Changing Concept And Objectives Of Business

CHANGING CONCEPT AND OBJECTIVES OF BUSINESS Traditionally, business meant commercial activities for profit or organizations formed to profit. Economic theory assumed profit maximization as the sole firm objective. But the modern outlook differs - profit is secondary. Many organizations, private and public, are not profitoriented. The old definition of business as commercial activity or organization for profit is narrow. Still, business is commonly associated with industry/commerce. The earlier profit-centered concept has changed radically. Business is now seen as a social institution integral to society. It has extensive influence and cannot isolate itself from society. An ecological view examines business' mutual relations and involvement with its societal environment. Beyond the systems perspective, three additional ideas are significant: Values: Businesses develop belief systems and values guiding employee decisions and providing motivation. Values derive from the business' social role, industry, nation, employees etc. Viability: Viability means the drive to grow, achieve untapped potential, and fulfill capabilities as a living system. Business must initiate forces in its environment rather than just adapt passively. It requires a self-driven spirit to be a positive societal actor. Public Visibility: This refers to the extent of external knowledge about the organization's activities, enabling examination and judgement. Lack of visibility prevents judgement. In essence, business is now an integral social organ helping accomplish societal goals. Professionalization Orientation and Social Professionalization has increased business' social orientation. Professionals have specialized knowledge/skills to perform responsible functions ethically. Peter Drucker notes management should be performance-grounded, not status-derived. Managers are professionals practicing the discipline ownership is incidental. Professionals need autonomy but serve the public interest. They avoid harming customers and follow ethical codes. Professionalization requires:  Formally acquired management knowledge/skills  Authority and freedom to decide rightly  No ideological biases  Ethical guidance decisions/actions of Though progress is happening, India has a way to go, especially in family firms. Professionalization brings efficiency, dynamism and social responsibility. Business Ethics Business ethics refers to the moral principles and rules applied to business conduct, reflecting responsibility and avoiding detriment to society. According to Peter Drucker, there is no separate business ethics - individuals and organizations should follow moral codes. But some principles are commonly advocated:  Truthfulness, fairness, building goodwill and benefitting all concerned (Rotary International's code)  Not knowingly harming others  No deception, hoarding, distortion of competition  Sincerity in advertising/labelling  No unfair competitor-tarnishing  Making available  Promptly fulfilling obligations  No detrimental cartels/informal agreements  No secret unethical payments  Fair employee treatment accurate records wages and In essence, business must serve social goals ethically. Professionalization should strengthen business ethics and social responsibility.