Objectives OF Business.Profit Is not the only objective of business. Every work is started with an objective. The objective is a goal, the achievement of which is a necessity and all efforts are concentrated for the fulfillment of the objective.
According to Peter Drucker, “Objectives are needed in every area where performance and results directly and vitally affect survival and prosperity of the business. The main objective of a business undertaking is to earn profits. Profit-earning is considered necessary for the survival of the business.
10 Objectives OF Business You Must Know
Now-a-days, the values of society have changed and society expects more from the business than merely earning profits. The objectives of the business may be categorized under three headings:
- Economic objectives.
- Human objectives, and
- Social objectives.
- Economic Objectives:
- Profit Earning
It can not be denied that business is started for earning profits. Profit is the basic incentive to business pursuits. Profits are needed to face various uncertainties like trade cycle, change in demand pattern, fluctuations in money markets. A business needs profits not only for its existence but also for expansion and diversification. The investors want an adequate return on their investments, workers want higher wages and the entrepreneur needs money for reinvesting. All these demands and requirements will be met only when some profits are charged The profit motive does not mean that the businessman should start exploiting consumers by charging higher prices or selling low quality, goods. The Interests ef businessmen and consumers are common. If profit becomes the sole objective of business, it will antagonize .the consumers and will hamper the /healthy relations between the businessmen and their customers, iVie businessman should charge a reasonable profit and it will be beneficial to the business and the society.
- Production of Goods:
The profit can be earned only when some exchange of goods and services takes place. So the next objective is to produce more goods and sell them to the consumers. The producers estimate the demands for goods and produce accordingly. The tastes, preferences and paying capacity of consumers must be taken into account. A businessman creates place and time utilities and meets the requirements of the society, so tangible form of wealth is produced in the form of goods.
- Creating Markets:
‘The alm of the businessman is to sell products. Marketing consists of these efforts which effect transfers in ownership of goods and care for their physical distribution. Marketing covers all those activities which relate to the creation of time, place and possession utility. The businessman searches for new consumers for increasing his sales. An effort is made to retain old consumers by supplying them better quality goods at reasonable prices. The new markets are also exploited to keep a
steady demand for goods. An enterprise cannot exist out new markets for its products.
(4) Technological Improvement
A businessman should always strive to use latest methods of productioh. In the world of competition everybody tries to sell his products by offering good quality products at lower prices. This Is possible when latest technology Is used for producing goods. There should always be an endeavour to increase production and reduce costs. The businessman should try to device new methods so that may keep pace with the changing business world.
- Human Objectives:
Human objective of business requires that a workable balance should be maintained among the claims of various Interested groups like employees, shareholders and consumers. These objectives can be discussed as follows:
- Welfare of Employees:
The employees should be looked upon as human beings. The old theory that workers should be coerced to get more work is no longer valid. The traditional businessman In Pakistan has always been in favour of ‘Iron rod theory’. With the advent of industrialization, production has Increased many times resulting in more profits to the businessman. The employees of an enterprise help in Increasing the profitability and they should also be given a due share in profits. It may be in the form of bonus, Increased allowances or spending money on their welfare Productivity should be linked to various Incentive schemes. The workers should be rewarded for their hard work. The businessman should look after the welfare of his workers. The workers should be provided with physical comforts, material Incentives, appreciation, dignity of Labour and conditions which will inspire the workers to give their best.
- Satisfaction of Consumers:
The consumers should be provided quality goods at reasonable prices. The tastes, likings and requirements of the consumers should be given due weightage. The business is meant for consumers and their satisfaction should be the main objective of the .business. So responsibility to consumers means setting up and maintaining standards of quality and service in addition to reasonable price.
- Satisfaction of Shareholders:
In the present business world, ownership and management are in twjp different hands. The shareholders are spread all over the country
and they have no access to the day-to-day working of the business. The management should give reasonable return on the money invested by shareholders. The shareholders should also feel that their money is not misused by the management. Taking these considerations into account, company law has provided many restraints on managements so that the company resources are employed for the welfare of all. These things are Important to encourage more Investments Into the business.
- Social Objective* or Social Responsibility of the Business:
The business has two aspects:
Individual; and
Social
Profit motive can be counted as Individual aspect and social obligations can be considered as social aspect. Business exists in society and as a part of it. The business should conform to various social needs. The present business activities are different from older times. The business Is required to meet varied needs of the society.
