The goals of the firm

Published on February 27, 2022   7 min

Other Talks in the Series: Key Concepts: Introduction to Strategy

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Hello and welcome to this series of introductory talks on business strategy. My name is Robert Grant, I'm a professor of strategic management at Bocconi University in Milan, Italy. I'm also the author of Contemporary Strategy Analysis, a leading strategic management textbook used in business programs throughout the world.
Let us begin by returning to the basic strategy framework that I introduced at the first talk. Here, we viewed strategy as the interface between the firm and its industry environment. Focusing on the left hand rectangle, the firm at the foundation of strategy are the goals of the firm. In this talk, we consider these goals the appropriate goals for a business enterprise, a topic that has stimulated a great deal of debate in recent years. My own goal for this talk is for you to appreciate the main issues in the debate over firms' goals.
What is business for? It would appear that every firm has a distinctive purpose, these purposes tend to reflect the personal ambitions of the people who founded the business. Henry Ford was explicit in what he wanted for his company, "I will build a motor car for the great multitude, it will be so low in price that no man making good wages will be unable to own one". Similarly, with Steve Jobs in founding Apple, he declared that Apple's purpose was to make tools for the mind that advance humankind. Today, the purposes that the firm chooses often express its mission statement. For Twitter, this is to give everyone the power to create and share ideas and information instantly, without barriers. For Nike, it is to bring inspiration and innovation to every athlete in the world, but it adds that if you have a body, you are an athlete. For Lego Group, it's to inspire and develop the builders of tomorrow. So, these are distinctive purposes, but are their goals that are common to all firms?