by Business is all around us and it is the mainspring of modern life. But very few people understand its true nature and its role in society. The study of business is essential for training oneself for a career. Study of the principles and practices of business organisation helps in understanding events in their right perspective and in tackling the problem of satisfying human wants through the use of available resources.
Every human being is busy in one activity or the other to satisfy his unlimited wants and desires. The sum total of human activities may broadly be divided into two categories-economic activities and non-economic activities. Economic activities are designed to attain and use the material resources of life. They are concerned with the production, distribution and consumption of goods and services. Human being as undertake economic activities in order to earn their livelihood.
According to L.R. Dicksee, “Business is a form of activity pursued primarily with the object of earning profit for the benefit of those on whose behalf the activity is conducted.” Business involves production and/or exchange of goods and services to earn profit, or to earn a living. However, profit is not the sole objective of the business. It may have other objectives like promotion of welfare of the workers and the general public.
“Business is an institution organised and operated to provide goods and services to society under the incentive of private gain.” :B.O. Wheeler
“All the activities including the production and sale of goods or services may be classified as business activities.”: William Spriegel
Characteristics
(i) Continuous Economic Activity:
In business an economic activity must be repeated again and again because if an entrepreneur does not do that it will not be treated as business. For example, if a person sells his own house, this activity does not come under the framework of business.
(ii) It is a Human Activity:
Business is a human activity which makes available goods and services to the society. It is not only dependent on making available the goods and services or the mere production of these but also depends on the exchange of value which is provided in return because if you are engaged in giving gifts to somebody then it will not be treated as business.
(iii) Profit Motive:
Any economic activity which leads to generation of profit is considered as business. Therefore, intension should be to earn profit otherwise if a person is engaged in social service or preaching about the religion cannot be treated as business.
(iv) Creation of Utility:
A man does not produce anything in a way, he only converts the form of resources which are provided by the nature. The business changes the form, place and possession utility of goods and makes them available in usable form. The business creates the utility of the things so that these can be consumed.
(v) Entrepreneurship:
One cannot run any sort of business without the element of entrepreneurship irrespective of the size of the business. Business can only be run by a daring person who has the ability to face risk of loss. Because no business is there where the element of risk is missing. Involvement of element of risk of loss makes the business world more challenging and to face financial challenge is not everybody’s cup of tea.
Objectives
A business objective may be defined as the purpose or the reason for the existence of the business in the society. The objective provides the direction towards which all business activities will be directed.
Though profit motive constitutes the primary objective of business activities, it should not lead us to conclude that profit is the sole objective of a business. The objectives of the business are to be laid down keeping in view the prevailing social, economic and political environment. Objectives of a business are multi-dimensional in nature.
They can be classified into four categories, namely:
(1) Economic objectives
(2) Social objective
(3) Human objectives
(4) National objectives
These objectives are interrelated in nature.
(1) Economic Objectives:
The economic objectives of a business are discussed below:
(i) Earning of Profits: Profits are needed to provide adequate reward to the entrepreneur and to provide funds for future growth. Entrepreneurship is one of the important factors of production. Just as other factors get their rewards, the entrepreneur must get reward for his efforts and taking of risk. Moreover, every businessman will like to see that the business he is managing should grow. This is possible only if the business earns sufficient profits for investing them into the business for expansion.
(it) Satisfaction of Customers: The survival of the business depends upon the satisfaction of customers. Thus, the business must aim at winning and satisfying the customers. Peter F. Drucker has rightly said, “There is only one valid definition of business purpose, i.e., to create a customer.” Customers are created through advertisement and sales promotion and delivering them ‘want satisfaction’.
(iii) Innovation: Innovation means developing new technology, new products and their multiple uses. Business cannot succeed without designing new products and finding their new uses.
(iv) Effective Utilisation of Resources: Business requires the use of men, machines and materials which are considered scarce resources. Every business is expected to make the best possible use of these resources. This objective can be achieved by employing efficient personnel, making full utilisation of machines and reducing wastage of raw materials.
(2) Social Objectives:
Social objectives of a business denote its obligations towards various stakeholders including customers, employees, community and the government.
The important social objectives include the following:
(i) Supply of Quality Goods at Fair Prices: The business must supply quality products as desired by the customers. The products should be durable, genuine (not duplicate) and safe. The prices charged for the goods should also be reasonable.
(ii) Adoption of Fair-Trade Practices: The business should follow fair business practices at all times. It should avoid anti-social practices like hoarding, black-marketing, over-charging the buyers, etc. It should also not indulge in unfair trade practices like spurious products or misleading advertisements.
(iii) Generation of Employment Opportunities: Every business should grow and expand its operations to create new jobs for the society. Further, a business should employ suitable people without any discrimination based on caste, creed, sex or religion.
(iv) Employees’ Welfare: It is an important responsibility of the business to promote the welfare of its employees. Besides providing fair wages, the business should also provide good working conditions, canteen facility, housing, transport and medical facilities, etc., to the employees.
(v) Community Service: Modern business organisations engage in community service to fulfil their social responsibility and thereby enhance their public image. Community service may be carried out by running dispensaries and schools, encouraging social activities and setting up training centres for the unemployed youths in the backward areas.
(vi) Protection of Environment: Every business house should ensure safety of the local surroundings and the protection of neighbourhood environment. It should take adequate measures to check air, water or noise pollution.
(3) Human Objectives:
A business is directly linked with two important groups, namely, (a) customers, and (b) employees. Both these groups must have a feeling of having been treated as human beings by the business enterprise. As human beings, customers expect courteous service and fair dealings from the business.
The employees look forward to the business enterprise for the following objectives:
(i) The employees are treated as partners in the business and not as inferior lot; they should get fair wages and healthy working conditions;
(ii) They are able to acquire and develop new skills in the process of employment; and
(iii) They derive job satisfaction.
(4) National Objectives:
These objectives are concerned with the goals of the nation.
Every business enterprise must contribute to the national goals such as:
(i) Achievement of self-sufficiency in production of goods and services,
(ii) Import substitution and export promotion,
(iii) Development of small scale and ancillary industries,
(iv) Development of backward regions,
(v) Economic development of the nation.
