Commerce · Ch 2 — Objectives of Business
National, Global and the Balancing of Business Objectives
National, Global and the Balancing of Business Objectives
5. National and Global Objectives of Business — and Balancing Them All
National objectives concern a business's obligations and contribution to the country it operates in, beyond its own immediate stakeholders:
- Contribution to national income (GDP) — the goods and services a business produces add directly to the country's Gross Domestic Product; a growing, productive business sector is central to a growing national economy.
- Generation of employment on a national scale — beyond the jobs any single firm creates, the cumulative effect of businesses across the country generating employment is a genuine national objective, reducing unemployment at scale.
- Generation of government revenue — businesses contribute to government finances by paying direct taxes (on their income/profit) and indirect taxes (such as GST on goods and services sold), funding public services and infrastructure.
- Promotion of self-reliance — businesses that manufacture within the country, using domestically available resources and technology instead of relying entirely on imports, reduce the nation's dependence on foreign countries for essential goods.
- Balanced regional development — setting up business units in less-developed or rural regions, rather than only in already-industrialised cities, helps spread economic opportunity more evenly across the country and reduces regional inequality.
Global objectives concern a business's role and reputation beyond national borders:
- Increasing exports — selling goods and services to other countries earns valuable foreign exchange for the nation and expands the business's own market beyond domestic limits.
- Improving global competitiveness — Indian businesses aim to produce goods and services that can genuinely compete with the best available internationally, on quality, price, and reliability.
- Technology transfer — international trade and collaboration often bring newer technology and production methods into the country, and conversely allow Indian innovations to reach the world.
- Enhancing national image — a business that performs well internationally, producing goods respected abroad, also builds the reputation of the country itself as a reliable source of quality goods and services.
Why all these objectives must be balanced together. The five categories of objectives covered in this chapter — economic, social, human, national, and global — are not a menu from which a business picks one; a genuinely well-run business must pursue all of them TOGETHER, and this is not always easy, because they can pull in different directions:
| Potential conflict | Example |
|---|---|
| Profit vs. fair pricing | Charging the highest price the market allows maximises short-term profit, but conflicts with the social objective of fair, reasonable pricing to consumers. |
| Cost minimisation vs. employee welfare | Cutting wages or safety spending lowers costs (economic objective) but conflicts with human objectives of fair pay and safe conditions. |
| Growth/expansion vs. balanced regional development | Concentrating new units where infrastructure is already best (for lower cost, an economic consideration) can conflict with the national objective of developing backward regions. |
| Short-term profit vs. long-term survival | Cutting corners on quality or research boosts profit now but undermines innovation and customer trust needed for the organic objective of long-term survival. |
Setting up business units across less-developed as well as already-industrialised regions, so economic opportunity and growth are spread more …
The national objective of manufacturing within the country using domestic resources and technology, reducing dependence on impor …
The ability of a business's goods or services to compete with the best available internationally on quality, pri …