Non Monetary Factors and Multiple Objectives of a Firm

Firm

Definition 1:

A commercial partnership of two or more persons, especially when unincorporated.

Definition 2

The name or designation under which a company transacts business.

It is a collection of assets with one owner that contracts with other assets to produce and sell goods. An example might be a steel company we will call Apex: a steel blast furnace owned by one man who hires workers to produce and sell steel. But this is too easy. We do not say that the iron mine which sells to Apex and other steel companies is part the same company as Apex. We could say that blast furnace by itself is Apex, but that neglects the value of its relationship with its workers.

Firm is usually thought as a collection of long-term relationships. But this is hard to pin down.

Tirole’s book suggests three ways:

Technological. Contractual. Incomplete-Contracting.

NON MONETARY FACTORS ESSENTIAL FOR A FIRM

Monetary factors implies money or financial factors, non-monetary fators are the ones which do not involve money.

It is usually thought by a common man that only money is required for the betterment of the firm and a without a large amount of investment a firm can never survive the competition in the market but it is quite a wrong approach. Although, money and investment is essential for a firm survival but it is not that vital. A firm can even progress without a large amount of investment by focusing on the non monetary factors which can play a soulful role in the progress of firm.

In the non- monetary factors firms usually look for the better human resources and try to enhance them. . In this climate, it is important to focus on the top non-monetary motivating factors: open communication, recognition, career development plan and the ability to make a difference at work. Here these are described briefly along with the ways to enhance human resources by using them and ultimately resulting in the firm’s progress.

Open Communication:

More companies adhere to the philosophy of minimal communication rather than "open book" management. In other words, senior management often assumes that the less employees know, the better.

Even if your senior management adheres to this closed communication style, practice open book management with your own staff. Whenever possible, research your organization on an internet search engine such as Google.com. In essence, you'll have a chance to research your firm as well as your competitors, and little does more to stimulate interest and competition than pointing employees to the right tools to educate themselves (and the rest of your staff). Knowledge is power, and the Internet and library make for free resources of invaluable information.

Staff Meeting Leadership:

Nothing says confidence and trust like putting someone in a position of leadership with the ability to make decisions. Maybe it's time to shift that responsibility for leadership away from yourself and toward your employees. One way to do this is to allow each of your employees to run a weekly staff meeting--its structure, delineation of responsibilities to others and follow-up. Placing future leaders into management development roles is probably the most important benefit that you have to offer your people. Besides, it's much easier to complain than it is to fix the problem. People responsible for attempting to fix problems are less likely to blindly blame others because they're more sensitive to the challenges involved in rendering a solution.

In addition, keep an eye out for other ways to give your employees more responsibility to test their leadership skills. Respect and recognition are two proven ways to retain employees--and you don't have to spend a dime.

External Training Workshops:

Assume that many of your best employees are resume-builders. They will stay long enough to prove their worth so long as they're on the fast track. Once they feel blocked from upward mobility, however, they will look elsewhere. The key is to allow all your employees a chance to reach their career goals at your organization. People are much more inclined to feel like they're making a positive contribution to your organization if they're in a learning curve. So even if you can't promote them because of hiring freezes, you could indeed challenge them to challenge themselves.

Many training organizations offer hundreds of situation-specific seminars via e-learning, self-study courses like finance for non-financial managers, foreign language acquisition and software certification. Two or three seminars per employee per year may add very little to your overhead budget and allow employees a one-day "sabbatical" to reflect on

their careers as well as to reinvent themselves in light of your company's changing needs. Many states offer employment training panel funds that will allow your company to tap monies set aside for employee development via payroll taxes.

Self-Evaluation Tools:

Remember that people want to learn, contribute and make a difference at work. They will do this better if they feel a direct connection with a company that benefits their own careers. Have your employees take stock of how they think they are affecting the business. It's a chance for your workers to give themselves an intermittent report card so that you can both compare notes.

You might structure a written self-evaluation form in three parts:

PAST ( review the previous performance) PRESENT ( focus on the work, the worker is doing at that time) FUTURE ( to decide the goals for future)

Hence, by focusing on these non monetary factors a considerable progress can be made in the firm.

MULTIPLE OBJECTIVES OF FIRM

An objective is something you want to achieve. Similarly, firm’s objectives are something which a business firm wants to achieve or accomplish over a specified period of time. These may be to earn profit for its growth and development, to provide quality goods to its customers, to protect the environment etc.

These are the objectives of business. In the following section let us classify the objectives of business.

Classification of Objectives of Firm:It is generally believed that a business has a single objective, that is, to make profit.

But it cannot be the only objective of business. While pursuing the objective of earning profit, business units do keep the interest of their owners in view. However, any business unit cannot ignore the interests of its employees, customers, the community, as well as the interests of society as a whole.

Business objectivesalso need to be aimed at contributing to national goals and aspirations as well as towardsinternational well-being. Thus, the objectives of business may be classified as -

Economic Objectives Social Objectives Human Objectives National Objectives Global Objectives

Economic ObjectivesEconomic objectives of business refer to the objective of earning profit and also other

objectives that are necessary to be pursued to achieve the profit objective, which include, creation of customers, regular innovations and best possible use of available resources. Let us learn about these.

1. Profit earningProfit is the lifeblood of business, without which no business can survive in a

competitive market. In fact profit making is the primary objective for which a business unit is brought into existence. Profits must be earned to ensure the survival of business, its growth and expansion over time. Profits help businessmen not only to earn their living but also to expand their business activities by reinvesting a part of the profits. In order to achieve this primary objective, certain other objectives are also necessary to be pursued by business, which are as follows: Creation of customers Regular innovations Best possible use of resources

Social ObjectivesSocial objectives are those objectives of firm, which are desired to be achieved for the

benefit of the society. Since business operates in a society by utilizing its scarce resources, the society expects something in return for its welfare. No activity of the business should be aimed at giving any kind of trouble to the society. If business activities lead to socially harmful effects, there is bound to be public reaction against the business sooner or later.

Social objectives of firm include production and supply of quality goods and services, adoption of fair trade practices and contribution to the general welfare of society and provision of welfare amenities

1. Production and supply of quality goods and servicesSince the business utilizes the various resources of the society, the society

expects to get quality goods and services from the business. The objective of business should be to produce better quality goods and supply them at the right time and at a right price.

2. Adoption of fair trade practicesIn every society, activities such as hoarding, black-marketing and over-

charging are considered undesirable. Besides, misleading advertisements often give a false impression about the quality of products. Such advertisements deceive the customers and the businessmen use them for the sake of making large profits. This is an unfair trade practice. The business unit must not create artificial scarcity of essential goods or raise prices for the sake of earning more profits. All these activities earn a bad name and sometimes make the businessmen liable for penalty and even imprisonment under the law.

3. Contribution to the general welfare of the societyBusiness units should work for the general welfare and up liftment of the

society. This is possible through running of schools and colleges for better education, opening of vocational training centres to train the people to earn their livelihood, establishing hospitals for medical facilities and providing recreational facilities for the general public like parks, sports complexes etc.

Human ObjectivesHuman objectives refer to the objectives aimed at the well-being as well as fulfillment

of expectations of employees as also of people who are disabled, handicapped and deprived of proper education and training. The human objectives of business may thus include economic well-being of the employees, social and psychological satisfaction of employees and development of human resources.

1. Economic well being of the employeesIn business employees must be provided with fair remuneration and incentives

for performance, benefits of provident fund, pension and other amenities like medical facilities, housing facilities etc. By this they feel more satisfied at work and contribute more for the business.

2. Well being of socially and economically backward peopleBusiness units being inseparable parts of society should help backward classes

and also people those are physically and mentally challenged. This can be done in many ways. For instance, vocational training programme may be arranged to improve the earning capacity of backward people in the community. While recruiting it staff, business should give preference to physically and mentally challenged persons. Business units can also help and encourage meritorious students by awarding scholarships for higher studies.

National Objectives

Being an important part of the country, every business must have the objective of fulfilling national goals and aspirations. The goal of the country may be to provide employment opportunity to its citizen, earn revenue for its exchequer, become self-sufficient in production of goods and services, promote social justice, etc.

1. Creation of employmentOne of the important national objectives of business is to create opportunities

for gainful employment of people. This can be achieved by establishing new business units, expanding markets, widening distribution channels, etc.2. Contribute to the revenue of the country

The business owners should pay their taxes and dues honestly and regularly. This will increase the revenue of the government, which can be used for the development of the nation.

Global Objectives

Today because of globalization the entire world has become a big market. Goods produced in one country are readily available in other countries. So, to face the competition in the global market every business has certain objectives in mind, which may be called the global objectives. Let us learn about them.

1. Raise general standard of livingGrowth of business activities across national borders makes available quality

goods at reasonable prices all over the world. The people of one country get to use similar types of goods that people in other countries are using. This improves the standard of living of people.

2. Make available globally competitive goods and servicesBusiness should produce goods and services which are globally competitive

and have huge demand in foreign markets. This will improve the image of the exporting country and also earn more foreign exchange for the country.