Strategic Management: Formulation and Implementation

Organizational Purpose

Purpose relates to the reason for an organization's existence. The purpose of a business generally is the production and distribution of goods and services. There is a tendency sometimes for companies to view their purpose in terms of "making a profit" this typifies all profit-seeking enterprises and thus distinguish none.

Defining purpose in terms of markets and customers to be served is a step forward, Peter Drucker, one of the most authorities in this field, maintains: "There is only one valid definition of business purpose: to create a customer." Derek Abell has developed Drucker's perceptive, arguing that the mission of a company is defined along three dimensions: "what is being satisfied", "who is being satisfied" and "how customer needs are satisfied". Defining the purpose of organization in term of what to satisfy, and how the organization satisfies needs, is in requires taking three factors: customer needs, customer groups, and the technologies used and functions performed. The development of shared organizational vision represents a crucial response to this problem.