Meaning of business / main objectives of Business
Meaning of Business
This is an activity which is primarily pursued with the object of earning profit. A business activity involves production and/or exchange of goods or services so as to earn profit. Business has been defined by L. R. Dicksee as “a form of activity pursued primarily with the object of earning profits for the benefit of those on whose behalf the activity is conducted”. The literal meaning of the work ‘business’, is ‘a state of being busy.’ In economic sense every person is engaged in some kind of work, activity, production or occupation. Accordingly, The word ‘business’ means work, effort, activity and acts of people, which are connected, with the production of wealth. The economic activity must be regular and continuous. The village farmer who tills his land and sells his produce; the shoe-maker who makes shoes to order, the various kinds of shops in the market, both in rural and urban areas dealing in various articles and commodities which are in demand; the restaurants and hotels that cater to the needs of different types of customers; the banks, insurance companies, transporters, financial institutions, cinemas and theatres and the line-selling services; the factories turning out manufactured goods according to the needs of the consumers and producer etc. are some examples of business which is being carried on so as to earn profit. Thus, the essence of business lies in people making or purchasing goods and supplying them to those who want them with the object of making profit. It has nothing to do with the production or purchasing for personal consumption; selling for profit is essential to constitute business.
It can be said that the term ‘business’ includes all those human activities which are related to the production and distribution of goods and services with the object of earning profit through satisfying customers/consumers’ needs and wants.
Objectives of Business
Business objectives are covered under the following categories:
(A) Economic Objectives.
(B) Social Objectives.
(A) Economic Objectives:
1. Profit Earning: It cannot be denied that business is started for earning profit. Profit is the basic incentive to business pursuits. Profits are needed to face various uncertainties like trade cycle, change 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. The profit motive does not mean that the businessman should start exploiting consumers by charging higher prices or selling low quality goods. The interest of businessmen and consumers are common. If profit becomes the sole objective of business, it will antagonize the consumers and will hamper the healthy relations between the businessmen and their consumers. The businessman should charge a reasonable profit and it will be beneficial both to the business and the society.
2. Production of Goods: The profit can be earned only when some exchange of goods and services takes place. So the next objective is to produce more goods and sell them to the consumers.
The producers estimate the demands for goods and produce accordingly. The tastes, preferences and paying capacity consumer must be taken into account. A businessman creates from, place and time utilities and meets the requirements of the society. So, a tangible form of wealth is produced in the form of goods.
3. Creating Markets : The aim of the business is sell products. Marketing consists of those efforts, which effect transfer in ownership of goods and care for their physical distribution. Marketing covers all those activities which relate to the creation of time, place and possession utility. The businessman searches for new consumers for increasing his sales. An effort is made to retain old consumers by supplying them better quality goods’ at reasonable prices. The new markets are also exploited to keep a steady demand for goods. An enterprise cannot exist without finding out new markets for its products.
4. Technological Improvements : A businessman should always strive to use latest methods of production. In the world of competitions, every body tries to sell his products by offering good quality products at lower price. This is possible when latest technology is use for producing goods. There should always be an endeavour to increase production and reduce costs. The businessman should try new methods so that he may keep pace with the changing world.
(B) Social Objectives:
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: 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 with 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 co-operate 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 the execution of major policies for the growth and development of the nation. It is not uncommon on the part of Indian businessman to adopt tactics and strategies that go counter to the declared policies of the government. The businessman also try to evade various taxes. These things lead to a situation of suspicion and misunderstanding between businessman 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 More 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 it has a multiple effect. Persons are required at various levels in the channels of distribution from the producers to the consumers. The business community should plough back its for further expansion of business activities which will ultimately create new job opportunities.
5. Utilising National Resources Properly: The business should put the scare national resources to the best possible use. Wastage of any thing will not only be a loss of the enterprises but it will 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.
