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For instance, no business can prosper in the long run unless fair wages
are paid to the employees and customer satisfaction is given due
importance. Again a business unit can prosper only if it enjoys the
support and goodwill of people in general. Business objectives also
need to be aimed at contributing to national goals and aspirations as
well as towards international well-being. Thus, the objectives of
business may be classified as;
A. Economic Objectives
B. Social Objectives
C. Human Objectives
D. National Objectives
E. Global Objectives
A. Economic Objectives:
Economic objectives of business refer to the objective of earning profit
and also other objectives that are necessary to be pursued to achieve
the profit objective, which include, creation of customers, regular
innovations and best possible use of available resources.
Profits help businessmen not only to earn their living but also to
expand their business activities by reinvesting a part of the profits. In
order to achieve this primary objective, certain other objectives are
also necessary to be pursued by business, which are as follows:
B. Social Objectives:
Social objective are those objectives of business, which are desired to
be achieved for the benefit of the society. Since business operates in a
society by utilizing its scarce resources, the society expects something
in return for its welfare. No activity of the business should be aimed at
giving any kind of trouble to the society.
This is an unfair trade practice. The business unit must not create
artificial scarcity of essential goods or raise prices for the sake of
earning more profits. All these activities earn a bad name and
sometimes make the businessmen liable for penalty and even
imprisonment under the law. Therefore, the objective of business
should be to adopt fair trade practices for the welfare of the consumers
as well as the society.
D. National Objectives:
Being an important part of the country, every business must have the
objective of fulfilling national goals and aspirations. The goal of the
country may be to provide employment opportunity to its citizen, earn
revenue for its exchequer, become self-sufficient in production of
goods and services, promote social justice, etc. Business activities
should be conducted keeping these goals of the country in mind, which
may be called national objectives of business.
E. Global Objectives:
Previously India had very restricted business relationship with other
nations. There was a very rigid policy for import and export of goods
and services. But, now-a-days due to liberal economic and export-
import policy, restrictions on foreign investments have been largely
abolished and duties on imported goods have been substantially
reduced.
Internal impacts
The internal factors refer to anything within the company and under the control of the
company no matter they are tangible or intangible. These factors after being figured out
are grouped into strengths and weaknesses of the company. If one element brings
positive effects to company, it is considered as strength. On the other hand, if a factor
prevents the development of the company, it is a weakness. Within the company, there
are numerous criteria need to be taken into consideration.
Human resources
It can be said that human element is among the most important factors that internally
exert impacts on the growth of the company. The employees can be either a strength or
weakness of the company depending on the level of practical skills, attitudes toward
work, and so on. For example, if a business has skillful and motivated workers, they are
sure to be the biggest asset of this enterprise. Conversely, employees without carefully
trained and have negative attitudes to their task will be an enormous challenge for the
company to address.
Capital resources
Of course, money is the vital part for any enterprise to perform its plan. No company
can survive without having capital resources. Once a company has enough budgets,
they can easily launch their projects and expand its scale. There are also several ways
for an enterprise to maintain stable budgets by some resources such as investment
opportunities, funding, and annual income.
Operational efficiency
The way an enterprise operates directly affects their success in the marketplace. The
operation of a company includes a bundle of contributing factors such as products,
employees, customers. The business owners need to fully understand how their
products manufactured, how it is consumed and favorable by consumers, how their
employees perform their tasks, what improvements need to be made, etc. Only when
the operator truly knows level of efficiency the company is, can he thinks about
appropriate adjustment methods to handle all current problems.
Organizational structure
Infrastructure
When you already have well-trained and motivated workers, an effective operational
and organizational system, make sure that the infrastructure of the company are good
enough for all your functions. With the modern and high quality facilities, stable power,
internet and wifi connection, and so on your company is likely to perform better. In other
words, the better your infrastructure, the more opportunities for your company to
perform successfully.
Innovation
With the fast pace of the fourth industrial revolution, the world is on the ways to strongly
change the life of people including how they work, they communicate with each other.
Therefore, each company also needs to innovate themselves firstly to keep up with the
development of the whole world and secondly to make themselves outstanding among
competitors. Innovations can be taken in manufacturing process, organizational
structure, or even infrastructure.
External factors
On the contrary to internal factors, external elements are affecting factors outside and
under no control of the company. Considering the outside environment allows
businessmen to take suitable adjustments to their marketing plan to make it more
adaptable to the external environment. There are numerous criteria considered as
external elements. Among them some most outstanding and important factors need to
listed are current economic situation, laws, surrounding infrastructure, and customer
demands.
Economic situation
Economy is one of the most determining factors to the success of the company even
though it is an external element. Within the economy, some contributing factors such as
the fluctuation of interest rate, economic crisis, and so on directly and strongly affects
the consumption of buyers, and consequently, the profits of businesses.
Laws
The rules and regulations from local government play an integral role in the
development of the company. There are some countries which their laws prevents the
development of some certain industries. That can be a threat to the company. On the
other hand, some industries receive positive and continuous support from local
government via their rules and regulations. Besides, if the laws allow organization
outside the countries invest in local industries, they will indirectly create an enormous
source of financial support for local business.
Surrounding infrastructure
Depending only on inside infrastructure is not enough for the company to develop. If
they have a well-structured and modern infrastructure, but the road to access the
company is not well created will be deterrence for the business. They will find trouble in
delivery method and looking for a collaborator. Especially, if your company manufacture
hi-tech devices; however, the outside infrastructure is not suitable to equip these
devices, it would be a big challenge.
Customer demands
We all know that what people want, what people need, and what they demand are
usually different from each other. Customers need something to communicate with their
family member outside their countries, they want to a smartphone which can perform
multi-function; however, they cannot afford that smartphone with a limited budget.
Therefore, their demand is just a typical phone which can perform basic functions. If
your company is not able to figure out what are your customer demands, you will face
difficulty in how to make your products consumed by customers. (Learn how to build
loyal customers for your business)
In conclusion, there is a bunch of contributing factors the success of the company which
comes from both outside and inside a business. Either outside or inside factors are of
utmost importance for the development of the company. If a business hopes to perform
smoothly and successfully, they need to take all these elements into consideration
before making any decision.
Market Catalyst
The government can implement a policy that changes the social behavior in the business environment. For
example, the government can levy taxes on the use of carbon-based fuels and grant subsidies for businesses
that use renewable energy. The government can underwrite the development of new technology that will bring
the necessary change. Imposing on a particular sector more taxes or duties than are necessary will make the
investors lose interest in that sector. Similarly, tax and duty exemptions on a particular sector trigger
investment in it and may generate growth. For example, a high tax rate on imported goods may encourage
local production of the same goods. On the other hand, a high tax rate for raw materials hampers domestic
production.
Political Stability
Government policy will always depend on the political culture of the moment. Policy crafted in a politically
stable country will be different that formed in an unstable country. A stable political system can make
business-friendly decisions that promote local businesses and attract foreign investors. Unstable systems
present challenges that jeopardize the ability of government to maintain law and order. This has a negative
affect on the business environment.
Government Spending
Governments get money to spend from taxation. Increased spending requires increases in taxes or borrowing.
Any tax increase will discourage investment, especially among entrepreneurs, who take the risks of starting
and managing businesses. Increased spending also eats into the limited pool of savings, leaving less money for
private investment. Reduction in private investments shrinks production of goods and services. That, in turn,
may lead to the elimination of jobs.
Interest Rates
Government policy can influence interest rates, a rise in which increases the cost of borrowing in the business
community. Higher rates also lead to decreased consumer spending. Lower interest rates attract investment as
businesses increase production. The government can influence interest rates in the short run by printing more
money, which might eventually lead to inflation. Businesses do not thrive when there is a high level of
inflation.
Regulations
Trade regulations, the federal minimum wage, and the requirements for permits or licenses have effects on
business. For example, periodic health inspections must be carried out in all restaurants. Businesses might
spend a lot of money and time to comply with regulations that ultimately prove to be ineffective and
unnecessary. Fair and effective regulations, however, promote business growth
Business Ethics and Corporate Social Responsibility
Corporate Social Responsibility, or “CSR,” refers to the need for businesses to be good
corporate citizens. CSR involves going beyond the law’s requirements in protecting the
environment and contributing to social welfare. It is widely accepted as an obligation of
modern business.
CSR goes beyond earning money for shareholders. It’s concerned with protecting the
interests of all stakeholders, such as employees, customers, suppliers, and the
communities in which businesses operate. Examples of CSR include adopting humane
employee practices, caring for the environment, and engaging in philanthropic endeavors.
Some people contend that companies owe no duty to society outside making as much
money as possible within the law. But those who support Corporate Social Responsibility
believe that companies should pursue a deeper purpose beyond simply maximizing profits.
Business ethics
Ethics is a subject of social science that is related with moral principles and social values.
'Business Ethics' can be termed as a study of proper business policies and practices regarding
potentially controversial issues, such as corporate governance, insider trading, bribery,
discrimination, corporate social responsibility, and fiduciary responsibilities.
Businesses must abide by some basic principles. It should provide quality goods and services at
reasonable prices to their consumers. It must also avoid adulteration, misleading advertisements,
and other unfair malpractices.
A business must also perform other duties such as distributing fair wages, providing good working
conditions, not exploiting the workers, encouraging competition, etc.
According to Crane, "Business ethics is the study of business situations, activities, and decisions
where issues of right and wrong are addressed."
Baumhart defines, "The ethics of business is the ethics of responsibility. The business man must
promise that he will not harm knowingly."
Code of Conduct − Business ethics is actually a form of codes of conduct. It lets us know
what to do and what not to do. Businesses must follow this code of conduct.
Based on Moral and Social Values − Business ethics is a subject that is based on moral
and social values. It offers some moral and social principles (rules) for conducting a
business.
Protection to Social Groups − Business ethics protect various social groups including
consumers, employees, small businesspersons, government, shareholders, creditors, etc.
Offers a Basic Framework − Business ethics is the basic framework for doing business
properly. It constructs the social, cultural, legal, economic, and other limits in which a
business must operate.
Requires Education & Guidance − Businessmen should get proper education and
guidance about business ethics. Trade Associations and Chambers of Commerce should
be active enough in this matter.
Relative Term − Business ethics is a relative term. It changes from one business to another
and from one country to another.
New Concept − Business ethics is a relatively newer concept. Developed countries have
more exposure to business ethics, while poor and developing countries are relatively
backward in applying the principles of business ethics.
Pay Taxes Regularly − Taxes and other duties to the government must
be honestly and regularly paid.
Service before Profit − Accept the principle of "service first and profit
next."