economic objective vs. social objective
Answers
Explanation:
Economic Objectives of Business
We learned in the previous topic that business is an economic activity. Hence, its purpose is to show economic results. Let’s understand the economic objectives of the business. They are as follows:
1] Profit Earning
Business is a set of activities undertaken with the prospect of sale for the purpose of earning a profit. Profit is the extra income over the expenses. The main objective of any business is to earn a profit. Just as a plant cannot survive without water, similarly a business cannot sustain without profit.
Profit is necessary for growing and expanding business activities. Profit guarantee a consistent stream of capital for the modernization and augmentation of business activities in the future. Profits likewise show the scale of stability, efficiency, and advancement of the business organization.
2] Market Share / Creation of Customers
In the words of Drucker, “There is only one valid definition of business purpose; to create a customer. “ Profits are not generated out of thin air. They are the result of the hard work of the businessman to satisfy the needs of the customers.
In the long run, the survival of the business completely depends upon the market share captured by the business. The creation of good and satisfaction of the needs of the customer is a crucial purpose of the business. So to generate profit and demand, the business must supply premium quality and give value for money products.
3] Innovation & Utilization of Resources
Innovation normally means to change processes or creating more effective processes, products and ideas. Nowadays, business is ever-changing and dynamic. To keep up with the growing competition a businessman has to introduce efficient design, latest trends, upgraded machinery, new techniques, etc.
Large corporations invest a humongous amount of capital in their Research & Development department to boost innovation. Whereas, on the parallel lines, utilization of resources is a proper use of workforce, raw material, capital and technology used in the business. A business has limited resources and that’s why its main objective is to put these resources to correct divisions.