The Purpose Of A Business

Is the purpose of a business just to make money?

Some people would say Yes but, 33 years ago in his book The Marketing Imagination, Theodore Levitt suggested that the purpose of a business was more than that.

Levitt summed up the purpose of a business  in five propositions. They are:

The purpose of a business is to create and keep a customer

To do that you have to produce and deliver goods and services that people want  and value at prices and under conditions that are reasonably attractive relative to those offered by others to a proportion of customers large enough to make those prices and conditions possible.

To continue to do that, the enterprise must produce revenue in excess of costs in sufficient quantity and with sufficient regularity to attract and hold investors in the enterprise, and must keep at least abreast and sometimes ahead of competitive offerings.

No enterprise, no matter how small, can do any of this by mere instinct or accident. It has to clarify its purpose, strategies, and plans and the larger the enterprise the greater the necessity that these be clearly written down, clearly communicated, and frequently reviewed by the senior members of the enterprise.

In all cases, there must be an appropriate system of rewards, audits, and controls to assure that what’s intended gets properly done and, when not, that it gets quickly rectified.