Purpose of Business
DBA 100Philosophy of Business
Purpose of a Business
by:
Evelyn Sanchez Makadados
The purpose of a business
to offer value (through products and/or services) to customers,
who pay for the value with cash or equivalents. Minimally, the
money received should fund the costs of operating the business as
well as to provide for the life needs of the proprietor.
WHAT IS the purpose of business? To make money, of course." will
be the random answer.John Mackey, CEO of Whole Foods Market,
"The purpose of business is to create sustainable value for all
stakeholders." (See his recent coauthored book,Conscious
Capitalism).
Other business leaders who share this perspective include Howard
Schultz of Starbucks, Bill Kelleher of Southwest Airlines, Bill
George of Medtronic, Ratan N. Tata of Tata Sons, and Biz Stone of
Twitter. Increasingly, business leaders are focusing on the dignity
of all their stakeholders, and firms are taking on projects in the
wider society to alleviate poverty.
They do this not because business caused these problems, but
rather because as thinking and feeling human beings, they realize
that their organizations might have the managerial talent and
resources to act where governments are unable or unwilling to do
so. sense of being called upon to seek the common good, to make a
difference, to make the world a better place for their having been
there.
Important factor Question of what the purpose of business is and
whether a business should exist at all. purpose of a business is
not to make money but rather to solve a problem. Money and revenue
come second to helping people ease certain pains. Just take a look
at Pinterest: zero revenue, and yet investors still throw money at
it because it solves a problem for customers, thereby generating a
huge user base.
Steve Blank, serial-entrepreneur and leading founder of the
Customer Development methodology, teaches that most startups do not
fail because the founders fight or because the market is
overdeveloped and there are too many competitors (although those
certainly account for some of all failures). Rather, it is because
there are nocustomers.
Blank describes something called the Minimum Viable Product
(MVP), which is essentially a calculated launch strategy that gets
product to market as efficiently as possible. When first launched,
an MVP should only function simply and without too many or any
features at all. That comes later with product development.
The purpose of a business
main purpose of a business is to maximize profits for its owners
stockholders or in the case of a publicly-traded company, its
stockholders.Milton Friedman
a proponent of this view Many fundamentalists used his 1970
historic statement.Darwinomics approach in doing business.
Principal purpose of business serve the interests of a larger
group of stakeholders, including employees, customers, and even
society as a whole. that business activities ought to comform with
legal and moral strictures. (proponent of this philosophy has been
U.S. businessman-turned-futurist John Renesch.)
John E. Renesch"Corporations are human-made organisms,
associations of human beings. To see this association as having one
solitary purpose and responsibility, to grow only in economic
terms, is such an extreme view that implosions like what happened
to Enron, WorldCom and other corporate collapses will become more
and more commonplace.
Anu Agha, ex-chairperson of Thermax Limited"We survive by
breathing but we can't say we live to breathe. Likewise, making
money is very important for a business to survive, but money alone
cannot be the reason for business to exist.Profit maximization is
extremely relevant when top management is mandated with the job of
selecting the right strategy for the business.
Michael Eugene Porter
According to him,The primary goal for any business strategy
exercise must be that of maximizing profitability.
Bishop William Lawrence University Professor at The Institute
for Strategy and Competitiveness, based at theHarvard Business
School. He is a leading authority on competitive strategy and the
competitiveness and economic development of nations, states, and
regions. Michael Porter's work is recognized in many governments,
corporations.
Peter Drucker Social ecologist andKnown as the manWho invented
Management.the very purpose of business is creating a satisfied
customer. This definition is also useful in evaluating to what
extent a business is succeeding in fulfilling its stated
purpose.
Many observers would hold that concepts such as economic value
added (EVA) are useful in balancing profit-making objectives with
other ends. They argue that sustainable financial returns are not
possible without taking into account the aspirations and interests
of other stakeholders (customers, employees, society,
environment.)
This conception suggests
principal challenge for a business is to balance the interests
of parties affected by the business, interests that are sometimes
in conflict with one another.
Thank you for listening.
