In any organized society, several institutions exist to serve the needs of people in that society, government creates several institutions to enable it carry out its function of providing law and order, security of life and property, regulation and control of the activities of individuals and groups in the society, development of infrastructure and promotion of the economic, social and cultural welfare of the nation. Institutions are also established to serve the needs of people for goods and services. Such institutions provide these goods and services to people with the aim of making profit for their owners. In many societies, these institutions are non-governmental but there are quite a number of societies where government also engages in providing these goods and services.

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A third category of institutions exist. These are non-profit and non-governmental institutions which are established to render certain services which neither government nor profit-oriented establishments render. They are usually concerned with educational, cultural, religious, environmental, etc. issues.

Institutions whose primary goal is profit are generally known as business enterprises. A business enterprise is a decision-making unit concerned with serving certain needs through the production and distribution of goods and rendering services at a profit for the owners. The distinguishing feature of business enterprises in relation to other institutions of society is profit. Other institutions may produce goods or render services but they do not generally do so for the purpose of making a profit. For example, a government-owned medical laboratory may produce vaccines for controlling certain animal diseases, but this activity is usually not carried out for the purpose of making a profit. Similarly, a non-profit and non-government agency may render Services without the aim of making a profit.

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It is important to recognize that the term business can be used loosely. It
may be used to describe a wide variety of activities or transactions that an
individual or group may engage in. A dictionary defines it as a commercial
activity engaged in as a means of livelihood; a trade a profession, occupation or a particular field of endeavour. From this definition, it is obvious that the term can be applied as a general term for most human activities. Specifically however, business is defined as any lawful human activity which involves the production and distribution of goods or the rendering of services for the purpose of making a profit.

Objectives of the business enterprise

Our definition of the business enterprise stresses that the primary objective
of business is to make profit by identifying and effectively serving the needs of consumers. This is correct. Profit is the primary motive for establishing a business enterprise. It is a reward for investing one’s savings in a venture in spite of the fact that the future outcome of the venture is uncertain. That is, profit is a reward for assuming the risk of establishing a business enterprise.
Profit serves other functions. It is the principal source of growth and continued existence of the business enterprise.

Through re-investment of profit, the business enterprise can be expanded. Profit also serves as a measure of performance. It is an index by which the performance of one enterprise can be compared with that of another or the performance of the same enterprise can be evaluated over time. Consequently, profit is an incentive for people to work harder and more efficiently.

There are however secondary objectives of business which are related to and dependent on the profitability objective. Among the secondary objectives are: etc.

(a) Growth Objective The expansion of the business enterprise is one of the objectives of business. This may take the form of increase in sales turnover, market share, number of people employed, capital employed.

(b) Innovation. This is an important means of striving to satisfy the needs of consumers better than competitors. Innovation involves introduction of new products, new method of handling distribution, new method of production, etc.

(c) Productivity. It is particularly important to the business enterprise that productivity is improved. Productivity is the ratio of output to input in a given period of time. It is the extent to which a business enterprise is able to utilize a given set of resources to achieve the highest possible value of output. Productivity may be measured over time in terms of output per employee, output per unit of capital invested or output per unit of the most critical resource invested.

d) Employee Satisfaction. Business enterprises seek to enhance the satisfaction of employees as a means of optimising their contribution to the growth and competitiveness of the enterprise.

(e) Shareholder Satisfaction. To guarantee continued support of investors, business enterprises seek to improve the returns to shareholders while at the same time reducing their risk.

(f) Public Image A positive public image for the enterprise enables it to obtain the resources it needs on favourable terms. Thus the business enterprise strives in various ways to improve its image as a good corporate citizen involved in the production and distribution of high quality products. It also strives to project itself as an enterprise which is concerned about its employees and the community in which it operates.

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Roles of some government agencies in the regulation and control of business.

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