Drucker On The Purpose Of Business


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Drucker On The Purpose Of Business

  1. 2. The Purpose of Business The Drucker Point Of View
  2. 3. Busting Common Myths & Getting The Facts Right <ul><li>A Business Enterprise is created and managed by People NOT Forces. </li></ul><ul><li>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! </li></ul><ul><li>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. </li></ul>
  3. 4. The Purpose of Business <ul><li>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. </li></ul><ul><li>All businesses should have one single purpose. </li></ul><ul><li>And all businesses need to effectively realize this purpose. </li></ul><ul><li>This purpose is not an objective or mission or quantifiable time based target - but is all encompassing and never completely achieved. </li></ul>So, What exactly should the Purpose of Business be?
  4. 5. <ul><li>The Purpose of Business Should be…. </li></ul>
  5. 6. <ul><li>To create a Customer. </li></ul>
  6. 7. To Create A Customer, because… <ul><li>The want a business satisfies may have been felt by the customer before he was offered the means of satisfying it. </li></ul><ul><li>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. </li></ul><ul><li>It is the customer who determines what a business is. </li></ul><ul><li>What the business thinks of itself is irrelevant. What the customer thinks of the business is of first importance. </li></ul><ul><li>The customer is never buying a product, but its always a utility – that is, what a product or service does for him. </li></ul><ul><li>And what is value to the customer is anything but obvious. </li></ul>
  7. 8. A Final Word <ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>It is only to supply the wants and needs of the customer, society entrusts wealth-producing resources to the business enterprise. </li></ul>
  8. 9. And Customer as God <ul><li>A Customer is the most important visitor on our premises. </li></ul><ul><li>He is not dependent on us. We are dependent on him. </li></ul><ul><li>He is not an interruption on our work. He is the purpose of it. </li></ul><ul><li>He is not an outsider on our business. He is a part of it. </li></ul><ul><li>We are not doing him a favour by serving him. He is doing us a favor by giving us an opportunity to do so. </li></ul>
  9. 10. <ul><li>Thank You for your Patience!!! </li></ul>