Drucker on “What is business”

I am currently reading “Principles of Management” by Peter Drucker. This is, in brief, what I understood in chapter 5:

1. Business is not created by economic forces. They do set limits and create opportunities but they do not define a business. Business is created and managed by people.

2. Profit is not the ultimate purpose of business. It is the result and test of performance of the business.

3. Profit has also another important function: Generate economic activity for future expansion.

4. The main purpose of business is to create a customer. To produce goods and services of economic value.

5. Any business enterprise has only two basic functions: marketing and innovation.

6. Marketing is “It is our job to produce what the market needs”. Cyrus McCormik invented the basic tools of modern marketing: “market research, market analysis, the concept of market standing, modern pricing policies, the modern service-salesman, parts and services supply to the customers and installment credits”.

7. Innovation means the provision of better and more economic goods and services. Innovation can be in form of technology, pricing, design, product, marketing technique, service to customer, organization or management methods.

8. Business also have a function of utilizing the resources productively. This is administrative function of the business.

9. There are five factors determining the productivity – Time, “product-mix”, “process-mix”, organization structure and balance of activities.

In current perspective, I think multi-tasking is also one of the determinants of productivity. It seems our brain is not wired to perform multiple tasks at a time and hence we loose lot of productivity in switching between the tasks (browsing, checking mails, calls and 10 different assignments)

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