Drucker On The Purpose Of Business

The Purpose of Business The Drucker Point Of View

Busting Common Myths & Getting The Facts Right
A Business Enterprise is created and managed by People NOT Forces.
Its wrong to assume “ Management only adapts the business to the forces of the Market”. Management should not only find these forces, but should also create them!
Profitability is crucial but the notion that “ An Organization’s purpose is to make Profit” is not only wrong but irrelevant. Profit is never the motive for business.

The Purpose of Business
The Purpose of a Business must lie outside the Business itself. In fact, it must lie in Society since business enterprise is an organ of Society.
All businesses should have one single purpose.
And all businesses need to effectively realize this purpose.
This purpose is not an objective or mission or quantifiable time based target - but is all encompassing and never completely achieved.
So, What exactly should the Purpose of Business be?

The Purpose of Business Should be….

To create a Customer.

To Create A Customer, because…
The want a business satisfies may have been felt by the customer before he was offered the means of satisfying it.
It is the potential want that is transformed into an effective demand by the action of the businessmen. It is thus business action that creates the customer.
It is the customer who determines what a business is.
What the business thinks of itself is irrelevant. What the customer thinks of the business is of first importance.
The customer is never buying a product, but its always a utility – that is, what a product or service does for him.
And what is value to the customer is anything but obvious.

A Final Word
Though now it appears that creating a customer would be the obvious purpose of a business, it still is not aptly realized by shortsighted organizations who focus on Profit Maximization as their purpose.
Businesses should have to realize that the customer is the foundation of a business and it is he who keeps it in existence. He alone gives employment.
It is only to supply the wants and needs of the customer, society entrusts wealth-producing resources to the business enterprise.

And Customer as God
A Customer is the most important visitor on our premises.
He is not dependent on us. We are dependent on him.
He is not an interruption on our work. He is the purpose of it.
He is not an outsider on our business. He is a part of it.
We are not doing him a favour by serving him. He is doing us a favor by giving us an opportunity to do so.

Thank You for your Patience!!!

Drucker On The Purpose Of Business

by Giri on Nov 27, 2009

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