Maga Ltd was manufacturing water-heaters. In the first year of its operations, the revenue earned by the company was just sufficient to meet its costs. To increase the revenue, the company analysed the reasons of less revenues. After analysis, the company decided:
(i) To reduce the labour cost by shifting the manufacturing unit to a backward area where labour was available at a very low rate.
(ii) To start manufacturing solar water-heaters and reduce the production of electric water-heaters slowly.
This will not only help in covering the risks, but also help in meeting other objectives too.
(a) Identify and explain the objective of management discussed above.
(b) State any two values which the company wanted to communicate to the society.
(a) Maga Ltd is discussing about the achievement of ‘organisation objective’ in part (i) and ‘social objective’ in part (ii) of the question. Organisational objectives It refers to the goals for the benefit of all stakeholders such as employees, government, shareholders and investors.
Organisation objectives are:
(i) Survival When the organisation earns enough revenue to cover its cost.
(ii) Profit When the organisation earns enough revenue to cover costs and risks of the business.
(iii) Growth It implies growth in terms of sales, profit, number of workers, products produced and sold, etc.
Social objectives Since, business organisations are social units, their objectives should be in line with general needs of the society.
Some of the social objectives of an organisation are :
(i) Supply of quality products.
(ii) Using environmental friendly methods of production…
(iii) It should provide employment opportunities to the disadvantaged sections of society.
(b) Two values which the company wants to communicate to the society are:
(i) Promoting employment opportunities By providing employment to the people of backward area.
(ii) Environment friendly By producing solar heaters and reduce production of electric heaters