Objectives Of Business
What are the objectives of business?
Every business enterprise has certain objectives which regulate and generate its activities. Objectives are needed in every area where performance and results directly affect survival and prosperity of a business. Various objectives of business may be classified into four broad categories as follows:
1. Economic Objectives:
Business is basically an economic activity. Therefore, its primary objectives are economic in nature. The main economic objectives of business are as follows:
(i) Earning profits:
A business enterprise is established for earning some income. It is the hope of earning profits that inspires people to start business. Profit is essential for the survival of every business unit.
Just as a person cannot live without food, a business firm cannot survive without profit. Profits enable a businessman to stay in business by maintaining intact the wealth producing capacity of its resources.
Profit is also necessary for the expansion and growth of business. Profits ensure continuous flow of capital for the modernization and extension of business operations in future. Profit also serves as the barometer of stability, efficiency and progress of a business enterprise.
(ii) Creating customers:
Profits are not created by God or by the force of nature. They arise from the businessman's efforts to satisfy the needs and wants of customers.
A businessman can earn profits only when there are enough customers to buy and pay for his goods and services. In the words of Drucker, "There is only one valid definition of business purpose; to create a customer.
The customer is the foundation of business and keeps it in existence. It is to supply the customer that society entrusts wealth-producing resources to a business enterprise."
No business can succeed without providing customers value for their money. Business exists to satisfy the wants, tastes and preferences of customers.
In order to earn profit, business must supply better,
Every business enterprise has certain objectives which regulate and generate its activities. Objectives are needed in every area where performance and results directly affect survival and prosperity of a business. Various objectives of business may be classified into four broad categories as follows:
1. Economic Objectives:
Business is basically an economic activity. Therefore, its primary objectives are economic in nature. The main economic objectives of business are as follows:
(i) Earning profits:
A business enterprise is established for earning some income. It is the hope of earning profits that inspires people to start business. Profit is essential for the survival of every business unit.
Just as a person cannot live without food, a business firm cannot survive without profit. Profits enable a businessman to stay in business by maintaining intact the wealth producing capacity of its resources.
Profit is also necessary for the expansion and growth of business. Profits ensure continuous flow of capital for the modernization and extension of business operations in future. Profit also serves as the barometer of stability, efficiency and progress of a business enterprise.
(ii) Creating customers:
Profits are not created by God or by the force of nature. They arise from the businessman's efforts to satisfy the needs and wants of customers.
A businessman can earn profits only when there are enough customers to buy and pay for his goods and services. In the words of Drucker, "There is only one valid definition of business purpose; to create a customer.
The customer is the foundation of business and keeps it in existence. It is to supply the customer that society entrusts wealth-producing resources to a business enterprise."
No business can succeed without providing customers value for their money. Business exists to satisfy the wants, tastes and preferences of customers.
In order to earn profit, business must supply better,