2. What is a business?
• A business, also known as an enterprise or a firm, is an
organization involved in the trade of goods, services, or both to
consumers. Businesses are prevalent in capitalist economies,
where most of them are privately owned and provide goods and
services to customers in exchange for other goods, services, or
money.
• Businesses may also be not-for-profit or state-owned. A business
owned by multiple individuals may be referred to as a company.
3. Characteristics of Business
• 1. Economic activity
• 2. Buying and Selling
• 3. Continuous process
• 4. Profit Motive
• 5. Risk and Uncertainties
• 6. Creative and Dynamic
• 7. Customer satisfaction
• 8. Social Activity
• 9. Government control
4. Economic activity:
•Business is an economic activity of production and
distribution of goods and services. It provides
employment opportunities in different sectors like
banking, insurance, transport, industries, trade etc.
•It provides a source of income to the society. Business
results into generation of employment opportunities
thereby leading to growth of the economy. It brings
about industrial and economic development of the
country.
5. Buying and Selling
•The basic activity of any business is trading.The business
involves buying of raw material, plants and machinery,
stationary, property etc. On the other hand, it sells the
finished products to the consumers, wholesaler, retailer
etc.
6. Continuous process
•Business is not a single time activity. It is a
continuous process of production and distribution
of goods and services.
• A single transaction of trade cannot be termed as a
business. A business should be conducted regularly
in order to grow and gain regular returns.
7. Profit Motive
• Profit is an indicator of success and failure of business. It is the
difference between income and expenses of the business.
• The primary goal of a business is usually to obtain the highest
possible level of profit through the production and sale of goods
and services. It is a return on investment. Profit acts as a driving
force behind all business activities.
• Profit is required for survival, growth and expansion of the business.
It is clear that every business operates to earn profit.
• Business has many goals but profit making is the primary goal of
every business. It is required to create economic growth
8. Risk and Uncertainties
• Risk is defined as the effect of uncertainty arising on the objectives of the
business. Risk is associated with every business. Business is exposed to two types
of risk, Insurable and Non-insurable. Insurable risk is predictable
Predictable factors are controllable
to some extent, such as:
a)Taxes
b) Change in the volume of expected
sales
c) Cost of supplies and equipment
d) Salaries
e) Cost of goods and services offered
Unpredictable factors include:
a) Changes in trends and tastes of
customers.
b) Impact of the local economy on
customer base.
c) Any unexpected action taken
by your competitors
9. Creative and Dynamic
•Modern business is creative and dynamic in nature.
Business firm has to come out with creative ideas,
approaches and concepts for production and distribution
of goods and services. It means to bring things in fresh,
new and inventive way.
•One has to be innovative because the business operates
under constantly changing economic, social and
technological environment.
•Business should also come out with new products to
satisfy the growing needs of the consumers.
10. Customer satisfaction
•The phase of business has changed from traditional
concept to modern concept. Nowadays, business adopts
a consumer-oriented approach.
•Customer satisfaction is the ultimate aim of all economic
activities. Modern business believes in satisfying the
customers by providing quality product at a reasonable
price
11. Social Activity
•Business is a socio-economic activity. Both business
and society are interdependent. Modern business
runs in the area of social responsibility.
•Business has some responsibility towards the
society and in turn it needs the support of various
social groups like investors, employees, customers,
creditors etc.
12. Government control
•Business organisations are subject to government control.
They have to follow certain rules and regulations set by the
government.
•Government ensures that the business is conducted for
social good by keeping effective supervision and control by
setting and amending laws and rules from time to time.
13. Functions of different
departments of business
• Every organisation is made up of different department. Each
department contributes to the running of the business.The most
common departments are:
• •Production
• •Marketing & Sales
• •Finance
• •Human resource
14. Production Department
•The production department is responsible for converting
inputs into outputs through the stages of production
processes.
•The Production Manager is responsible for making sure that
raw materials are provided and made into finished goods
effectively.
•He or she must make sure that work is carried out smoothly,
and must supervise procedures for making work more
efficient and more enjoyable.
15. • •Production and planning.
• They will set the standards and targets at each stage of the production
process.The quantity and quality of products coming off a production
line will be closely monitored.
• •Purchasing department
• This department will provide the materials, components and equipment
required. An essential part of this responsibility is to ensure that stocks
arrive on time and are of good quality
• •The stores department
• The stores departments are responsible for stocking all the necessary
tools, raw materials and equipment required to service the
manufacturing process.
16. •• The design and technical support department
•They are responsible for the design and testing of new
product processes and product types.
•• The works department
•This department is concerned with the manufacture of
products.This will include the maintenance of the
production line and other necessary repairs.The works
department may also have responsibility for quality
control and inspection.
17. Human resource Department
• The role of Human resource department is in charge of recruiting, training,
and the dismissal of employees in an organisation.
• •Recruitment and selection
• Sets the hiring process of employees in an organisation
• •Training programmes
• Training programs are held by the HRD to improve the employee’s skills, as
well as to motivate them.
• There are three main types of training :
• 1. Induction training
• 2. On-the- job training
• 3. Off-the-job training
18. • •Manpower Planning
• The HR department needs to think ahead and establish the number
and skills of the workforce required by the business in the future.
Failure to do this could lead to too few or too many staff or staff
with inappropriate needs.
• •Dismissal and Redundancy (retrenchment)
• Dismissal is where a worker is told to leave their job due to
unsatisfactory work or behaviour.
• Redundancy is when the business needs to reduce the number of
employees either because it is closing down a branch or needs to
reduce costs due to falling profits. It may also be due to
technological improvements, and the workers are no longer needed
19. Marketing department
• These are the main sections of the market departments:
• •Sales department is responsible for the sales and distribution of
the products to the different regions.
• •Research department is responsible for market research and
testing new products to make sure that they are suitable to be
sold.
• •Promotion department decides on the type of promotion
method for the products, arranges advertisements and the
advertising media used.
• •Distribution department transports the products to the market.
20. Finance Department
• • Bookkeeping procedures
• Keeping records of the purchases and sales made by a business as well as capital
spending
• • Preparing Final Accounts
• Profit and loss account and Balance Sheets
• • Providing management information
• Managers require ongoing financial information to enable them to make better
decisions.
• • Management of wages
• The wages section of the finance department will be responsible for calculating the
wages and salaries of employees and organising the collection of income tax
• • Raising Finance
• The finance department will also be responsible for the technical details of how a
business raises finance e.g. through loans, and the repayment of interest on that
finance. In addition it will supervise the payment of dividends to shareholders.
21. Basic forms of ownership
•Forms of business ownership vary, but several
common forms exist:
•Sole proprietorship/sole trader
•Partnership:
•Corporation:
•Cooperative
