Question

Mega 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
(All India 2014c; VBQ)
(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 objectives of management discussed above.
(b) State any two values which the company wanted to communicate to the society.​

Answer 1

ANSWER:

Mega Ltd is discussing about the achievement of ‘organisational objectives’ in part (i) and ‘Social objectives’ in part (ii) of the question.

(i) (a) Organisational objectives Management is responsible for setting and achieving the organisational objectives. It achieves the objectives in such a manner that the human and financial resources are acquired, used and maintained in the most economic and efficient manner.

Organisational objectives are survival, profit and growth.

Survival The most important objective of every businessis to survive and in order to survive, it should earn enough revenue to cover its costs.

Profit It is the incentive or reward for the efforts put in by an entrepreneur, moreover, it is the reason behind carrying out a business.

Growth It is an extension of the objective of survival and profit.

Business organisations must grow and expand their activities. The success of every business is measured by the growth rate and growth is measured in terms of sales profits, number of products produced and sold, etc.

(b) Social objectives Since, 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:

Supply of quality products.

Using environmental friendly methods of production.

It should provide the employment opportunities to the disadvantaged sections of the society.

(ii) Two values which the company wants to communicate to the society are:

Giving employment opportunities to the people of backward area:

Environment friendly by producing solar heaters and reduced production of electric heaters.