Purpose of

organizations
Business and the Business
Environment

Lecture overview

1. Purposes of organisations
– Profit
– Profit-related objectives
– Non-profit objectives

2. Purposes, strategy and culture

– Vision, Mission, Goals and Objectives
– Values

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 1. Purposes of organisations

• Organisations have formal and informal purposes.

• There is often a combination of purposes.
• Some purposes may conflict.

1. Purposes of organisations

PROFIT
• Some share of profits are paid to the owners of the company
– In a public company, these are paid as “dividends” to shareholders

• Profits are the reward for risk-taking

• Pursuing profit is the main purpose for the vast majority of
companies.

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 1. Purposes of organisations

NON-PROFIT OBJECTIVES
• Survival
• Satisfying customer demand
• Market penetration
• To increase sales revenue
• To provide employment

1. Purposes of organisations
OBJECTIVES FOR SOCIAL GAIN
• These objectives are usually for “social gain”. They
may include objectives for:
– The benefit of the general public or the wider community
– The benefit of its members
– To support a cause

• The “profits” that are made in these organisations

are called “surplus”.
• Any surplus made is ploughed back into the
organisation to help support the cause.

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 2. Purposes, strategy and culture

STRATEGY FORMULATION
The strategy of an organisation is used to fulfil its purpose.

Vision Mission
Goals Objectives
Statement Statement

Implementation

2. Purposes, strategy and culture

VISION STATEMENT
A vision is an inspirational statement which sets out the direction of the
organisation.
• Answer the question “Why” or “ What to become”
• A vision is not useful in the shorter term.
• A vision is a “super-objective” – it may never be obtained.
• It is non-specific and not quantified.

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 2. Purposes, strategy and culture

MISSION STATEMENT
The mission describes the organisation’s basic function in society, in terms
of the products and services it produces for its clients. (Mintzberg)
• Answer the question “What” and “How”
• A mission statement outlines the specific role the organisation
plans to fulfil in the long-term.
• Limits the scope of operations by implicitly excluding areas outside
its stated mission.
• It is non-specific and not quantified.

Mission or Vision?

• To create the most compelling car company of the 21st century by

driving the world’s transition to electric vehicles.
• To accelerate the world’s transition to sustainable energy.

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 Mission or Vision?

• Offer a wide range of well-designed, functional home furnishing

products at prices so low that as many people as possible will be
able to afford them.
• To create a better everyday life for the many people.

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Mission or Vision
• To become a world grade brand in food and beverage
industry, where people put all their trust in nutrient and
health products.
• To deliver the valuable nutrition to community with our
respect, love and responsibility.

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 Mission or Vision

• To creates development opportunities for students, lecturers and

staff members through academic curricula and educational
environment of international standards, which are developed in the
light of creativity, enthusiasm and responsibility.
• To become a well-known research and educational centre on
economics and business management.

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2. Purposes, strategy and culture

GOALS
Goals are the intentions behind decision or actions - the states of mind that
drive individuals or organisations to do what they do. (Mintzberg)
• Goals apply to shorter time-frames than the vision and mission.
• They are still non-specific and not quantified.
• The goals interpret the mission statement into more
understandable statements for different stakeholders.
– Helps to minimise conflict between stakeholders.
– Separate goals can be developed for each set of stakeholders.

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 2. Purposes, strategy and culture

OBJECTIVES
Objectives are quantified statements of what the organisation actually
intends to achieve over a period of time.
• Objectives set out the goals of the organisation more specifically.
• Refers to aims and the desired end results.

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 2. Purposes, strategy and culture

VALUES
The culture of an organisation often drives its purpose
• The values of an organisation determine the culture of the
organisation.
• They provide a set of principles that govern the overall conduct of
the organisation’s operations, code of behaviour, the management
of people and its dealings with other organisations.

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