. To run the business successfully it is necessary to earn profit.

Creation of Customers. Customers are the ultimate source of happiness to a business. Customers are the source of revenue and profit. If they continue to come, do not alter the patronage, are satisfied with goods, services, business dealings and behavior. They usually stick to the business and tell their relatives and friends about the business they have good relations.  It is a chain reaction. Infact a satisfied customer is an asset who always is expected to bring more and more customers. More customers mean a good turnover and a good turnover means a fair amount of profit to the business.

Creation of new customers is the ultimate objective of any business and there is no substitute. This can be better done by educative and repetitive advertisement and by satisfying the customers who are patronizing so that they may stick and ask other to follow them.

Innovation. Innovation is again an important objective of a business. In this, complex and competitive industrial and commercial world everyone tries to woo the customer. It will help the business to attract more customers if it tries to innovate in its field of activities. Innovation of goods and services customers policies, production quality, service facility etc. all need innovation.

Business activities are essentially measured in terms of money, all measurements must show profit. Money flowing in and profit are the two measuring rods of the success of a business, but at best these two can only be called a motivating force for the enterpriser.

Social Objectives of Business

Supply of Quality Goods and Fair Prices. The community pays for goods and services the business offers to it. In turn the community expects that the business will adhere to the standard. Of quality which is necessary to satisfy its wants and business will also ensure that whatever is being made available to the community is being made available at competitive and fair price. A consumer surplus to the buyer and normal satisfactory profit to the business go side by side and both are complementary. In fact this sis norm of a business unless this is not ensured the survival and development of the business may not assure in this complex business world.

Fair Deal to Workers. Wherever they are working for living the workers should be motivated to work for the organization so as to make the organization forehead amidst fierce when the business is able to attract best talent towards its organization. It is because of this business has to meet the needs of workers and make them a satisfied lot. A fair deal to workers helps the business in this direction.

Fair Return to Investors. Profit to investors must be ensured which should be fair one according to the prevailing market conditions. This is an important objective. Investors provide working capital as well as fixed capital to the business. Business therefore, must aim to allow them a fair amount of return so that their interest must remain in the business.

Fair Deal to Suppliers. Supplier supply the raw materials with the help of which goods are manufactured. Supplier supply all other components and accessories to the manufacturing organization, which in turn ensures smooth and timely production. Similarly suppliers supply the goods to a commercial venture for onward supply to the ultimate consumers. Whatever may be the type of business the suppliers form the basis of the entire business community. They expect a fair deal, that is, payment in time, regular placement of orders, ethical business dealing sand continuity. Thus the business has to ensure in its own interest as the supplier is the basic link between the business and community. They too are to be kept satisfied particularly at a time when there is a paucity of qualitative supply of goods – whether industrial or commercial.