Everything you need to know about the social objectives of business. Business is an integral organ of society. It is closely related to various sections, e.g., investors, shareholders, employees, workmen suppliers, consumers, and government.
A business must fulfil its obligations to various sections of the society. Business is allowed to earn as much profit as it likes but it cannot ignore it, commitment to society. Rather, business itself is a part of society.
Society gives so much to business in terms of human resources, physical and natural resources that it owes a duty towards the society.
Social objectives of business refer to the obligations of business towards customers, employees, investors, suppliers, government and the general public. The profits of business represent government and the general public.
The profits of business represent a social surplus in which all stockholders roust share in proportion to their contributions.
Business has a responsibility towards society. It has the following social objectives:-
1. Qualitative Products and Services 2. Fair Pricing 3. Generating Employment 4. Conservation of Natural Resources 5. Welfare of Employees 6. To Improve Industrial Relations 7. Social Security 8. Help to Solve Social Problems
9. Complementing Government 10. Community 11. Protection of Environment 12. Ensuring Employee Satisfaction 13. Provision of Work-Related Training 14. Avoidance of Profiteering and Anti-Social Practices 15. Paying Fair Return to Investors 16. Fair Deal to Suppliers of Raw Material etc.
15+ Social Objectives of Business
Social Objectives of Business – 6 Social Objectives: Qualitative Products & Services, Fair Pricing, Generating Employment, Conservation of Natural Resources & a Few Others
Business is an integral organ of society. It is closely related to various sections, e.g., investors, shareholders, employees, workmen suppliers, consumers, and government. A business must fulfil its obligations to various sections of the society.
To quote Henry Ford, “The primary aim of business should be service and subsidiary aim should be earning of profit. The purpose of business is not only earning profit but also discharging responsibilities towards society.”
A business, therefore, has not only to consider profit making objective but also to pursue its social responsibility in relation to various expectations of society. While there cannot be compromise on profit motive, the interest and welfare of different groups of society too cannot be ignored. A business can make profits only by maximising the welfare of different associate group, e.g., consumers, suppliers, employees, shareholders, etc. Social objective therefore, need to be pursued to maximise profits.
The social responsibilities are discharged by pursuing the following social objectives:
Social Objective # 1. Qualitative Products and Services:
Goods produced and services generated should be of the quality standards and specification prescribed as well as expected by customers. Goods and services can be sold only if the goods are useful and the needs of consumers are satisfied. Inferior and spurious goods do not generate demand for products.
Social Objective # 2. Fair Pricing:
Goods and services need to be priced reasonably. Sales are linked to the pricing of a product. Costlier products have a limited demand as compared to reasonably priced products. Pricing serves as an inbuilt control for management to economise overheads, eliminate wastes and optimise utilisation of resources. Fair pricing thus serves to enhance profit by economising production, process as well as maximising sales.
Social Objective # 3. Generating Employment:
Business enterprises are run human beings. Competent persons are required for all levels and activities of an organisation. Business therefore provides employment for people to work and earn livelihood.
Similarly, business activities provide opportunities for entrepreneurs and self-employed persons rendering various services to engage in gainful activities.
Social Objective # 4. Conservation of Natural Resources:
Natural resources are scarce. These resources should be used with utmost caution and restraint so that these are not exhausted. Efficient use of resources by business helps to conserve them.
Social Objective # 5. To Improve Industrial Relations:
One of the social objectives is to treat the workers and employees as part of the organisation. While pursuing the business objectives the problems and grievances of employees are also considered. This humane approach of business helps to improve industrial relations.
Social Objective # 6. Social Security:
Business enterprises follow various welfare schemes like group insurance, accident insurance, provident fund and pension to provide effective security to workers and employees.
Social Objectives of Business – Supplying Quality Products, Avoiding Unfair Trade Practices, Employment Generation, Welfare of Employees and Other Objectives
A business depends on society for the utilization of various resources. Hence, as a token of gratitude, it has to undertake social initiatives to gain goodwill and acceptance of the people.
i. Supplying Quality Products:
Customers are a part of the society that a business actively seeks to serve. Thus, providing quality products/services at reasonable prices becomes a pre-requisite. Quality refers to product attributes such as purity, safety, durability, utility etc. Customers will be satisfied if they get value for money. Satisfied customers help in creating a favourable brand image that leads to further widening of the customer base. This in turn enhances the profitability of the enterprise.
ii. Avoiding Unfair Trade Practices:
A business concern should avoid malpractices like black marketing, misleading advertising, wrong measurement etc. It should follow fair trade practices. Unfair trade practices may lead to quick profits but in the long run, it affects the image of the company and the company loses its market share to its competitors.
Business units undertake economic activities in the society. Thus, they can be described as socio-economic institutions. Business helps society by providing adequate employment opportunities to the people. A business should also consider providing employment opportunities to the needy and the physically challenged people. This helps in establishing a favourable public image and enhances the goodwill of the organization.
Skilled and unskilled labour / employees are a resource that a business obtains from the society. Therefore, employee welfare is a way to serve the society. It can be achieved by providing the employees with fair wages, good working conditions, appreciations, increments, additional perks and benefits etc.
Rapid industrialization leads to various problems such as air pollution, water pollution, noise pollution, traffic jams, etc. Business sector should understand the intensity and impact of such problems and try to find a viable solution. It should implement processes that reduce pollution and safeguard the environment. This ensures harmony in the social and ecological environment.
A business should understand and play a pro-active role in the general welfare of the society. They can lend support to social, cultural, religious, research and developmental organizations. They can help build schools, colleges, libraries, dharamshalas, hospitals, sports bodies and research institutions. They can help non-government organizations (NGOs) like CRY, Help Age and others which render services to weaker sections of society.
Social Objectives of Business – Some Social Objectives of Business: Employment, Quality of Goods, Reasonable Price, Optimal Utilisation of Resources and a Few Others
Business has a responsibility towards society.
It has the following social objectives:
Business provides opportunity to workers for meaningful work. Apart from wages. Business provides opportunities for their promotion, welfare etc. Expansion of business also creates more job opportunities.
2. Quality of Goods:
Business has the objective of producing goods and services of standard quality. Customer satisfaction cannot be attained with inferior quality of goods.
3. Reasonable Price:
Value to customers is enhanced by providing best possible quality at given price or given quality at lowest possible price. Excessive margins resulting in unreasonable profits cannot be sustained for long.
4. Optimal Utilisation of Resources:
Business must aim to use the available scarce resources with utmost care. Wastage or under-utilisation of such valuable and scarce resources must be avoided.
5. Complementing Government:
Business has the responsibility to aid the Government in proper discharge of its obligations, by paying its taxes on time, abiding by Government directives, funding Government in times of calamities, etc.
Apart from the above objectives that help the community, business also has a responsibility of adopting measures such as prevention of pollution, maintaining cleanliness of the neighbourhood, initiating community welfare schemes, etc.
7. Fair Trade Practices:
A Business must follow fair trade practices. It should not try to earn profits and grow by creating roadblocks to competition (example- A large business enterprise selling goods below cost price so that small businesses cannot survive and ultimately close down). It should fully comply with regulation and other standards of Safety. For example, a business should not employ child labour in its factory.
Social Objectives of Business
Social objectives of a business are as follows:
1. Better Quality Products:
Business is required to provide better quality products to improve the living standard of the people. The products should be according to the specifications as claimed by the concerned producer.
2. Fair Trade Practices:
Business should follow fair trade practices to ensure that a customer gets exactly the same product for which he pays. Thus, business should not indulge in practices like adulteration, black marketing, under weighing, etc.
3. Employment Generation:
Business should put emphasis on generating employment in the process of performing its activities so that people may get employment opportunities. Thus, business should adopt man-machine ratio in favour of the people.
4. Community Service:
Business should undertake some community service. This may be in the form of providing training to underprivileged people, providing health services, development of backward areas, etc.
5. Protection of Environment:
Business should maintain ecological balance in order to protect the environment. Thus, business should not extract natural resources disproportionately, pollute the environment, etc.
Social Objectives of Business – Explained!
Business is allowed to earn as much profit as it likes but it cannot ignore it, commitment to society. Rather, business itself is a part of society. Society gives so much to business in terms of human resources, physical and natural resources that it owes a duty towards the society.
In the race to earn heavy profits, it must not do anything that harms the society in anyway. If there is any inevitable harm because of the nature of production process like production of toxic fumes in the chemical factories, then it must suitably compensate the society.
Social Objective # 1. Quality of the Product:
It is wrong to produce an inferior quality product in order to earn a higher profit. It is in the interest of the consumers to produce a better quality product. Business should ensure that there is no adulteration in products like pulses, spices and medicines. If a business guarantees optimum quality of its products, its goodwill will increase in the long run. Companies like Reebok, Bata and Nike are reaping the benefits of their quality footwear products.
Social Objective # 2. Reasonable Prices:
Profiteering is not fair, although business can earn reasonable profit. Increasing the prices of the products by creating artificial scarcity or shortage in order to earn huge profits will not be tolerated by the society. Business should make sure that the goods and services are sold at reasonable prices which the consumers can afford. This stability in prices will also go a long way to build up its reputation in the market. The price of the product must justify the benefits that the consumers will derive by using the product.
Business should not indulge in black marketing and hoarding. By doing this it will lose the confidence of the customers. It will lose in the long run in terms of its share in the market when the customers turn away from it. It should earn profit through the use of fair trade practices.
Social Objective # 4. Welfare of the Employees:
Employees work for the business. It should ensure maximum facilities at the place of work. Moreover, providing congenial working conditions will increase the efficiency of the workers. This will increase production and profit. So keeping the workers in good atmosphere or working conditions is always a good human resource policy.
They should also be given a fair remuneration for the efforts put in by them. Big companies are giving stock options to the employees to bring the sense of belongingness among the employees. The employees thus align themselves with the firm and work harder for the benefit of the firm.
Social Objective # 5. Creating Employment Opportunities:
Unemployment is a curse in our society. Both educated and skilled young persons are unemployed. The business should aim at expansion and thereby create employment opportunities. By giving jobs to the young educated and skilled persons the business will help increase the inflow of the income of the society.
Women, handicapped and disabled poor people form a major part of our population. The business should aim at creating jobs for this category of people. Moreover, on-the-job training should be provided to improve upon their efficiency. This will enhance the image of the business in the society.
Social Objective # 6. Pollution Control:
If the production process is such that it creates pollution, the business should ensure to reduce the level of pollution. The industrial waste moves into the lakes, and toxic fumes are inhaled by the people living in the nearby areas. Gas leak from the Union Carbide Co. in Bhopal in December, 1984 caused havoc among the people living in Bhopal.
The business is, therefore, morally bound to use environment friendly techniques of production so that such tragedies do not happen. Proper industrial waste management techniques should be used to reduce pollution level to zero.
Social Objective # 7. Community Service or Social Responsibilities:
Business owes an obligation to give back to the society in exchange for what the society has given to the business. It must do something to solve the social problems. It must undertake projects to open schools and hospitals for the poor in the society. Companies in Tata Group are spending money for family planning in Jamshedpur. Modi and Birla groups have opened a large number of schools and colleges. This is how a business realises and undertakes its responsibility towards society.
Social Objectives of Business – Most Important Social Objectives of a Business
Since business firms are a part of society they have to pursue certain social goals or objectives in order to serve the society or the members of the community.
The most important social objectives of a business are the following:
1. Supply of quality products at affordable prices – The business has to supply quality products to satisfy the customers at reasonable prices so that most consumers can afford them. The products should be of acceptable standard, durable, reliable or genuine (not spurious) and safe.
2. Adoption of fair and ethical practices – A business firm should always follow fair business practices. It should not indulge in practices such as hoarding, black marketing, charging excessive prices for its products which all go against greater public interest.
3. Generation of employment opportunities – Every business should expand its operations with a view to creating new jobs and opportunities for the members of society. In addition, a business should not adopt any discriminatory practice in respect of employment or the basis of caste, creed, sex and religion. It should also ensure that there is no discrimination at the work place.
4. Employees’ welfare – Business is also responsible for promoting welfare of its employees by paying fair wages, giving other benefits and improving working conditions. It should provide such facilities as cheap canteen, rent-free accommodation, transport and medical care. The objective is to improve employee’s welfare.
5. Community service – Modern business provides various community services such as running free dispensaries and primary schools and setting up training centres for unemployed girls and boys in backward regions with a view to creating various types of self-employment opportunities.
6. Protection of the environment – Every business should discharge its social responsibility by protecting the physical environment. So it should not engage in polluting activities such as emitting smoke and dirt and throwing waste materials into nearby ponds, lakes or rivers. It should take effective measures to reduce/check air, water or noise pollution levels as much as possible. The objective is to improve the quality of life of the people. The term ‘quality of life’ refers to the general well-being of a society in terms of natural environment, education, health care and safety which conjointly add satisfaction and joy of the people. The more money businesses earn, the more is potentially available to improve the quality of life for everyone.
Social Objectives of Business
The various social objectives of business are:
Customers pay for goods and services offered by a business. This makes it obligatory for business to ensure that goods and services offered by it conform to socially acceptable norms, they are of superior quality and priced reasonably. It is evil to fleece customers by overcharging or by reducing the quantity by unfair means—witness how makers of a popular brand of chocolates have resorted to increasing the gap between pieces in the chocolate bar to reduce quantity but retaining the same price.
A business should keep in mind that profit-making and consumer satisfaction are two sides of a coin. To fix a high price for essential goods and services, particularly in times of scarcity, is neither justifiable nor moral. Witness how transport aggregators unjustifiably increase fares during peak hours but bring them down in non-peak hours.
Employees working in a business spend the best part of their working life in business organization. It becomes moral duty of business to satisfy their basic and other needs to keep them motivated. They should be paid fair wage keeping in view the wage rates in market. They should be given recognition for their skills and experience through wage increases and promotion to higher levels.
The really talented ones among them should be afforded opportunity to innovate and design new products and work methods. They should be provided peaceful and cordial work environment. The working place should be neither too hot nor cold or humid—install air-conditioners where necessary. There should be necessary first-aid facility to treat workers injured while working on machines or otherwise.
New and less-experienced workers should be afforded training to improve their productivity and skill-levels. Most important, they should be treated as human beings – practicing ‘X’ theory on them should be a strict no-no.
Business plays an important part in creating jobs opportunities. Expansion and extension of business would create jobs and increase production of goods and services. A jobs-starved country like India rightly expects businesses to create job opportunities for the unemployed or under-employed people.
New technology is fast replacing manual labour. Even robots are being drafted to do what workers are presently doing. Of course, this is not to say that a business should not use cutting-edge technology, only that it should do everything possible to create job opportunities.
Investors are an important source of raising fixed and working capital of business. A business should ensure that they are paid a fair return on their investment, keeping in view the practice in the industry. A rate of return higher than the normal rate would become an unbearable burden, a lower return would prompt investors to seek alternative avenues to invest their money.
Suppliers of raw material, tools and other accessories help keep the business wheels moving. They play a large part in timely production of required goods and services. If they are not paid on time or are not given orders on a regular basis, they may not be prompt in meeting material requirements.
A business should be alert to its obligations towards the government. It should declare its income, wealth and transactions honestly and pay tax fully and on time. It passes understanding why in a country of 130 crore people, there are a little more than 3.02 crore individual taxpayers and about 40 lakh corporates. This is in contrast to the number of non-tax paying people who own cars and visit foreign countries every year.
People who evade or underpay taxes conveniently forget that tax revenue enables the government to finance facilities and infrastructure—skilled workers, machines and components, electricity, banking, transport, roads, warehousing and so on, that enable people to earn salaries and business profits.
Business should take advantage of the tax incentives and other benefits /to create employment opportunities and set up industries in backward areas.
To quote Howard R. Bowen, “The decision and actions of the businessman affect the lives and fortunes of us all. Added together, the decision of businessman—in small business or big—largely determines the extent of employment and prosperity, the rate of economic growth, the distribution of income among various groups”.
The type and quality of goods and services produced by business will determine the quality of life of people. Advertising and publicity by business reinforces moral and cultural values of society.
Social Objectives of Business – 3 Main Objectives: Avoidance of Profiteering and Anti-Social Practices, Providing Employment and Quality Goods at Fair Prices
The economic objectives of business can be realised only by serving the society. Business is an organ of society and it draws its resources from the society. Therefore, it must satisfy the wants and aspirations of society. A business enterprise can survive and grow only when it caters to the needs of the society. A really successful business can be built on the foundation of social services.
If a business enterprise serves the various sections of society, profits will follow automatically. Profits are, in other words, the reward which business receives by serving society. There is no conflict between profit-motive and service to society. It is through service that business earns profits.
Social objectives of business refer to the obligations of business towards customers, employees, investors, suppliers, government and the general public. The profits of business represent government and the general public. The profits of business represent a social surplus in which all stockholders roust share in proportion to their contributions.
The social objectives of business are as follow:
(a) Avoidance of Profiteering and Anti-Social Practices:
It is legitimate for a business enterprise to work legitimate profit. But it must not over-charge the customers or indulge in profiteering at their cost. It is the social obligation of a business concern not to indulge in hoarding, black- marketing, adulteration and other anti-social practices.
In times of scarcity it should ensure fair and equitable distribution. Moreover, business enterprise is expected to adopt socially responsible and ethical behaviour with the suppliers, competitors, and other interacting groups of people. It should be fair in its dealing with all these groups.
(b) Providing Employment:
Another social objective of business is to create opportunities for gainful employment of the people. Sometimes this objective may conflict with the economic objective of cutting down costs and improving profits by introducing mechanisation or automation. In a country like India, mechanisation may have to be deferred or implemented gradually into stages without causing loss of job to anyone.
(c) Quality Goods at Fair Prices:
The first and foremost social objective of business is to provide regularly the goods and services of proper quality and quantity to consumers at reasonable prices. Today consumers are conscious of the quality of goods they buy. When goods are of sub-standard quality or adulterated, they stop patronising the enterprise and the enterprise faces eventual closure. Therefore, business units must always maintain a continuous and adequate supply of articles of standard quality. Businessmen who keep their customers satisfied are likely to earn profits.