Five Objectives of Business Survivial

The five objectives of business – Survival, Stability, Growth, Efficiency and Profitability -- run in a continuum. Normally, one objective precedes the other.1. SurvivalIn the initial phase of a company the objective is to “survive”. Survival means, “Not getting killed by the competition”. Business follows the law of the jungle; namely survival of the fittest. Survival is important for success. In a marathon race, the athlete begins at a slow pace, conserving his energy, for the final burst. For a company to survive it has to first break even; then comes making profits.2. StabilityPost survival a firm looks for stability. Stability can be in terms of sales or profits. A company following such an objective is seeking to maintain the status quo, of not rocking the boat. Some element of stability is necessary before launching on to growth. In the middle phase of the marathon the athlete maintains a steady pace before he sprints in the final leg. In a sense it is the least expensive in terms of time, talent and resources.3. GrowthEvery business wants to “Grow.” With expansion come more profits. Growth brings in its wake self-esteem. Growth could be in terms ofa. Volume of business, (Increasing turnover from 10,000 tons to 15,000 tons)b. Value of sales, (Increasing turnover from Rs 50 million to Rs 100 million)c. Number of customers, (Rising the number of clients from 1200 to 1500)d. Moving up the value chain, (From being a provider of raw-material to becoming the provider of the product which is uses this raw-material)e. Progressing from doing low skilled work to highly skilled work. (A company engaged in BPO operations would like to move to becoming a KPO4. EfficiencyBusiness is an economic activity. It seeks to add value to the customer and profit to the firm. Profit is the difference between the revenue earned and the costs incurred. Profit can be increased in 2 ways. Either increase the revenue or reduce the cost. While the first is dependent on external forces, the second is dependent on internal factors. Efficiency is a tool to reduce costs. If the work processes are conducted in the most efficient ways, it would lead to fall in costs and increase in profits. Efficiency mainly relates to the activities involved in the day-to-day running of the business.5. ProfitabilityProfitability means the ability to make profits. All businesses want to make profits. Peter Drucker once said, “There is no such thing as a non-profit organization. There are only organizations that do not make profits.” If a business ceases to make profits, it will have to be closed down. So survival, stability and growth exist only with profits. Efficiency will enhance profits. Hence ultimately, a business is of significance to a businessman only if it is making profits.