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Economic Objectives

Since business is essentially an economic activity, the primary focus is on economic objectives. Such objectives are as follows:

(i)    Earning of Profits. A business must earn sufficient profits to survive and grow in the competitive business environment. It must be noted that earning of profits is not the sole objective of business. As put by Henry, “Mere money-chasing is not business”. On the other hand, earning of adequate profits is a precondition for the existence or survival of the business. Profits are necessary to provide an sufficient return on capital, to provide funds for innovation and growth, and to provide better working conditions to the employees.

(ii)    Creation and Satisfaction of Customers. Why should a business firm be created ? The answer is quite simple. It aims at earning profits by the creation and rendering of goods and services which can satisfy the needs of customers. It a firm is to stay and grow in business, it must create new customers and satisfy their needs. If the customers are not satisfied, the business will not be able to generate revenues to meet its costs and to pay reasonable return to its owners or shareholders. Ducker has rightly observed. “There is only one valid definition of business purpose: to create a customer. It is the business and deeps it in existence and it is to supply the customer that society entrusts wealth-producing resources to a business enterprise,”

The business can earn profits only by satisfying the needs of customers. Therefore, attempt should be made to win more and more customers. Customers are the patrons of the business and their satisfaction must be uppermost in the mind of the entrepreneur. Customers fell satisfied if they are supplied with goods and services of right quality at reasonable prices. The customers also expect good service and courtesy from the business. To quote Mahatma Gandhi.

“A customer is the most important visitor on our premises. He is not an interruption in our work, he is the purpose of it. He is not an intruder n our business, he is a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”

The rationale of business is lost if it can’t serve the customers satisfactorily. Such a business will be compelled to move out of market. Therefore, continuous patronage of customers is most essential for the survival of the business.

(iii) Innovation. As an economic activity, business has to strive for innovation, growth, expansion, and diversification so that the society can benefit in ways more than one. The most important and remarkable benefit to the society through innovation and growth is a availability of new and better products for higher standard of living and creation of employment opportunities. Innovation is also essential for business survival and growth. It can help in reducing cost of production and providing better quality products to the customers. That is why, most f the big firms invest huge of money every year on research and development activities.

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