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Objectives of the Business

What are the Objectives of the Business? ( Top 5 Major Objectives )

Every business unit should have certain well-defined objectives. It should conduct various activities in order to achieve such objectives.

Profit-making, social recognition, and business growth are some universal business objectives.

Objectives indicate the destination towards which the business unit desire to move.

Running a business unit without well-defined objectives is like traveling without a fixed destination.

Business Objectives are not stable over a long period. In fact, they are redefined from time to time as per environmental changes.

According to D. E. Mc. Farland,

“Objectives are the goal, aims or purposes that organizations wish to achieve over varying periods of time.”

Business objectives are many and varied in nature. The success of any organization depends on how well these are balanced. Business objectives can be broadly classified into five major categories which are as follows:

A] Organic Objectives : ( Objectives of the Business pdf )

The organic objectives are also called as three-fold objectives of the business. Organic objectives are the primary objectives relating to a firm. Every firm has to give attention to three basic objectives. These Objectives are as follows –

Survival :

Survival is the basic objective of every organization. Other objectives can be thought of only if the organization survives. Due to globalization, liberalization, and privatization, the business environment has become extremely competitive. Further, technological advancements and changing consumer behavior have made the business environment complex. This has made survival extremely difficult. Constant monitoring of the business situation and strategic planning are necessary for survival in the competitive business environment.

Growth :

Growth is the second major organic objectives of the business. Growth takes place through expansion or diversification. The expansion involves an increase in business by introducing a product that is similar to the existing product line of the business. While diversification involves introducing a product that is totally different.

Growth brings more profit, opportunities for advancement, better utilization of resources, reputation and goodwill, etc.

Recognition and Prestige :

Every business organization desires to have social recognition and prestige.

The prestige of an organization is due to the standard quality of its products, regularity in their supply, reasonable prices, and satisfactory service to customers.

Recognition indicates public confidence in an organization. Such recognition is possible only after a long period of useful service to society.

B] Economic Objectives :

The main economic objectives of the business is profit. To earn a profit, there are several other economic objectives, which are to be accomplished. The important economic objectives of the business are as follows.

Profit :

The main economic objectives of the business is to earn profit. Business activity is primarily undertaken for earning profit. It enables a business to realize other objectives of the business.

Profit is the main motive of all business activities and is necessary for the survival, growth, and prestige of an enterprise. Profit is an indicator of business performance and a sign of efficiency. It is a reward for bearing risk and uncertainty in business. It is a lubricant that keeps the wheels of a business moving.

Creation of Wealth :

The creation of wealth is one of the important objectives of the business. Creating wealth involves increasing the wealth of the shareholders.

It happens only if the business grows steadily whereby the shareholders get higher dividends and there is an appreciation in the market value of the shares.

Creation of Customer :

The customer is the foundation of a business. The purpose of business is to create a customer.

Every businessman must find customers for high goods or services. Thus, the objectives of the business should be to identify the customer for their goods and services. This requires the creation of customers in the market and distributes of goods and services.

Innovation :

In order to survive and succeed in today’s competitive business environment, a business organization needs to be innovative.

Innovation means to bring new methods, new ideas and concepts, and modern efficient techniques.

It is useful in improving quality, reducing costs, and satisfying the customer better.

Utilisation of Resources :

Effective utilization of resources is the most important economic objectives of the business enterprise, it is expected to utilize available resources fully i.e. to the optimum level.

The resources available with an enterprise may be limited but they must be utilized fully.

The production capacity of plant, machinery, and equipment must be used fully wastages of all kinds should be avoided or minimized. Modern technology should be used for more production and Superior quality production. It leads to bringing down the cost of production.

Expansion of Market :

A business enterprise may increase its market share by the effective distribution network, maintaining good relations with dealers, effective advertising and publicity, providing effective and efficient after-sale service, effective sales promotion, etc.

A business firm may aim at entering a new market. i.e. domestic as well as in the international market. This would enable the firm to survive during a recession grow and gain a reputation not only in the domestic markets but also in the international market.

Growth of business:

The growth of business activities is one of the economic objectives of the business.

Growth is desirable for more production and turnover in business. The business expansion also gives advantages to large-scale operations. Introduction of new products, setting new production units, and use modern techniques of production are some methods useful for the growth of business activities. Such growth is necessary for meeting market competition.

C] Social Objectives :

Business is a part of a social System. A social system involves people and their Organisations in mutual relationships with each other. Business is an integral part of society. Following are the social objectives of the business –

Social Objectives towards Customers :

The Survival and success of any business organization depend on its consumers.

The social objectives of the business are to satisfy consumers by providing goods and services as per their needs and expectations.

Businesses have to supply quality goods at a reasonable price to the customer.

Social Objectives towards Employees :

The Social objectives of the business firm towards its employees are to treat them with respect and provide them with the right compensation and facilities.

Businesses should provide better wages, working conditions, good treatment to the employees, It also provides monetary and non-monetary benefits for the satisfaction of the employees.

Social Objectives towards shareholders :

Shareholders invest their money in the business in the form of shares, debentures, bonds, etc.

The objectives of the business is to utilize efficiently the money of the shareholder and give them fair returns on their investment in the form of dividends and interest.

Social Objectives towards Government :

A business organization can’t function smoothly without the support and cooperation of the government.

Hence, it becomes necessary on the part of the organization to fulfill its social duties towards the government. These include payment of taxes and duties, following the rules and regulations framed by the government from time to time, contributing towards the welfare activities of the government, and so on.

Social Objectives towards Suppliers :

The suppliers can play an important role in the success of an organization by supplying the right quality and quantity of material at the right time.

Therefore, a business firm needs to have social objectives towards suppliers in respect of timely payment of dues. helping the suppliers in their financial requirements by making advance payments.

Social Objectives towards Dealers :

Dealers assist business firms by promoting and pushing goods and services in the market at the right time at the right place.

It is one of the basic social objectives that goods of special quality be produced and supplied. If this basic demand of the society is met, the business may survive in the long run.

Social Objectives towards Society :

Business organizations gain profit because of the support of society.

they are expected to provide financial support for various social, educational, and cultural activities and support social welfare programs.

This is also necessary for maintaining cordial relations with society.

D] Human Objectives :

One of the objectives of the business is to look after the interest of the people who make a business successful. It has been widely recognized that human beings should be treated as an individual. Businessmen should have a parental approach towards human beings.

Following are the human Objectives of the business. –

Fair wages :

Employees should be treated as human beings first and then as workers. The employees should be paid fair wages. Apart from this, they should also be given other monetary and non-monetary benefits, incentives, and other facilities.

Better working conditions:

The working conditions provided to the employees must be hygienic. Good lighting ventilation, good recreation facilities, better labor-management relations, etc. provide a healthy work atmosphere. This is necessary so that the health of the workers is not adversely affected.

Job Satisfaction :

Business enterprises should provide challenging and interesting job opportunities to the employees.

If Jobs are routine and less challenging, then it brings boredom and may lead to labor turnover and absenteeism.

Jobs can be made more challenging and interesting through techniques like job enlargement, job enrichment, job rotation, etc. Sometimes promotions and transfers can also be used to bring job satisfaction.

Motivation :

The employees should be motivated to work hard. This can be done by offering monetary and non-monetary benefits to them.

Monetary rewards include high salaries, housing allowance, car allowance, etc. while non-monetary incentives include appreciation, recognition, promotions, Job title, etc.

Workers participation in the management :

Workers’ participation in the management has been recognized.

Their representation in the management may create healthy co-operation. The problems and disputes can be solved on human grounds.

This enables both employees and managers to understand each other’s problems and improve relations.

Human Resources Development :

The management must undertake human resource development programs.

Necessary training should be given to the employees to improve their skills.

Suitable conditions should be created to enable them to use their latest talents like creativity, communication skills, decision-making ability etc.

This develops their overall personality, which ultimately benefits the organization.

Welfare facilities :

The Organisation should provide to its employees’ proper welfare facilities like canteen facilities, transport facilities, sports and recreation facilities, education facilities and so on.

E] National Objectives :

These are aimed at the fulfillment of national needs and aspirations. The government has to implement the national plans and policies in accordance with the accepted priorities. The business organization should consider these priorities, policies, and plans to make business decisions.

Social Justice:

Social justice means providing equal opportunities to all, protecting the interest of neglected, unorganized, and economically backward sections of the society, and prevent any sort of exploitation. For example, a business organization should do social justice to its handicapped workers, and women employees.

Development of small scale industries :

Small scale industries are those that require less capital and generate more employment.

In the present era of globalization, this sector is adversely affected; In order to boost this industry, big business organizations should assist the growth of small-scale industries by purchasing raw materials from them.

Self Sufficiency :

Every business organization should make use of available natural resources and human resources for economic development. It should reduce the country’s dependence on foreign countries by producing goods indigenously or by promoting exports and reducing imports.

Social welfare :

Business organizations may also support directly or indirectly welfare schemes in society.

The welfare schemes that business has to adopt i.e. adopting schools in backward areas, providing funds for rural development activities such as the construction of roads, irrigation, etc. organizing health camps, etc.

Development of Backward Areas :

Business organizations can contribute towards the development of backward areas of the nation. This can be done by setting up industries in such areas.

Also, financial and technical assistance can be provided to units in such backward areas.

The government should encourage the development of backward areas by providing lots of incentives such as tax holidays, low rates of taxation, tax exemptions, and so on.

Creation of Employment opportunities :

Business creates employment opportunities either directly or indirectly.

In a country like India where unemployment and disguised employment are at a very high level, it is advisable for the industries to adopt wherever possible labor-intensive techniques so as to employ more people and thereby reduce the number of people below the poverty line.

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