OBJECTIVES OF BUSINESS| CLASS XI |BST
We all have some aim, purpose and a reason to live our lives. Likewise, a business also operates because it has some objectives to fulfil. A reason why that business gets started!
WHAT IS THE MEANING OF OBJECTIVES?
In simple words, an objective is a point that an organization has to achieve in a specified time period. All the efforts and actions are directed towards achieving that objective. It may be anything like earning a profit, increasing productivity, providing quality goods, making a position in a specific industry, etc.
Setting objectives bring prosperity to a business. They should be time-oriented, specific, achievable, relevant and measurable.
WHY PROFIT IS AN ESSENTIAL OBJECTIVE?
The main objective of any business is to earn a profit. Without profit, a business cannot run smoothly. A person who invests in a business always thinks of generating more revenue so that the business can earn a good amount of profit.
Suppose, this man has invested Rs. 10,00,000 in a business, so he works to generate at least 15,00,000 as revenue to get the profit of Rs.5,00,000.
OTHER REASONS TO EARN PROFIT -
1. LIVELIHOOD - To generate income and earn a livelihood. With higher profits, one is able to live and spend a better life and fulfil the basic necessities of life.
2. TO EXPAND BUSINESS - To expand a business, additional income is required and if the profits are high it would be easier to reinvest that profit and expand it rather than borrowing it from other sources.
3. INDICATION OF EFFICIENCY - Higher profit indicates that a business is working effectively and efficiently.
4. SOCIETY’S APPROVAL OF THE UTILITY OF BUSINESS - Higher profit means I am adding some value to society, and society is approving my business by accepting it.
5. IT BUILDS THE REPUTATION OF BUSINESS- Higher profit builds the trusts among the stakeholders of a business and increases its reputation. Higher the profits, more prosperity!
WHY PROFIT SHOULD NOT BE THE ONLY OBJECTIVE?
Some people think that the only motive of the business is to earn a profit, to earn a lot more than what we have invested. But, now times are changing and the ways of doing business are also changing.
Earning profit can be the personal objective of a businessman but we should always keep in our mind that businessman and business both are separate entities. There are various other things or factors that are associated with a business and contributes towards its success and prosperity. You can't simply ignore them!
Like, for instance, your customers who are the most important part of your business, your employees who work to grow your business, the entire community or society where your business is operating. So you have to set some objectives which ultimately leads you to earn higher profits and prosper in long run.
Now there are some businesses that exploit certain sections of society to achieve more figures like doing unfair trade practices, overlooking the interests of their employees, wasting limited resources, and much more. Such entities only get profit in the short-run but it is not possible for them to survive in the long-run.
So, it doesn't matter how small your business is or how big it is, you should always set objectives for other factors which run your enterprise, earning profit should not be the only objective.
MULTIPLE OBJECTIVES OF BUSINESS
A business has to set some objectives to grow and survive as it depends upon many factors. So, it has to balance a number of needs and goals, it requires multiple objectives.
Objectives should be specific, concrete that what a business is going to do to achieve them.
Like, To set the sales target, To define the amount of capital to be raised, How much resources to be procured, How many units to produce.
They also enable a business to measure its performance and what is needed to make it better.
1. MARKET STANDING-
It refers to the position of your business among your competitors. A business enterprise must aim at standing strong in terms of providing competitive products to its customers and satisfying their needs.
How you can do that –
Identifying customer needs properly.
Providing them with a quality product at a suitable price.
Providing them after-sale- services.
Product reviews and suggestions.
Sales promotion activities – offers, discounts, lucky draws.
Connecting with their needs by story-telling in advertisements.
2. INNOVATION-
It means introducing new methods, new ideas, new techniques.
In a business, innovation is done in two ways-
Innovation in product and services
Innovation in new skills and activities which are required to supply goods and services.
It is impossible to stand in a market without doing innovation, as we always say, Innovation is the key!
3. PRODUCTIVITY-
It means, how efficiently a business is able to convert the input into an output. In order to ensure continuous survival and progress, every business enterprise must aim at achieving higher productivity.
How you can do that-
-Use advanced technology
-Focus on innovation
-Optimum utilization of resources
-Invest in your workforce
4. PHYSICAL AND FINANCIAL RESOURCES
We need sufficient resources to run any business. These are physical resources and financial resources which are basically 4 m’s -
As these resources are limited so business must aim at utilizing these resources efficiently.
How can you do that-
-Implementing new techniques.
-Try to reduce costs and expenses.
-Proper stock and inventory management policies.
-Improving cash-flow and fund-flow of your business.
-Formulating strategies from time to time.
-Maintain and employ a strong workforce.
-Satisfying customers by giving them a good quality of products.
5. MANAGER PERFORMANCE AND DEVELOPMENT
Management is an integral part of any business. Managers are required to organize and coordinate various activities of the business.
It is necessary to look upon their growth and development. It is an important objective.
How to do that-
-Motivating them through various programmes.
-Developing their skills, competence and expertise from time to time.
-Creating new opportunities for promotion and advancement.
-Fair amount of pay-scale.
-Addressing their grievances.
-Giving them the liberty to take decisions.
-Goal-setting.
-Imparting leadership skills.
6. WORKER PERFORMANCE AND ATTITUDE
Workers’ performance and attitude determine their contribution to the productivity and profitability of the business. An enterprise should not only motivate its managers, but also the middle-level and lower-level workforce. They are equally responsible for accomplishing the long-term goals of an organization. It is necessary to look upon their growth, performance, and development and to improve their attitude towards the organization.
How to do that-
-Training and development programmes
-Providing them financial assistance.
-Motivating them on their performance.
-Introducing safety measures.
-Grievance handling
-Fair wages and pay scale
-Frequent feedback.
-Establishing better communication
7. SOCIAL RESPONSIBILITY
Every business must also set an objective to which focus on social responsibility. Why..?? Because every business operates in society by using its resources, and in return it expects society to support it, to create a conducive environment to grow and flourish. But it becomes a responsibility of business to give this society something in return, to play fair, and to contribute towards its welfare.
How to do that-
-Producing and selling good quality products.
-Fair pricing of products.
-Fairtrade practices.
-Contributing to the general welfare of society by opening up schools, colleges, medical facilities, recreational facilities.
-Creating employment by establishing new units.
-Should pay taxes and dues honestly.
-Less pollution.
-Practising corporate social responsibility.
So, these are some objectives that every enterprise must set for growth and prosperity in the long-run.
For Real-Time examples, watch my youtube video on this topic!
Leave a comment if you understood the concept!
Thanx
Isha :)
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