What is Business? Meaning and Objectives of Business

What is Business?

Business aggregates all those activities connected with the manufacture, purchase, and sale of goods and services to earn profit. The profit earned is the reward for undertaking business activities. So business is the sum total of all those activities linked with manufacturing, trading, transport, banking, insurance, warehousing, advertising, etc. that are undertaken to earn profit.

According to Peterson and Plowman, “Business may be defined as an activity in which different persons exchange something of value, whether goods or services or mutual gain or profit.”

Objectives of Business

An objective is a goal toward which all efforts are directed. It is the purpose of the existence of an organization. Objectives offer guidance and serve as reference points.

A business has to set multiple objectives for different areas. Objectives should be specific in every field and corner of a business. For example, sales targets must be there, the amount of capital to be raised has to be fixed beforehand, and so on. Objectives also set targets to be achieved, and these become the measure of performance. Objectives should be there in every area where performance and results affect the survival and prosperity of a business.

Types of Objectives of Business

Business objectives can be divided under the following headings:

• Economic objectives
• Social objectives
• Human or individual objectives

Economic objectives

Following are some major economic objectives of business:

• Profit earning
• Survival
• Growth
• Production of quality goods
• Creating markets
• Technological improvements
• Innovation
• Optimum utilization of resources

1. Profit earning: Businesses have indeed started to earn profit. Profit is the basic incentive for business pursuits. Profits are needed to face various uncertainties like trade cycles, changes in demand patterns, and fluctuations in money markets. A business needs profits not only for its existence but also for its growth and diversification. Investors want a fair return on their investments, employees expect higher salaries, and entrepreneurs need money for reinvestment. All these demands and requirements will be met only when some profits are made.
2. Survival: The objective of every business is to survive in the market. A business faces a lot of competition from other business units, encounters a fluctuating marketing environment, fears uncertainties about the future, etc. The objective of a business will be to face various types of challenges and survive in different situations. It will be possible only when the economic position of the business is sound and it can face adverse situations successfully.
3. Growth: A business will stay in the market if it can grow over time. Growth is an important objective for every business. It will be possible only if the business is earning proper profits and can finance its growth and expansion. A stagnant business will not be able to survive for long, and growth plans must be prepared and implemented for the betterment of the business.
4. Production of quality goods: The profit can be made only when the occurrence of any exchange of goods and services takes place. So, the next goal is to create more goods and sell them to consumers. The producers estimate the demand for goods and produce accordingly. Taste and preference, plus the paying capacity of consumers, must be considered. A businessman creates form, place, and time utilities and meets the requirements of society. So, a tangible form of wealth is produced in the form of goods.
5. Creating markets: The business aims to sell products. Marketing consists of those efforts that effect transfers in ownership of goods and care for their physical distribution. Marketing covers all those activities that influence the creation of time, place, and possession utility. The businessman wants new consumers to increase his sales. An effort is made to retain consumers by supplying them with better-quality goods at reasonable prices. The new markets are also explored to maintain a regular demand for goods. An enterprise can’t survive without finding new markets for its products.
6. Technological improvements: A businessman should always strive for the latest methods of production. In the world of competition, everybody tries to sell their products by delivering good-quality products at lower prices. This is possible when the latest technology is used for producing goods. There should always be an effort to increase production and reduce costs. The businessman should try new ways to keep pace with the changing business world.
7. Innovation: Innovation refers to new methods of production and the adoption of the latest technologies. When newer and better methods of handling various functions are used, then there will be better results. The companies that use innovations first will benefit the most. In a competitive business environment, innovation helps take advantage of the latest developments. Innovations help improve the profitability of the business.
8. Optimum utilization of resources: It refers to the best use of men, money, materials, machinery, etc. The resources are scarce, and their proper utilization will help improve the economic position of the business. The objectives of optimum use of resources will be achieved if the following factors are taken into account:
   • • Proper training should be given to employees so that machines and equipment are used in the best possible way.
     • The waste of materials should be curtailed.
     • Find out ways and means of using waste products.
     • The spending of money should align with the benefits derived from it.

Social Objectives

Following are some major social objectives of business:

• Production of goods
• Supply of quality goods and services
• Co-operation with the Government
• Generation of more employment
• Social service or community service
• Avoiding environment pollution

1. Production of goods: The business should ensure the production of goods to meet the requirements of society. The business should estimate the total demand for various commodities and adjust production accordingly. The governments are also undertaking the work of coordinating business activities according to the needs of society. This is done through various licensing laws. The licenses are issued according to the demand for various goods.
2. Supply of quality goods and services: Business is responsible for the supply of quality goods and services to consumers at reasonable prices. The business should aim for consumer satisfaction. The supply of adulterated goods that are poor in quality, unusable, or harmful to health will be against business ethics. In the present scarcity-ridden period, consumers are worst affected. They are supplied with poor-quality goods at higher prices, yet goods are not made available in abundance. No business can survive in the long run if it ignores consumers. The business must study the wants and needs of consumers and provide them with quality goods at reasonable prices.
3. Co-operation with the Government: Businesses should cooperate with the government in helping to achieve the objective of a socialistic pattern of society. The Government of India has devised roles for both the public and private sectors. The government has fixed priorities for undertaking major policies for the growth and development of the country. It is not uncommon on the part of Indian businessmen to adopt any approach that goes against the declared policies of the government. The businessmen even 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 government policies and support to solve national problems.
4. Generation of more employment: The business can benefit society by creating multiple job opportunities. The expansion of business not only helps in employment growth, but it has multiple effects. The role of individuals is a necessity at various levels in the channels of distribution, from the producers to the consumers. The business community should plough back its profits for further expansion of business activities, which will ultimately create new job opportunities.
5. Social service or community service: There is an emphasis on the social responsibility of business. Society expects that businesses should spend some part of their profits on community service or creating infrastructure for better social living. Some business houses are undertaking charitable activities by opening charitable dispensaries, hospitals, schools, etc. for the benefit of needy people. Participating in social service programs adds to the reputation of the company and helps establish a better image. For example, Tata is spending a specific amount every year on social service projects.
6. Avoiding environment pollution: Environmental pollution has become a major problem in all countries. Industrial units are contributing to environmental pollution by disposing of their waste in rivers, lakes, etc. The gases released through the chimneys of industrial units are creating a lot of problems for society. Businessmen should try to avoid all types of pollution by installing mechanical devices to control it. It is the moral duty of businesses to use environmentally friendly technology and control all types of pollution.

Human or Individual Objectives

Human or individual objectives are related to the welfare and growth of employees. Employees are valuable resources and contribute greatly to the success of a business. The employees should be motivated to contribute their maximum to the business. The individual needs and aspirations of employees should be taken care of. Some of the common individual objectives are:

1. Payment of competitive wages and salaries.
2. Providing good working conditions.
3. Employees should be given proper training and updating of their knowledge and skills for their growth and development.
4. The better performance of employees should be recognized by giving them incentives, awards, promotions, etc.
5. Employees should be encouraged to participate in the decision-making process.
6. Benefits, such as housing facilities, medical facilities, transportation, education of children, etc., will be provided to employees.