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Asked Dec 9, 2019
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For whose benefits should a buisness be organized, the employees or the customers? Why?

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Expert Answer

Step 1

The term business is derived from the word ‘busy’. Thus, business means being busy. However, business refers to any occupation in which people regularly engage in an activity with a view to earning profit. The activity may consist of production or purchase of goods for sale, or exchange of goods or supply of services to satisfy the needs of other people. In every society people undertake various activities to satisfy their needs. These activities may be broadly classified into two groups — economic and non-economic. Economic activities are those by which we can earn our livelihood whereas non-economic activities are those performed out of love, sympathy, sentiments, patriotism, etc. For example, a worker working in a factory, a doctor operating in his clinic, a manager working in the office and a teacher teaching in a school— are doing so to earn their livelihood. On the other hand, a housewife cooking food for her family or a boy helping an old man cross the road are performing non-economic activities since they are doing so out of love or sympathy.

Step 2

An objective is the starting point of business. Every business is directed to the achievement of certain objectives, which refer to all that the business people want to get in return for what they do. It is generally believed that business activity is carried on only for profit. Business persons themselves proclaim that their primary objective is to produce or distribute goods or services for a profit. Every business is said to be an attempt on the part of business people to get more than what has been spent or invested or, in other words, to earn profit which is the excess of revenue over cost. However, it is widely accepted nowadays that business enterprises are part of society and need to have several objectives, including social responsibility to survive and prosper in the long run. Profit is found to be the leading objective but not the only one.

Step 3

Although earning profit cannot be the only objective of business, its importance cannot be ignored. Every business is an attempt to reap more than what has been invested and profit is the excess of revenue over cost. Profit may be regarded as an essential objective of business for various reasons: (i) it is a sourc...

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