The Purpose of BusinessThe Purpose of Business

The Drucker Point Of ViewThe Drucker Point Of View

Busting Common MythsBusting Common Myths & &

Getting The Facts RightGetting The Facts Right

A Business Enterprise is created and managed by People A Business Enterprise is created and managed by People NOT Forces.NOT Forces.

Its wrong to assume “ Management only adapts the Its wrong to assume “ Management only adapts the business to the forces of the Market”. Management business to the forces of the Market”. Management should not only find these forces, but should also create should not only find these forces, but should also create them!them!

Profitability is crucial but the notion that “ An Profitability is crucial but the notion that “ An Organization’s purpose is to make Profit” is not only Organization’s purpose is to make Profit” is not only wrong but irrelevant. Profit is never the motive for wrong but irrelevant. Profit is never the motive for business.business.

The Purpose of BusinessThe Purpose of Business The Purpose of a Business The Purpose of a Business

must lie outside the Business must lie outside the Business itself. In fact, it must lie in itself. In fact, it must lie in Society since business Society since business enterprise is an organ of enterprise is an organ of Society.Society.

All businesses should have one All businesses should have one single purpose.single purpose.

And all businesses need to And all businesses need to effectively realize this purpose.effectively realize this purpose.

This purpose is not an objective This purpose is not an objective or mission or quantifiable time or mission or quantifiable time based target - but is all based target - but is all encompassing and never encompassing and never completely achieved.completely achieved.

So, What exactly should the Purpose of Business be?

The Purpose of Business Should be….The Purpose of Business Should be….

To create a Customer.To create a Customer.

To Create A Customer, because…To Create A Customer, because…

The want a business satisfies may have been felt by the customer The want a business satisfies may have been felt by the customer before he was offered the means of satisfying it.before he was offered the means of satisfying it.

It is the potential It is the potential want want that is transformed into an effective demand by that is transformed into an effective demand by

the action of the businessmen. It is thus business action that creates the action of the businessmen. It is thus business action that creates the customer.the customer.

It is the customer who determines what a business is.It is the customer who determines what a business is.

What the business thinks of itself is irrelevant. What the customer What the business thinks of itself is irrelevant. What the customer thinks of the business is of first importance. thinks of the business is of first importance.

The customer is never buying a product, but its always a utility – that is, The customer is never buying a product, but its always a utility – that is, what a product or service does for him. what a product or service does for him.

And what is value to the customer is anything but obvious.And what is value to the customer is anything but obvious.

A Final WordA Final Word Though now it appears that creating a customer would be the Though now it appears that creating a customer would be the

obvious purpose of a business, it still is not aptly realized by obvious purpose of a business, it still is not aptly realized by shortsighted organizations who focus on Profit Maximization as their shortsighted organizations who focus on Profit Maximization as their purpose.purpose.

Businesses should have to realize that the customer is the Businesses should have to realize that the customer is the foundation of a business and it is he who keeps it in existence. He foundation of a business and it is he who keeps it in existence. He alone gives employment. alone gives employment.

It is only to supply the wants and needs of the customer, society It is only to supply the wants and needs of the customer, society entrusts wealth-producing resources to the business enterprise. entrusts wealth-producing resources to the business enterprise.

And Customer as GodAnd Customer as God

A Customer is the most important visitor on our premises. A Customer is the most important visitor on our premises.

He is not dependent on us.He is not dependent on us.We are dependent on him. We are dependent on him.

He is not an interruption on our work.He is not an interruption on our work.He is the purpose of it.He is the purpose of it.

He is not an outsider on our business. He is not an outsider on our business. He is a part of it. He is a part of it.

We are not doing him a favour by serving him. We are not doing him a favour by serving him. He is doing us a favor by giving us an opportunity to do so.He is doing us a favor by giving us an opportunity to do so.

Thank You for your Patience!!!Thank You for your Patience!!!