Organizational Purpose And Its Role In Businesses
In this essay I will be talking about organizational purpose and its importance to businesses, and relating them to Friedman and Kay’s point of view. Organizational purpose is the main purpose of the business. This is expressed using; The aim, what the business wants to achieve. The objectives, much more strategic, geared towards planning they are, “specific and measurable targets of how the business wants to achieve business aims”. The mission statements are the principles, beliefs and values backing the business according to their aims and objective.
Organizations must state their purpose because, it outlines what the business does. Organizational purpose gives an idea of the activities that the organization will engage in and the values they up hold. Kay believes that “business does not have multiple objectives” but the only goal is profit. He believes that businesses don’t work with multiple objectives in mind and if they do it is because there is some sort of profit that will come in over the time period. However, Friedman also believes that the only social responsibility of a business is to make profit as far as it is made through no dubious means. He sees “social responsibility” as a way executives deceive society therefore concluding that the only thing businesses owe is transparent activities.
It is important for organizations to state their purpose because it helps the business in decision making. Organizational purpose help businesses to plan themselves and take decisions on how to approach issues concerning achieving their goal, activities Corporate Social Responsibility and anything that may affect the business. Kay believes that there is a difference between “characteristics and policy”, businesses of today only make decisions after weighing all options cost wise, he used marks and spencer providing food for its employees as an example to compare how businesses made decisions keeping in mind the business they are trying to build as opposed to today when decisions are made with the overall profit or only long term gains mind. Whereas Friedman believes that there is no way a business can operate bearing the burden of “social responsibility”, such activities may benefit the society but harm the business as it may decrease profits, increase prices and decrease wage.
Finally, organization purpose is important because, it sends a message and image about business. the statement that a business puts forward, can act as basis for the kind of image the business is trying to portray, allowing people to check if the business works in line with their mission and also judge the quality of goods. Kay divided the idea of business goals into two groups. “mode I” the one that sees business as other professions, maintaining then same standards and professionalism, satisfying the needs of all stakeholders including the shareholder in this he says profit is key to business success but it is not the primary goal and “mode II”, where business is not like other professions, he believes that businesses like these don’t entirely neglect other stakeholders but just operate with the wealth generation mindset and when something isn’t bringing profit in they get rid of it. This can in the long run affect quality of goods negatively. As for Friedman the only thing that can boost a business’s image is to engage in activities that are not fraudulent.
