The purposes and objectives of businesses
Understanding Business Purposes and Objectives
What are Business Purposes?
- Businesses exist for various purposes. These might include producing goods or services, generating profit for owners, providing employment, or offering solutions to societal problems.
Profits and Financial Objectives
- The desire to generate profits is a common reason to establish a business. This can satisfy the owners or shareholders who invested money into the business.
- Businesses also often set specific financial objectives, such as increasing sales or profit margins, minimising costs, expanding market share, or maximising shareholder value.
Survival and Growth Objectives
- For young or small businesses, the main aim often is survival. This means earning enough revenue to cover costs and keep the business operational.
- Established businesses frequently aim for growth, which might entail increasing sales, expanding into new markets, diversifying product ranges, or acquiring other businesses.
Social and Ethical Objectives
- Some businesses set social objectives, aiming to benefit the community or environment, rather than focusing solely on profits. This could include creating jobs, enhancing the local economy, or providing valuable services.
- Relatedly, many businesses set ethical objectives, seeking to operate in a way that is morally right, even if this means lower profits. This might involve ensuring ethical sourcing of materials, fair treatment of employees, or reducing environmental impact.
Challenges in Achieving Objectives
- Achieving objectives often poses challenges. These could range from lack of financial resources to competitive pressures, regulatory issues, or changes in the market environment.
- To address such challenges, businesses need to devise effective strategies, adapt to changes, and carefully manage their resources.
Remember, while businesses have diverse purposes and objectives, they all need a clear sense of direction to steer their decisions and activities. Understanding these foundations is crucial to understanding the rest of the Business Organization and Environment unit.