Purpose of a Business

Mission is the statement which defines the role of a business enterprise. Purpose is anything which a business enterprise strives for. In business policy, both these terms are either used jointly or singly. Mission & Purpose of a business go hand in hand. Mission refers to the particular needs of the society, for instance, its information needs. Purpose relates to what the organization strives to achieve in order to fulfill its mission to the society.

For example, a book publisher and a magazine editor have different purposes but an identical Mission.

A Mission statement defines the basic reason for the existence of the organization. Such a statement reflects the corporate philosophy, identify, character and image of an organization. ONGC, a Navratra PSU, states its mission and purpose as “To stimulate, continue and accelerate efforts to develop and maximize the contribution of the energy sector to the economy of the country”.

A mission when explicitly defined provides enlightenment to the public of what the organisation stands for.

In. order to be effective, a mission statement should process the following seven characteristics (objectives)

  • It should be feasible.
  • It should be precise.
  • It should be clear.
  • It should be motivating i.e. motivating to the organization employees and to the general public.
  • It should be distinctive organization with same type of business should produce their mission statements differently.
  • It should indicate major components of strategy.
  • It should indicate how objectives are to be accomplished.

The mission statements deal with objectives to be achieved within a given time period. For strategic decision making it is important to consider the mission each phases of the strategic management process.

Prof F. Drucker has framed the following questions

  • What is our Business?
  • What will our Business be?
  • And what should it be?
  • What is our Business?

What is our Business?

What is our business is not determined by the producer but by the consumer. It is not defined by the company’s name, statues or articles of incorporation, but by the want the consumer satisfies when he buys a product or a service. The question can therefore be answered only by looking at the business from the outside, from the point of view of the consumer and the market.

Management must make conscious efforts to get honest answers from the consumer himself rather than attempt to read his mind.

It is then, the first responsibility of top management to ask the question “What is our business” and to make sure that it is carefully studied and correctly answered. To raise this question and to study it thoroughly is most needed when a business is successful.

What will our business be?

When the management asks question “What will our business be?” this involves finding out four things

  • The first is market potential and market trend, How large can we expect the market for our business to be in five or ten years, assuming no basic changes in market structure or technology? And what are the factors that will determine this development?
  • Secondly, what changes in market structure are to be expected as the result of economic developments, changes in fashion or taste or moves by competition?
  • Thirdly, what innovations will change the customer’s wants, create new ones, extinguish old ones, create new ways of satisfying his wants, change his concepts of value or make it possible to give him greater value Satisfaction? This has to be studied in respect of all activation of the business.
  • Finally, what wants does the consumer have, that are not being adequately satisfied by the products or services offered him today? It is the ability to ask this question and to answer it correctly that usually makes the difference between a growth company and one that depends for its development on the rising tide of its economy or industry; and whoever contents himself to rise with the tide will also fall with it.

And what should it be?

The analysis of ‘our business’ is not yet complete, however, Management still has to ask “ Are we in the right business or should we change our business”?

Of course many companies get into a new business by accident; they stumble into it rather than steer into it. But the decision to shift major energies and resources to new products and away from old ones, the decision, in other words, to make a business out of an accident should always be based on analysis; “what is our business and what should it be?”

Changes in the nature of business arise out of following (what changes are effected for a business enterprise in course of time?)

  • Innovation (b) Productivity
  • Profitability
  • Objectives must be set according to what is right and desirable for the enterprise and all objective have to be reexamined continually and change to be effected, if necessary.

Organization Directions or Goal provide the foundation for all managerial activity Organization directions or goals provide standard for measuring performance to attain the end objective, Goal aid in legitimizing an organization and creating a place for it in the environment.

Goals have public relation value, they might help in drawing support from various group in environment. Organizational direction can also help in image building with supplier’s customers and the government. Organization goals can be classified into three types

  • Official goals are the general aims of the organization as described in a memorandum of association. They may also be found in public statements by top executives.
  • Operative goals indicate what the organization is really attempting to do. They may be inferred from the actual operating policy of the organization. They help the organizational manager to focus attention & reduce uncertainty.
  • Operational goals are used by supervisory personnel or managers in the organization to influence the behavior of subordinates and to measure their performance.
  • Mission implies the fundamental and enduring objectives of an organization that set it apart from other organization of similar nature.

The mission is a general enduring statement of instruction of an organization. The corporate mission highlights the organization self concept and indicates the nature or product or service to be offered or rendered for fulfillment of the requirements of the customers, and the society as a whole.

The mission may be described as the scope of operation in terms of product, market of the service as well as customers and clients.

An organization may define its mission highlighting the philosophy and purpose.

Vision: The vision of an organization refers to an idealized, yet achievable status to which the organization stands committed. A worker in an organization can attain managerial vision only through his performance. In other words, a worker sees the enterprise as if he were a manager responsible, through his performance for its success and survival

This vision an employee of a business enterprise can only attain through the experience of participation. Vision gives an employee pride in his work and a sense of importance or accomplishment.

Vision and Business Principles Examples

  • According to business legend Dhirubhai Ambani of Reliance Industry group “Vision should not be in the air, it should be achievable”.
  • Syngenta India Limited, a multinational company in the crop protection business, have highlighted following seven core dimensions to provide a set of guidelines for company’s vision and business principles, in The Annual Report 2001 2002CUSTOMERFOCUSED “We focus our actions on our customer’s needs, we develop and sustain strong customer relationships.”

Innovative: “We generate innovative solutions; we challenge the statuesque and push boundaries; we try different and novel ways to deal with work problems and opportunities”.

Decisive: “We draw conclusions and choose a timely course of action based on relevant facts, constraints and probable consequences”.

Communicative: “We clearly convey information and Ideas; we encourage open and continuous communications; we are keen to listen and learn”.

Trusted: “We develop and maintain an environment of openness, trust and integrity; we gain the confidence of our stakeholders”.

Team oriented: “We actively participate as members of a team to move the team toward completion of goals; we collaborate effectively across organizational boundaries”.

Results oriented: “We deliver on our commitments; we set inspirational goals and work tenaciously to reach or exceed them”.

Based on the corporate objectives, department objectives which are meant to be achieved in the short run need to be formulates and finalized.

F. Drucker has suggested eight important areas of business objectives

  • Marketing
  • Innovation
  • Human Organization
  • Physical Resources
  • Financial Resources
  • Productivity
  • Social I Responsibility
  • Profit Requirement

Get industry recognized certification – Contact us

Menu