Explain the Objectives Of Business | FYBCOM Commerce Chapter 2

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Explain the Objectives Of Business ?

1) Discuss the steps involved in setting business objectives.

Answers : Business is derived from the English word “bisig” literally means a state of being “busy”. It is a part of social system. Every action taken in a business is related to the external world around it. Every individual in a society is related to the business activity. It is a
gainful human activity. Following are the steps involved in formulating business Objectives.

a) Analyse Internal Environment :
An analysis of internal environment helps in fixing realistic Objectives. Internal environmental factors include human resources, financial resources, physical facilities, management structure, internal relationship etc. must be studied, such an analysis helps in understanding strengths and weaknesses of the organisation.

b) Analyse External Environment :
The Organisation also needs to analyse the external environment. It includes customers, suppliers, competitors, political, economic, social, technological, natural and so on. Such an analysis reveals the opportunities and threats created by the environment such analysis would help the organisation to grab the opportunities and to minimize or defuse the threats.

d) Consider value System :
The values system followed influences the functioning of the business organisation to a great extent. Value System is a set of consistent ethical values followed by an individual or an organisation. While setting objectives, value system must be considered.

e) Consider management philosophy :
Management philosophy also affects setting of business objectives. A management that adopts on orthodox approach uses traditional and old fashioned practices to carry on its business. Objectives set by such a management would differ from those set by professional management.

f) Setting of objectives :
After analysing the internal and external environment, the firm should set the objectives in all the areas. Long term and short term objectives must be set. Further, these must be set on the basis of priority. Once the objectives are decided, it must be inform to the all personnel.

2) Bring out the classification of business objectives.

Answers : Business objectives are many and varied in nature. The success of any organisation depends on how well these are balanced. Business objectives can be broadly classified into five major categories. These have been depicted by a chart given below.

A) Organic Objectives or Threefold Objectives of business :
The organic objectives also called as three-fold objectives of business. Organic objectives are the primary objectives relating to a firm. Every firm has to give attention to three basic objectives.

B) Economic Objectives of business :
The main economic objective of business is profit. To earn profit, there are several other economic objectives, which are to be accomplished. The important-economic objectives of business are as follows.

C) Social Objectives Business :
Business is a part of a social System. A social system involves people and their Organisations in mutual relationship to each other. Business is an integral part of society.

D) Human Objectives of business :
One of the objectives of business is to look after the interest of the people who make business successful. It has been widely recognised that human beings should be treated as an individual. Businessman should have parental approach towards human being.

E) National Objectives of business :
National objectives are the more Specific objectives of business. These are aimed at fulfillment of national needs and aspirations. The government has to implement the national plans and policies in accordance with the accepted priorities. Business organisation should consider these priorities, policies and plans making business decisions.

3) What are types of organic objectives?

Answers : The organic objectives also called as three-fold objectives of 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:-

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

b) Growth :
Growth is the second major organic business Objective. Growth brings more profit, opportunities for advancement, better utilisation of resources, reputation and goodwill etc. Growth takes place through expansion or diversification. Expansion involves increase in business by introducing a product which is similar to the existing product line of the business. While diversification involves introducing a product which is totally different.

c) Recognition and Prestige :
Every business organisation desires to have social recognition and prestige. This objective is partly economic and partly social. Prestige of an organisation is due to standard quality of its products, regularity in their supply, reasonable prices and satisfactory service to customers. Recognition indicates public confidence on an organisation. Such recognition is possible only after a long period of useful service to the society.

Business organisations are not satisfied only with profit and growth. It desire to create goodwill and good image in the market. It has publicity and promotional value. A business organisation wants popularity among consumer’s, dealers, employees and local community.

4) Explain the classification of economic objectives.

Answers : The main economic objective of business is profit. To earn profit, there are several other economic objectives, which are to be accomplished. The important-economic objectives of business are as follows.

a) Profit :
The main economic objective of business is to earn profit. Business activity is primarily undertaken for earning profit. It enables a business to realise other objectives of business. Profit is the main motive of all business activities and is necessary for survival, growth and prestige of an enterprise. Profit is an indicator of business performance and a sign of efficiency.

b) Creation of Customer : The purpose of business is to create a customer. Customer is the foundation of a business. Business has a important human obligation. Profit can’t be earned only by producing the goods. Every businessman has to find customers for high goods or services. Thus, the objective of the business should be to identify the customer for their goods and services. This requires creation of customer in the market and distributes goods and services.

c) Innovation :
Innovation means to bring new methods, new ideas and concepts and modern efficient techniques. It mean something new and creative. It is useful in improving quality, reducing costs and satisfying the customer better. It is a continuous process. In order to survive and succeed in today’s competitive business environment, a business organisation needs to be innovative.

d) Utilisation of Resources :
Effective utilization of resources is the most important economic objective of a business enterprise, It is expected to utilise 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.

e) Expansion of Market :
A business firm may aim at entering in to new market. i.e. domestic as well as in international market. This would enable the firm to survive during recession grow and also gain reputation not only in the domestic markets but also in the international market. A business enterprise may increase its market share by effective distribution network, maintaining good relations with dealers, effective advertising and publicity, effective sales promotion etc.

f) Growth of business :
Growth of business activities is one of the economic objectives of business. Growth is desirable for more production and turnover in business. Business expansion also gives advantages of large scale operations. Introduction of new products, setting new production unit, and use modern techniques of production are some methods useful for the growth of business activities. Such growth is necessary for meeting market competition.

5) Discuss various types of social objectives.

Answers : Business is a part of a social System. A social system involves people and their Organisations in mutual relationship to each other. Business is an integral part of society. Following are the social objectives of business.

a) Social Objectives towards Customers :
The Survival and success of any business organisation depends on its consumers. One universally accepted social objective of business is to satisfy consumers by providing goods and services as per their needs and expectations. Business activities are essential for meeting the needs of consumers. Business have to supplied quality good at reasonable price to the customer.

b) Social Objectives towards Employees :
The Social Objective of a business firm towards its employees is to treat them with respect and provide them with the right compensation and facilities. Business should provide better wages, working conditions, good treatment to the employees. It also provide monetary and non-monetary benefits for satisfaction of the employees. This also ensures industrial peace and harmony.

c) Social Objectives towards shareholders :
Shareholders invest their money in the business in the form of shares, debentures bonds etc. The basic objective is that the shareholder should receive a fair, return on their investment. The Objective of the business is to utilise efficiently the money of the shareholder and give them fair return on their investment in the form of dividend a interest.

d) Social Objectives towards Government :
A business organisation can’t function smoothly without the support and co-operation of the Government. Hence, it becomes necessary on the part of the organisation 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.

e) Social Objectives towards Society :
Business organisation gain profit because of the support of the society. Naturally, they are expected to provide financial support for various social, educational and cultural activities. This is also necessary for maintaining cordial relations with the society. Business organizations must also support social welfare programmes.

6) Evaluate important types of Human objectives.

Answers : One of the objectives of business is to look after the interest of the people who make business successful. It has been widely
recognised that human beings should be treated as an individual. Businessman should have parental approach towards human being Following are the Human Objectives of business.

a) Human Resources Development :
The management must undertake human resource development programmes. 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 to the organisation.

b) Job Satisfaction :
Business enterprise 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 labour turnover and absenteeism. Jobs can be made more challenging and interesting through techniques like job enlargement, job enrichment, Job rotation etc. Some times promotions and transfers can also be used to bring job satisfaction.

c) Workers participation in the management :
Workers participation in the management has been recognised. 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.

d) Motivation :
The employees should be motivated to work hard. This can be done by offering monetary and non-monetary benefits to them. Monetary rewards includes high salaries, housing allowance, car allowance etc. while non-monetary incentives includes appreciation, recognition, promotions, Job title etc.

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

7) Evaluate different types of National objectives.

Answers : National objectives are the more Specific objectives of business. These are aimed at fulfillment of national needs and aspirations. The government has to implement the national plans and policies in accordance with the accepted priorities. Business organisation should consider these priorities, policies and plans making business decisions. Following are the important national objectives of business.

a) Social Justice :
Social justice means providing equal opportunities to all, protecting the interest of neglected, unorganised and economically backward sections of the society and prevention of any sort of exploitation. For example, a business organisation should do social justice to its handicapped workers, and women employees.

b) 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 material from them.

c) Production as per National Priorities :
Business organizations must make efforts to provide the basic requirement of life i.e. food, clothing and shelter at reasonable prices. In other words, every business organisation should set its objectives after considering national priorities. Secondly, efforts should be made to reduce the nation’s dependence on foreign countries. This could be done by undertaking production indigenously, promoting exports and reducing imports.

d) Social welfare :
Business Organisation may also support directly or indirectly welfare schemes in the society. The welfare schemes that business has to adopted i.e. adopting schools in backward areas, providing funds for rural development activities such as construction of roads, irrigation etc. organizing health camps etc.

e) Development of Backward Areas :
Business organisation can contribute towards 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, too, encourages the development of backward areas by providing lots of incentives such as tax holidays, low rates of taxation, tax exemptions and so on.

f) 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 labour intensive techniques so as to employ more number of people and thereby reduce the number of people below the poverty line.

8) How would you reconcile economic objectives with social objectives?

Answers : A) Economic Objectives of business : The main economic objective of business is profit. To earn profit, there are several other economic objectives, which are to be accomplished. The important-economic objectives of business are as follows.

b) Innovation :
Innovation means to bring new methods, new ideas and concepts and modern efficient techniques. It mean something new and creative. It is useful in improving quality, reducing costs and satisfying the customer better. It is a continuous process. In order to survive and succeed in today’s competitive business environment, a business organisation needs to be innovative.

c) Expansion of Market :
A business firm may aim at entering in to new market. i.e. domestic as well as in international market. This would enable the firm to survive during recession grow and also gain reputation not only in the domestic markets but also in the international market. A business enterprise may increase its market share by effective distribution network, maintaining good relations with dealers, effective advertising and publicity, providing effective and efficient after-sale-service, effective sales promotion etc.

d) New product Introduction :
A firm may aim at introducing new product lines or brands. The introduction of new products or brands would help the organisation in several ways i.e. increase its overall market share, face the competition effectively in the market, earn good amount of profit and so on.

B) Social Objectives Business : Business is a part of a social System. A social system involves people and their Organisations in mutual relationship to each other. Business is an integral part of society. Following are the social objectives as follows :

a) Social Objectives towards Suppliers :
The suppliers can play an important role in the success of an organisation by Supplying the right quality and quantity of material at the right time. Therefore, a business firm needs to have social objectives towards supplier in respect of timely payment of dues. Helping the suppliers in their financial requirements by making advance payments.

b) Social objectives towards Dealers :
Dealers assist business firm 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.

c) Social Objectives towards Society :
Business organisation gain profit because of the support of the society. Naturally, they are expected to provide financial support for various social, educational and cultural activities. This is also necessary for maintaining cordial relations with the society. Business organizations must also support social welfare programmes.

d) Social Objectives towards Customers :
The Survival and success of any business organisation depends on its cusumers. One universally accepted social objective of business is to satisfy consumers by providing goods and services as per their needs and expectations. Business activities are essential for meeting the needs of consumers.

9) Distinguish between economic and social objects.

	Economic objectives	Social objectives
1) Meaning	Economic objectives relate to financial aspects and are directly related to the survival, stability and growth of business.	Social objectives relate to social responsibilities and are directly related to welfare of different social groups.
2) Coverage	Economic objectives include reasonable profit making, growth, introduction of innovation, reduction in the cost of production and marketing, business stability, prestige and recognition.	Social objectives include regular and continuous supply of goods and services, raising social welfare, support to community, pollution control and justice to investors, consumers and employees.
3) Closer to enterprises	Economic objectives are closer to enterprises as they are useful for their survival.	Social objectives are closer to the society at large as they are useful for raising social welfare.
4) Priority	Economic objectives are treated as primary objectives by business organisation.	Social objectives are treated as secondary objectives by business organisation.
5) Historical background	Economic objectives have a long history and are universally accepted by the business community since long.	Social objectives are recent in origin but are not accepted in the right spirit by the business community.
6) Effects/Benefits	Economic objectives bring industrial growth and create employment opportunities.	Social objectives raise social welfare and offer justice to different social groups.
7) Role	Economic objectives bring financial soundness to business organisation.	Social objectives bring social support and recognition to business organisation.
8) Scope	Economic objectives are limited in scope as they are related to an individual enterprise.	Social objectives are wide in scope as they are related to different social groups.
9) Effect of neglect	Neglect of economic objectives brings financial difficulties. Even the survival of an enterprise may come in danger.	Neglect of social objectives leads to non-co-operation from social groups. This may also lead to social criticism and social control.

Distinguish between economic and social objects

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