MANAGERIAL ECONOMICS

TOPIC -2
OBJECTIVES OF THE BUSINESS FIRMS

PRESENTED BY:
ISHITA ARYA
DEEPANSHI VERMA
POOJA BAHRTI
PARUL NARULA
NAKUL PAWAR
 BUSINESS FIRMS
• A firms is a commercial enterprise, any
company that buys and sells goods and
services to customers with a main aim of
making profits.

According to Edwin Mansfield; “ Firms is a

unit that produces good and services for
sale”
 SOLE
PROPERTRIOSHIP

TYPES OF
JOINT STOCK
BUSINESS PARTNERSHIP
COMPANY
FIRMS

LIMITED
LIABILITY
PARTNERSHIP
 OBJECTIVES OF
BUSINESS FIRMS

Economic
Social
objectives
objectives
Objectives
of business
firms

Human National
objectives objectives
 ECONOMIC
OBJECTIVES

• Profit maximization :- This objective sometimes

considered as the guiding principle of firms. This is the difference
between the total revenue and total cost. Every firms tries to
maximize the profits for achieving growth and for long term
sustainability of firm as well.

• High productivity:- Productivity is the ratio between

inputs and output obtained. Higher productivity gives better
results for the business. It also reflect better quality, low cost of
production and improved competiveness of business.
• Creating Customers:- It arises through the efforts of firms
to satisfy the needs and wants of the customers. A firms can
earn profits only when there is enough customers to buy and
pay their goods and services at reasonable price and by giving
maximum satisfaction them. By advertising and providing
services to customers, firms can come into existence for a long
run and can earn profits.

• Innovation :- In these days of competition a business can

survive only when they adopt the technological changes ( i. e
new designs, better machines etc.). It comprises all the efforts
made in perfecting the product, minimizing the cost and
maximizing the benefits to the customers. Firms have to explore
the new markets and attract more customers to know about the
innovations and adopting that to earn more profits.
 SOCIAL OBJECTIVES

• Creation of employment opportunities :-Since

business is a social institution, it must create the employment
opportunities for the members of the society. From this, firms
needs also fulfilled and social responsibility is also performed
towards society.

• Ensuring good working condition:- A business has to

earn the legitimate profit by showing decent behavior to its
customers, suppliers, competitors and other stakeholders. It must
involve anti social practices like- speculation, hoarding
adulteration etc.
• Service to community:- Firms should provide service to
community by providing after sales services, by performing the
corporate social responsibility (CSR), by involving itself in some
charitable and social activities. From these, customers will be
loyal with firms and public image will also developed.

• Supply of quality products at fair price:- It is

the primary objective of firms. They must be aware about
the tastes and preferences , needs of the customers to
maintain the continuous and adequate supply of quality
products and services.
 NATIONAL
OBJECTIVES
• Optimum utilisation of resources:- Firms should
use the nation’s resources in proper manner. Judicious
allocation and optimum utilisation of scarce resources is
essential for better economic growth of the country. Firms
should produce the products according to priorities and
interests. It should minimize the resources.

• Development of enterprise :- Economic

development of the nation depends on the development of
large scale and small scale industries. As, both are
complementary to each other, the growth of larger industries is
naturally expected to grow many smaller units around them.
• National self-sufficiency and export
promotion :- Firms must produce and sell those goods and
services which create substitute imports and promote exports.
From, this business can ensure national self sufficiency and also
contribute to the development of nations.

• Balanced regional development:- A welfare nation

must ensure the balanced regional development. Firms can
achieve this by investing and utilizing resources available in
backward and remote areas of the country.
 HUMAN OBJECTIVES
• Employess Welfare :- Business must recognize the
dignity of employees should given due recognition . Proper
opportunities should be provided for utilizing individuals talents
and satisfying the needs of workers. Adequate provisions should
be made for their health, safety and social security. Business
should ensure the job satisfaction and sense of belonging to
workers.

• Developing the human resources:- Employees

must be provided the new skills and opportunities, as these are
the most valuable assets and important for the growth of firms
also. They must be compensated fairly for what they deserve.
By innovations and creativity, firms can achieve their objectives
and earn more profits also.
• Participative Management:- Employees should be
allowed to take part in the decision making of the firms. This will
help in the development of the employees. Firms will get
information from the employees for improving the goods and
services they are producing. For effective decision making
participation is must and long term policies will also formed for
maximizing their profits.

• Workers management co-operations:- Firms

should strive for creating the friendly relations among the
employees so that they can work efficiently and targets will be
achieved easily and earn more profits and stay in market for the
long run.
 CONCLUSION
The objectives of the firms are clearly defined targets which
are set by the firms, investors, management as well. Firms
must plans the objectives and keep the track of the
progress .

Firms which are fulfilling their desired objectives are more

successful than others. By performing these objectives in
proper way, can enhance their brand image and the
customers will be more loyal to that brand only.
Again, the firms will get more advantages from its rivals,. All
these ensures the long term profitability and long term
sustainability of firms.