Objectives of business, part -2

APRIL 21, 2020

Good Morning boys!

I hope you all have understood the economic and social objectives of business and the role of profit in business. Today we will do the multiple objectives of business and is profit the sole objective of business.

LEARNING OUTCOMES- At the end of the topic, students will be able to -
a) Understand the multiple objectives of business.
b) Discuss  profit as a sole objective of business or not.

  Q.9 Why multiple objectives are needed by an organization? Explain them. (6)

Ans- As business seeks to create a balance between different needs and goals of different interest groups, like consumers, employees, society, etc, it needs multiple objectives. Some of them are explained as follows:

1.      Market Standing-

a)      It refers to the position of a business in context of its competitors.

b)      Every business enterprise must aim at securing a stronger standing in terms of offering competitive products to its customers and serving them to their satisfaction.

2.      Innovation-

a)      It is important as no business enterprise can flourish in a competitive world without innovation and it can be incorporated in two ways-

b)      i) It may be enhanced by adding new features to it or modifying its packaging.

ii) It can be improved with the help of better technology and exploring new channels of distribution.

3.      Productivity-

a)      It is measured in terms of ratio between the inputs and outputs.

b)       Higher productivity indicates higher efficiency of the business.

4.      Physical and financial resources-

a)      Every business needs varied kinds of resources be it human, physical or financial in order to carry out its activities.

b)      A business must obtain and utilize these resources efficiently.

5.      Manager performance and development-

a)      The success of a business primarily depends upon the competence of its human resources.

b)      Therefore, the enterprises must actively work for this purpose by conducting motivational programmes for managers.

6.      Worker performance and attitude-

a)      The enterprises must ensure a positive attitude on the part of the workers in order to enhance their contribution towards productivity and profitability of the enterprise.

Q.10 Is profit the sole objective of business? Explain. (4)

Ans- 1) No, profit is not the sole objective of business. A layman may say that profit is the sole objective of business. But a good businessman may not consider profit as the sole objective of business.
2) There are many factors of production used in business like capital, labour, land, etc. and profit is the return given to the investors for investing capital. But the return given to the other factors of production is also important as it is not the only factor of production used in business.
3) The arguments against profit maximisation are as follows:
a) Long term interest of the business will be ignored as only profit will be maximised in the short run.
b) Business will indulge in unfair trade practices like black marketing, hoarding, etc in order to maximise profits in the long run.
c) The government will intervene in the business activities .
4) Hence, we can say that profit is not the sole objective of business.

Q .11What are the types of business activities? (1)
Ans- 1. Industry
         2. Commerce

The above video will help you to understand the topic better.