Why does business need multiple objectives? Explain any five such objectives.
Need for Multiple Objectives
It is generally believed that profit earning is the primary objective of business. However, as per modem thinking, business needs to have several objectives. Consistent and sustainable profit can be earned only if the business performs useful services to society. Business requires multiple objectives since it has to balance a number of needs and goals related to various aspects of society. Following only one objective cannot lead business towards excellence. Objectives are needed in every area where performance and results affect the survival and prosperity of business.
Five of the objectives of business are described below
(i) Profit Maximisation Profit is defined as excess of revenue over cost. Profitability refers to profit in relation to capital investment Although, earning profit cannot be the only objective of business, its importance cannot be ignored. Every business makes an attempt to reap maximum profit as possible in the given market conditions.
Profit mh.y be regarded as an essential objective of business for various reasons
(a) It is a source of income for business persons.
(b) It can be a source of finance for meeting expansion requirements of business.
© It indicates the efficient working of business.
(d) It can be taken as society’s approval of the utility of business.
(e) It builds up the reputations of a business enterprise.
(ii) Market Standing It refers to the position of an enterprise in relation to its competitors. A business enterprise must aim at standing on stronger footing in terms of offering competitive products to its customers and provide customer satisfaction.
(iii) Innovation It is the introduction of new ideas or methods.
There are two kinds of innovation in every business
(a) Product Innovation In product innovation, a new product or service or an improved version of existing product is developed.
(b) Process Innovation This involves innovation in the methods, skills and activities needed to produce or supply products. Product demand starts declining after a span of time. At time stage, the business must introduce a new innovation to create fresh demand for the existing product by introducing new features in it or bring out a new product to sustain in the market.
(iv) Supply Good Quality Products Consumers generally prefer the products which are of satisfactory quality and are available at reasonable price. Thus, it is the duty of a businessman to produce and supply products of proper quality to satisfy the expectations of consumers.
(v) Employee Welfare Employees are the valuable asset of an organisation. Because of their contribution, business can expect its success in future. Therefore, it is the duty of every employer to provide good working conditions, fair and just treatment, impressive wages to their employees.