question_answer

Sona and Mona are two friends. Both of them have completed their MBA and are planning to start their own business. Sona believes that ultimate aim of a business is to earn profits. It is profits which provide financial base to a business. Mona agrees that profits are important for business but she claims that business cannot ignore other objectives.

(a) Identify two other objectives Mona is referring to.

(b) Do you think profits play an important role in business? Give three points to justify your perspective.

(c) Which of the two objectives are more important?

Answer:

Ans.     (a) Some of these objectives are as follows: (Any two)

(i) Market standing: Business can survive for a longer period only if it is able to capture a big share in the market and has market standing.

(ii) Innovation: Means developing new products and their multiple uses, Old customers can be maintained and new can be attracted by innovation only.

(iii) Improving productivity: Every business enterprise must aim at greater productivity by making optimum use of available resources.

(iv) Earning profit: One of the objectives of business is to earn profits on the capital employed. Every business must earn a reasonable profit to survive and grow.

(v) Optimum use of physical and financial resources: Every business requires physical (plant, machine, office etc) and financial resources (money or funds) to produce goods & services; the business enterprise must aim to use them efficiently.

(vi) Workers performance and attitude: Every business enterprise must aim at improving its workers performance and creating positive attitudes of workers. It will boost the morale of the employees.

(vii) Social Responsibility: A business is a part of society and so it must meet the expectations of the society. It can set goals in the areas of the environmental protection, Supply of desired Quality of products, employment generation etc. (b) Yes, profits play an important role in business. (Any three) (i) It acts as a source of income for business persons. (ii) It acts as a source of funds for meeting expansion requirements. (iii) It acts as an indication of efficiency of the business. (iv) It is a reward for risk taking. (v) It builds up reputation of the company. (c) These objectives are not conflicting but complementary in nature. Hence both of these are equally important and need to be strived for simultaneously.