Nature & Scope of Business | Objectives Of Business | Importance of Business
Business may be defined as an activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit.
We find people like mill owners, transporters, bankers, traders, tailors, taxi operators etc. doing business. All of them are engaged in an activity of manufacturing or trading (buying and selling) or providing some service. They have invested their money, bear the risks involved and work for earning some profit. Thus,
Nature and Purpose of Business :
The nature of business is best understood on the basis of its characteristics or features which are as follows:
- Business is an economic activity
- It includes the activities of production or purchase and distribution.
- It deals in goods and services.
- It implies regularity of transactions.
- It aims at earning profits through the satisfaction of human wants.
- It involves risk; it is not certain that adequate profit will be earned.
- It creates utilities.
- It serves a social purpose by improving people’s standard of living.
Objectives Of Business :
Success in business depends on proper formulation of its objectives. Objectives must be clear, and attainable. Thus, the objectives of business may be classified as –
(a) Economic objectives
(b) Social objectives
(c) Human objectives
(d) National objectives
(e) Global objectives
Now let us discuss these objectives in detail.
(a) Economic objectives of a business refer to the objective of earning profit and those which have a direct impact on the profit-earning objective of business.
Some of the main economic objectives of business are:
(i) Earning of adequate profits;
(ii) Exploring new markets and creation of more customers;
(iii) Growth and expansion of business operation;
(iv)Making innovations and improvements in goods and services; and
(v) Making use of available resources in the best possible manner.
(b) Social objectives of business are those, which are desired to be achieved for the benefit of the society.
Some of the major social objectives are:
(I) production and supply of quality goods and services to the society;
(ii) Making goods available at reasonable prices;
(iii) Avoidance of unfair practices like hoarding, black-marketing, over-charging, etc.;
(iv) Contributing towards the general welfare and upliftment of the society;
(v) Ensuring fair return to the investors;
(vi) Taking steps in the direction of consumer education; and
(vii) Conserving natural resources and wild life and protecting the environment.
(c) Human objectives of business primarily refer to the objectives aimed at safeguarding the interest of its employees and their welfare.
Some of the major human objectives are:
(i) providing fair remuneration and incentives to the employees;
(ii) arrangement of better working conditions and proper work environment for the employees;
(iii) providing job satisfaction by making the jobs interesting and challenging, putting the right persons in right job;
(iv) providing the employees with more and more promotional opportunities;
(v) organizing training and development programs for the growth of the employees; and
(vi) providing employment to the backward classes of the society and people who are physically and mentally challenged.
(d) National objectives of business are the objectives of fulfilling the national goals and aspirations.
Some of the National objectives are:
(i) creation of employment opportunities;
(ii) promotion of social justice;
(iii) produce and supply goods in accordance with the national interest and priorities;
(iv) payment of taxes and other dues honestly and regularly;
(v) helping the state in maintaining law and order by promoting good industrial relations; and
(vi) implementing government’s economic and financial policies framed from time to time.
(e) Global objectives of business are the objectives of facing the challenges of global market.
Some of the global objectives are:
(i) making available globally competitive goods and services; and
(ii) reducing disparities among rich and poor nations by expanding its operations.
Significance of Business in Modern Society/Importance of Business:
Business is an integral part of modern society. It is an organized and systematized activity for profit. It is concerned with activities of people working towards a common goal. The modern society cannot exist without business. The need and importance of business in society can be described as follows:
1 . Improvement in standard of living: Business helps people in general to improve their standard of living.
2 . Proper utilization of resources: It leads to effective utilization of the scarce resources of society. It provides facility of mass production.
3 . Better quality and large variety of goods and services: It involves production, purchase and sale of goods and services for price. Customer’ satisfaction is the backbone of modern business. Services such as supply of water, electricity etc. may be considered highly significant for the community
4 . Creates utilities: Business makes goods more useful to satisfy human wants. It adds to products the utilities of person, time, place, form, knowledge etc. Thus, people are able to satisfy their wants effectively and economically.
5 . Employment opportunities: It provides employment opportunities to large number of people in society.
6 . Workers’ welfare: Business organizations these days take care of various welfare activities for workers. They provide safer and healthier work environment for employees.