objectives of business



A business is an organisation of human, material and other intangible resources. It is created to offer satisfaction to its customers, owners, employees, managers and other stakeholders. The function of business is to create, retain and satisfy profitable customers as a means of successfully achieving the desired ends of an enterprise.

Although as regards the objectives of business, the general belief is that earning profits is the sole objective of a business. But this is not true. Professor L. Urwick has rightly pointed out “Profit can be no more the objective of a business than eating is the objective of living”. The fact remains that human beings do not live with the sole objective of eating and similarly business cannot exist with the sole objective of making profits.

The following are various objectives of business:



1. Profit Earning: It cannot 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 cycles, changes in demand pattern and 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 made.

2. Survival: The basic objective of organisation is to ensure that it continues to survive and exist in the future. Survival is possible only when organisation is able to earn enough to recover the cost of its assets.

3. Growth:  A business needs to add to its prospects in the long run. For this, the organisation must grow and expand to survive in the long run. Growth of an organisation indicates how well it is able to exploit its potential opportunities. Growth is measured in terms of sales, volumes, increase in number of employees, market share, number of products, increase in capital investment etc.


Human objectives of business require that a workable balance should be maintained among the claims of various interested groups like employees, shareholders, consumers, government etc. As a socio-economic organisation, modern business organisation must fulfil the following human objectives:

1. 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 The old theory that workers should be coerced to get more work is no longer valid. 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 get increased allowances.

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 which will motivate the workers to give their best.

2. 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.

3. Satisfaction of Shareholders: In the present business world, ownership and management are in two different hands. The shareholders are spread all over the country and they have no hand in the day-to-day working of the business. The management should give reasonable return on the money invested by the 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 management so that the company resources are employed for the welfare of all. These things are important to encourage more investments into the business,

4. Helpful to Government: A business owes responsibility to government also. Industrialization has created a number of problems which a government is expected to solve. An unplanned industrial growth has created a problem of pollution. This problem is so huge that government cannot do much without the help of business community.

Every industrial house should use methods of controlling pollution at unit level. It will help in reducing and controlling this problem. Business should also pay various taxes to the government honestly and promptly. Government cannot be run without financial resources. Business makes main contribution to the government funds.


Business is an integral part of society and it must, therefore, fulfill the expectations of society. Business activities should be carried on in a socially desirable manner. In fact, profits can best be earned in the long run by putting the needs of society above profit. In other words, service first and profit next should be the motto of business because business has no meaning unless it can serve and satisfy customers. Social objectives of business are as under:

1. Availability of Goods: The business should ensure the supply of goods to meet requirements of the society. The business should estimate the total demand for various commodities and adjust the production accordingly. The governments are also undertaking the work of coordinating business activities according to the needs of the society. This is done through various licensing laws. The licenses are issued according to the demand for various goods.

2. Supply of Quality Goods at Fair Prices: The supply of quality goods and services to consumers at reasonable prices is the responsibility of the business. The business should aim at consumer satisfaction. The supply of adulterated goods, poor in quality, unusable or harmful to health will be against business ethics.

In the present scarcity ridden periods, the consumer is the worst affected. He is supplied poor quality goods, at higher prices and still the goods are not made available in abundance. A business cannot flourish in the long run if it ignores consumers. It is the duty of the business to study wants and needs of consumers and provide them with quality goods at reasonable prices.

3. Co-operation with the Government: Business should cooperate with the government in helping to achieve the objective of socialistic pattern of society. The Government of India has devised roles both for public and private sectors. The Government has fixed priorities for excecution of major policies for the growth and development of the nation. It is not uncommon on the part of Indian businessmen to adopt tactics and strategies that go counter to the declared policies of the government. The businessmen also try to evade various taxes.

These things lead to a situation of suspicion and misunderstanding between businessmen and the government. The business community should adopt a positive approach towards policies of the government and should help it in solving national problems.

4. Creation of Employment: The business can help the society by creating more and more job opportunities. The expansion of business not only helps in employing more persons in the factory but has a multiple effect too. Persons are required at various levels in the channels of distribution from the producers to the consumers. The business community should plough back its profit for further expansion of business activities which will ultimately create new job opportunities.

5. Utilizing National Resources Properly: The business should put the scarce national resources to the best possible use. Wastage of anything will not only be a loss of the enterprise but will also be a national loss. A business is not free to damage or cause discriminate depletion of natural resources. The use of improved technological methods for the production of goods can be helpful in raising production and reducing costs.

6. Service to Community: Large business firms are expected to undertake community services like setting up training centres for the unemployed, charitable dispensaries and schools and giving donations for social and religious functions, sponsoring games etc. Such community services help to improve the public image and reputation of business. Business is expected to adopt environment friendly practices and to follow the regulations prescribed by the Government.

7. Avoidance of Anti-Social and Unfair Trade Practices: A businessmen should not indulge in anti-social practices like hoarding, black marketing and adulteration to make quick money. Some businessmen make money by misleading and exploiting people through false advertising. Such anti-social practices not only spoil the image of business but also lead to punishment. Therefore, businessmen should avoid these undesirable means of increasing profits.


A business does not exist for itself only, it contributes substantially to the national uplift. It should see the needs and requirements of the nation and meet priorities fixed by the government. A business has the following national objectives:

1. Helping National Efforts: A business aims at helping the national efforts of improving economic position of the society. Every government fix national priorities for the nation but have not developed. The business should enter those fields of industrial activity which remained neglected so far. Rural industrialization and balanced regional growth are the priorities of Indian Government.

Businessmen should set up new units in backward and under-developed areas so that people living there get employment opportunities and resources available there are fully utilized. There may be certain items which are short in supply. It is the duty of the business entrepreneurs to produce goods on the basis and not on the basis of needs and not on the basis of profit margins.

2. Development of Small Entrepreneurs: Big business houses should help in the development of small undertakings. They should not treat small-scale as their competitor. Small units should be patronised by purchasing their products for further assembling etc. Big units may also help by encouraging ancillary units to sell their products to them and arranging industrial inputs for them.

3. National Self-Sufficiency and Export Development: Business can play an important role in making the country self-reliant. It should produce all those goods which are imported from outside. Efforts should also be made to produce those goods which find ready market in foreign countries. This will help in earning foreign exchange. A self-reliant nation has more prestige in international community.

4. Development of Skilled Personnel: Every country needs trained and skilled personnel for the development of its industry. Business houses can provide technical knowledge and training to their employees. This helps in skill formation for the country’s growth and development. In India, some business houses have set up engineering and technology institutes which supply trained personnel to the nation.


To sum up, business may be said to be an enterprise which makes, distributes or provides any article or service which other members of the community need, and business transactions are essentially measured in terms of money. These measurements show result in profits for the survival of business. Both money and profits are measuring devices, but a measuring device is not a purpose. To realise profit may be, and usually is the motive or purpose of some of the individuals who engage in business. But the only valid definition of business purpose is to create a customer that is to provide goods or services which someone needs.



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