The diverse nature of business

(Part II)

Survival

Thismust be as important an objective for a business as it is for individuals. The need to survive can override the profit motive in the short term. The divorce of ownership and control – where a business is owned by one group of people and managed or controlled by another – can lead to a conflict of objectives. The management might be more interested in survival strategies to secure their jobs. Survival can be a short-term objective to achieve future profits. It can also be seen as a subversive, unrecognized objective arising out of the personal experience and objectives of the people employed. The desire to protect their employment can lead to a reluctance to take necessary risks. When it is the latter it can be described as sabotage – an action designed to hinder the achievement of a stated objective.

Prestige

The desire for prestige, i.e. to be held in high regard by other people whose opinions you value, does not seem at first sight to contribute a great deal to either the profit motive or survival. It can, however, contribute to both, and some businesses actively seek to enhance their prestige in order to increase sales. Businesses might seek prestige from high quality products, from care for the environment, from the use of the latest technology or from care for its employees. Essentially it is attempting to build up an image for excellence in one area of its operations that will attract potential customers, or present a more favourable impression of its operations to the world. If customers believe that the activities of a business, undertaken to acquire profit, are in some way dishonourable, they may withdraw their custom from that business.

The pursuit of prestige could lead to lower profits in the short term when money might be spent on advertising, improving quality control or the provision of better employee services. In the long term a company with prestige can expect to find a better quality of applicants for any jobs they advertise, an increase in sales and, potentially, an increase in profits.

Growth

The objective of growth might be rationally based on the fact that if the business grows larger the cost of each item it produces will fall (economies of scale). It might also be the result of a personal desire on the part of the owner for more power or it might be a desire to take over and eliminate competitors so that there will be more scope for greater profit. In the first and last cases the profit motive dominates. In the second case it is an example of personal motives subordinating purely business motives.

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