A business has responsibilities to several different groups, namely, employees, customers and owner-investors. In particular, a good business should:
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provide a safe, fulfilling work experience and a stream of income to its employees,
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deliver a valuable product or service to its customers,
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provide a return on investment to its owners,
...and do so in a way that's responsible and respectful to the rest of the world. Because this is an [accounting and finance] course, we're going to focus on the company's responsibility to its owners. Every (for-profit) business is ultimately owned by a human being—or multiple human beings—and from a strictly financial perspective, the business's job is to take that owners' money and turn it into more money. For this reason, a business's owners are often referred to as its investors.
In fact, many investments—whether a stock, a savings account, or a piece of real estate—is like a "machine" that takes the investors' money and turns it into more money.
I like to draw the machine like this:
[Diagram of the machine and the investor next to it]
You see, the investor "feeds" her money into the machine (i.e., the business), expecting that it will throw back more money later on. The money that the investor feeds into the business is often called contributed capital, and the money that comes back to them later is called a return.
In some cases, the owner of the business also runs it; this person is an owner/operator or an owner/manager. But because many of today's businesses are highly complex (e.g., Apple, Amazon, Google), the investing owners don't know how to run the business, so they effectively hire people to do it for them—and these are the managers. So managers have an important responsibility to the company's investors, in that the investors have given over their money to the company, expecting that the managers will run the business in such a way that will produce returns for them later on.
Mike Friedmann
Mike is a former financial analyst and consultant at IBM and a former economic research associate at Harvard Business School. He is now a private instructor to busines students from Harvard, Columbia, NYU/Stern, and about 40 other schools, and a private instructor/coach to entrepreneurs, investment banking analysts, real estate professionals, attorneys and other executives.