2 Traditionally, the only objective of a business was to make a profit. However, some writ

Question

2 Traditionally, the only objective of a business was to make a profit. However, some writers have suggested that this idea is simplistic and that profitability is only one objective amongst many.

Required:

State and explain Drucker’s eight classifications of objectives.

(15 marks)

Answer 1

正确答案：
2 For the complex, modern business, the view that the single objective of business is to make a profit is regarded by many writers as simplistic. Peter Drucker has argued that for a business to be successful, it must address a number of objectives.
Drucker was one of the first writers to identify the dangers of the single objective of profit maximisation. Concentrating on a single objective (invariably profit) is not only unproductive but potentially harmful to the organisation and can endanger the survival of the business and seriously undermine its future. He argues that business organisations have in fact eight objectives, all of which must be addressed concurrently. These eight objectives are particularly relevant to management, bringing together as they do the need to address all the issues with which the organisation is concerned.
Market standing is the need to identify and maintain market share and to ensure the development of new products to maintain share. Without market standing, no organisation can succeed.
Innovation is the need to develop and find new products and processes; no business can survive on providing the same product or service over the long term. Innovation is fundamental to understanding growth; organisations grow by developing innovative differences to their competitors.
Productivity and ‘contributed value’ recognises the need for efficiency and the efficient use of business resources.
Physical and financial resources is a recognition of the need to use the correct and appropriate financial resources.
Profitability. The word ‘profit’ does not appear, but ‘profitability’. Here there are three important determinants, profitability as a measure of effectiveness (many businesses make a profit which in fact is a poor return on the effort produced), the need for profit so that the business can be self-financing and the need to attract new capital.
Manager performance and development is the explicit recognition that the business requires objectives and that management activity can be linked directly to those objectives.
Worker performance and attitude is recognition that it is vital to measure the performance of the workforce by such means as labour turnover. However, worker attitude is more difficult to measure, but should be attempted.
Public responsibility has become an issue in the twenty-first century. Any business needs to be aware that it is a part of the community within which it operates and is therefore part of a wider social system.