The Purpose of Business 1 answer below »
People have different viewpoints about the purpose of business and the role profit, or net income, should play in the strategic intent of a business or organization. Some people believe that the purpose of business is to generate profit for stakeholders, and some feel that the purpose is to create economic growth and employment opportunities. Others believe that the purpose is to improve consumers’ well-being by providing useful products. Finally, there are those who think that the purpose is to create a respectable identity. Regardless of their viewpoint, most people can agree on at least one concept: Profits are a necessary part of fulfilling the purpose of a business, and net income above expenses is necessary for other organizations to continue to exist.
In this Application Assignment, you will examine four viewpoints about the purpose of a business and the role of profit, or net income. You will also formulate your own ideas on those topics and compare and contrast them to the four opinions you examined.
To prepare for this Assignment, carefully consider the following four quotations: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” (Friedman, 1970) “People need to change how they think about their business challenges. In my view, they should think about their products, services, pricing, place of business, promotion, and people as a means to an end. And that end is to give customers a happy now, show them a happy future, and enhance their sense of worth and belonging.” (Asacker, 2008, p. 51) “I think winning is great. Not good — great. Winning in business is great because when companies win, people thrive and grow. There are more jobs and more opportunities everywhere and for everyone.” (Welch, 2005, p. 3) “Saying that the point of business is to produce profit is like saying that the whole point of playing basketball is to make as many baskets as possible. One could make many more baskets by having no opponent. The game and styles of playing the game are what matter because they produce identities people care about. Likewise, a business develops an identity by providing a product or a service to people. To do that it needs capital, and it needs to make a profit, but no more than it needs to have competent employees or customers or any other thing that enables production to take place. None of this is the goal of the activity. Businesses and business people exist in market economies to form identities that are recognized by others as respectable due to their usefulness or excellence.” (Spinosa, Flores, & Dreyfus, 1997)
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To complete this Assignment, respond to the following in a 2- to 3-page paper: Review your selected quote from the four above. Analyze what the author was saying about the relationships that exist between the strategic intent, business model, and profit, or net income, of a business or organization. Provide a description of the role the author believes these play in the guiding purpose of a business. Discuss how your ideas are different from those expressed in other quotations.
References Asacker, T. (2008). A little less conversation: Connecting with customers in a noisy world. Ithaca, NY: Paramount Market Publishing, Inc. Friedman, M. (1970, Sept. 13). The social responsibility of business is to increase its profits. New York Times Magazine. Spinosa, C., Flores, F., & Dreyfus, H. L. (1997). Disclosing new worlds: Entrepreneurship, democratic action, and the cultivation of solidarity. Boston, MA: MIT Press. Welch, J. (2005). Winning. New York City, NY: HarperCollins Publishers, Inc.