QUARTER 3 / WEEK 1 / LESSON 2

I. TOPIC

The Purpose of Business

II. INTRODUCTION

It would be interesting to ask people from various walks of

life this question: “ What is the purpose of business?” You
would not be surprised if you hear the honest
and consistent answer: “to earn profit, of
course!” What else, but to make money!”. It
seems that the popular belief as to the
purpose of business revolves around this:
money, profit, financial returns. It is rare or
even impossible at all to encounter a
businessperson who says that he or she does
not care about profit and that his or her only
concern is to help and to be of service to the customers,
consumers, employees, the government, and the
community.

III. LESSON PROPER

The classic business text of the American sociologist and

economist Thorstein Veblen ( 1904 ) said: „ The motive of
business is pecuniary gain, the method is essentially
purchase and sale. The aim and usual outcome is an
accumulation of wealth. Men whose aim is not increase of
possessions do not go into business, particularly not on an
independent footing.”

Some people say: “ The business of business is business.”

In this chapter, we will explore some positions on the
purpose of business. We will start by discussing some
subjective reasons for putting up a business. Then, we will
delve into the thoughts of some prominent scholars
regarding the purpose of business.

Subjective Reasons for Putting Up a Business

Subjective reasons refer to reasons that motivate the

individual to put up a business. They are subjective because
these reasons vary from one businessperson to another.

1. The desire to make more income for oneself and his or her
family.
2. To become more independent.
3. To continue the legacy of your family.
4. To try a unique and novel idea.
5. The desire for competition.
6. A genuine desire to help people in your small community.
7. You like it and you are attracted to the prospect.

What is the Purpose of Business?

https://www.hufflingtonpost.com/isabel-rimanoczy-edd-
/what-is-the-purpose-of-bu_b_/100126.html.
The Objective Purpose of Business

In order to clarify our understanding of the objective

purpose of business we will explore the ideas of three
scholars:

a. Milton Friedman – American economist

b. Paul F. Camenisch- Professor of Religious Studies
c. Ronald Duska- American Professor, scholar in the field of
business ethics.

Milton Friedman: Profit as the Primary responsibility of

Business

 To increase profits.
 If you are an executive or manager of a firm,
remember that you are not the owner and that you are
hired for a purpose.
 “ Business must be played within the rules of the game”
 “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, engages in open and
free competition without deception or fraud.
 “Existing laws and moral codes of the society must be
consciously be considered by the business entity.
.

Not Business as Usual

https://documentary.com/not-business-as-usual/
Paul F. Camenisch: The primacy of Business’ Social Function

 The essential element of business- that it exists to

respond to the societal needs for life-sustenance and
life-enhancement.
 Camenisch speculated that “with the passage of time
developments such as cooperative efforts, barter, and
monetary exchange modified this simple and idyllic
situation.
 There are two essential elements for any proper
definition of business: “the provision of goods and
services, and the fact that this is done with the intention
of making profit.”

Ronald f. Duska: The Motive is Not the Purpose

 The main contributions of Duska in the debate

regarding the purpose of business is his argument on
the distinction between purpose and motive.
 The purpose is not necessarily the motive and vice
versa. He said “ My motive for doing an action is not
necessarily the same as the purpose of the action”
 He believed that the primary purpose of business is
neither personal benefit nor the accumulation of profit.
The purpose of business is to respond to the society‟s
needs for goods and services..

The 1987 Philippine Constitution

“ The goals of the national economy are a more

equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and
services produce by the nation for the benefit of the
 people; and an expanding productivity as the key to
raising the quality of life for all, especially the
underprivileged.”

The Corporation Code of the Philippines

“… to establish a new concept of business corporations so

that they are not merely entities established for private gain
but effective partners of the National Government in
spreading the benefits of capitalism for the social; and
economic development of the nation.”

Founders of big and successful businesses do not fail to see

as well the narrowness of a solely profit-driven business.

Henry Ford (July 30, 1863 – April 7, 1947) was

American industrialist and business magnate,
founder of the Ford Motor Company, and chief
developer of the assembly line technique
of mass production. By creating the first
automobile thamiddle-class Americans could
afford, he converted the automobile from
an expensive curiosity into an accessible
conveyance that profoundly impacted the landscape of
the
20th century, considering him to be a revolutionary in the
sector.

https://en.wikipedia.org/wiki/Henry_Ford
  For Motor Company has its share of ethically
questionable decisions and practices such as the
famous Ford Pinto case in 1970s.

Masaru Ibuka, Japanese businesman

and co-founder of Sony Corporation. In
1946, a fellow wartime researcher, Akio
Morita, saw a newspaper article about
Ibuka's new venture and after some
correspondence, chose to join him in
Tokyo.
With funding from Morita's father, they
co-founded Tokyo Telecommunications Engineering
Corporation, which became known as Sony Corporation in
1958. Ibuka was instrumental in securing the licensing
of transistor technology from Bell Labs to Sony in the 1950s,
thus making Sony one of the first companies to apply
transistor technology to non-military uses.He also led the
research and development team that developed
Sony's Trinitron color television in 1967.Ibuka served as
president of Sony from 1950 to 1971, and then served as
chairman of Sony from 1971 until he retired in 1976.

 He was instrumental for the conceptualization of Sony‟s

Code.

https://en.wikipedia.org/wiki/Masaru_Ibuka

Resources:

1. Business Ethics and Social Responsibility, Franz Giuseppe F Cortez, PhD ( Vibal )
2. Not Business As Usual
https://documentary.com/not-business-as-usual/

3. https://en.wikipedia.org/wiki/Henry_Ford
4. https://en.wikipedia.org/wiki/Masaru_Ibuka

5. The Purpose of a Business ( Alan Weiss )

http://www.contrarianconsulting.com/the-purpose-of-a-business/.

6. Reflections on Business‟s No. 1 Purpose ( Ken Makovsky )

https://www/forbes.com/sites/kenmakovsky/2013/08/15/reflections-on-business-
no-1-purpose/#720a8ed0327d.

7. The Origin of the World‟s Dumbest Idea: Milton Friedman ( Steve Denning )
https://www.forbes.com/sites/stevedenning/2013/06/26/the-origin-of-the-worlds-
dumbest-idea-milton-friedman/

8. What is the Purpose of Business?

https://www.hufflingtonpost.com/isabel-rimanoczy-edd-/what-is-the-purpose-of-
bu_b_/100126.html.

9. Reasons to Start a Business

https://www.youtube.com/watch?v=UA8gHtNGwgQ