MEANING OF BUSINESS
Business can be defined as the sum total of all economic activities which people engage in to create, procure or provide desired goods and services to the consumers in proper quantities at suitable times and at satisfactory prices in order to make profit. It can also be defined as any activity that people engage in directly or indirectly in order to make profit. It can be owned privately or by the government. e.g. Okoli Transport Limited, Safeway Pharmacy, etc.
Business resources are the inputs which are required for effective and efficient running of a business concern. The resources must be organised by the manager to achieve the set objectives of an organisation. These are human, finance, materials, time and opportunities.
- Human Resources: This is the most important resources because it plans, controls, organises and co-ordinates all other resources to achieve maximum efficiency. Human resources refer to the personnel required to run the business to achieve the organisation’s objectives. They may be skilled or unskilled labour.
- Money Resources: Financial resources include the money to float a business and to purchase other resources. Money as a resource is important because it is used to finance all aspects of a business such as purchase of machinery, materials and payment of labour. Finance can be obtained through borrowing, selling shares, debentures and retained profit.
- Material Resources: Material resources include input-raw and semi-finished raw materials, equipment, tools, plant and machinery which are needed for production. For a business to operate efficiently, the quality and quantity of the material resources must be taken into consideration.
- Opportunities / Goodwill: These include facilities within the environment which the business uses. They include water, roads, electricity and telephone services. The name and reputation of a business which is referred to as goodwill is also good for business operation.
Objectives of Business
- To derive maximum profit.
- To provide goods and services that will meet the needs of the consumers.
- To provide job opportunities for the people.
- To help solve some of the country’s social problems, e.g. environmental pollution etc.
- To provide quality and cheap goods to the consumers.
- To protect the interest of workers.
Management is the process of setting organisational goals, deciding what actions and resources must contribute to meeting goals and then co-ordinating, guiding and encouraging the co-operative work of other people to meet the goals. In a summary, it is the process of coordinating all resources through the process of planning, organising, leading and controlling in order to attain stated objectives.
According to Peter Drucker, “management is a task, management is a discipline. But management is also people.” We can also define management as the process of using authority to organise, direct and control subordinates in order to achieve the objectives of the business.
Functions of Management
The following are the basic functions of management:
1) Planning: This is the function which involves setting goals and devising specific activities, procedures and schedules for meeting the goals or objectives. It is a process which entails formulating targets or objectives for an organisation and outlining the strategies or means of achieving these objectives.
Benefits of Planning
- Planning enables an organisation to set up goals and targets.
- It helps to accomplish the set goals and objectives.
- Planning helps in setting up policies, procedures and schedules for meeting the goals.
- Planning leads to acceptable decisions.
- It helps in forecasting the activities of an organisation over a period of time.
2) Controlling: Controlling involves setting standards, measuring progress with the set standard and taking corrective action to minimise or avoid errors, thus achieving the objectives. It helps in reducing wastage by taking corrective measures. Actual performance will be compared with the set standards and where there is deviation, corrective measures will be taken.
Elements of Controlling
- Setting of standards.
- Measuring progress with standard.
- Interpretation of results.
- Taking corrective actions.
3) Organising: This is another function which involves the bringing together or arranging whatever resources that are available, e.g. people, time, money, equipment to achieve the objectives of an organisation. Organising involves the division of work into different sections, allocating responsibilities and authority to all components of the organisation in order to achieve the objectives.
4) Motivating: This is the process which deals with the various ways by which an organisation’s leader can channel the inner-force in the people towards behaving in the ways that will coincide with the corporate goals. This involves the ways the leaders get the subordinates to willingly carry out their responsibilities to the business, by inspiring them through monetary and non-monetary welfare packages.
5) Staffing: This is the process of organising human resources in such a way that the organisation has the right people in the right place or position at the right time to achieve the objectives. It involves the provision of qualified, skilled and efficient personnel to manage the affairs of the organisation.
6) Directing: This involves getting people to carry out the decisions quickly, efficiently and with minimum fuss. Directing entails using leadership, motivation and other skills to ensure that people in the organisation know what their work is and have it.
7) Communication: This is the transfer of information and ideas with feedback between people. It is the process by which people attempt to share meaning via transmission of symbolic messages. Planning, organising and leading require managers to communicate with subordinates so that group goals can be achieved.
Business environment consists of a number of activities that affect the operations of a business. The environment of business is full of complexities and intricacies; in fact, it is highly dynamic. For a business to survive, it must monitor what is going on in the environment. The business environment can be classified as follows:
- Technological Environment: Technological development makes previous materials to become outdated or obsolete. A business must be concerned about the technical know-how as technological development will lead to increase in the quality and quantity of goods to be produced, e.g. computers. Technological environment includes provision for training in research institutions.
- Political Environment: The policies of the political party in power would affect the operation of business. Government policies will determine business practices and investment climates in a country, e.g. military regime in Nigeria during which the political situation was not conducive for investments. Business concerns were badly affected during this period.
- Financial Environment: The effect of the present economic crisis is reflected in the financial position of many business organisations. Businesses are suffering from a deficiency of liquid financial resources. The inability to obtain, raise shares and debentures affects the performance of business.
- Economic Environment: A country’s economic system will determine the nature of business, e.g. in a socialist economy, there is much state intervention while under capitalism, market forces prevail. The interfaces between a business and its economic environment also include income distribution, expenditure pattern and the saving capacity of the people. All these will affect the performance of the business. The state of the economy also affects business operation, e.g. period of boom or recession will affect a business positively or negatively as the case may be.
- Infrastructural Environment: The availability of social amenities like road, telephone, railway, airports and seaports will affect the operation of a business. The facilities within the environment of a business play crucial role in the survival of an organisation.
- Cultural Environment: A business organisation must take into consideration the beliefs, attitudes, needs, values and lifestyles of the people. The socio-cultural attitudes of the people will undoubtedly affect their consumption pattern, e.g. Sharia states which do not allow alcohol consumption or sale.
- Legal Environment: A great deal of government legislations, laws, acts and decrees, e.g. Company Act, Partnership Act, Employment Act etc will affect the conduct of a business. To avoid any legal action, the business must abide by the various legislations in its operation.
- Demographical Environment: This takes into consideration the composition of the population, i.e ., size and structures and how it will affect the performance of a business. The total population distribution and structure will determine the quantity and types of goods to be produced, e.g. Nigeria with her large population of about 140 million will have a very large market.
- Natural Condition and Ecological Environment: These include the climatic and ecological changes in an environment. The changes will include drought, erosion, pollution, flood and the water resources which will definitely affect the operation and performance of a business.
The creation of departments and divisions is known as departmentalisation. Different patterns of departmentalisation are possible and the pattern selected will depend on the peculiar circumstances of the organisation. Nevertheless, any organisation may be divided into different departments according to numbers, shifts, functions and geographical location.
Departmentalisation is also the grouping into departments of work activities that are similar and logically connected.
Functions of each Department
a) Personnel Department: This is concerned with the general administration of the whole organisation. The Personnel Manager is the head of this department. The main functions are:
- Human resources planning.
- Recruitment, interviewing and selection.
- Industrial training and development.
- Staff discipline.
- Welfare, safety and health of workers.
- Maintaining good industrial and labour relations.
- Trade union matters.
- Demotion and dismissal.
b) Finance Department: This is concerned with the financial aspect of the organisation. There are various divisions like accounting, costing and auditing within this department. The main functions of the Finance Department are:
The main functions of the Finance Department are:
- To control expenditure.
- To take account of revenue.
- To keep proper books of account.
- To calculate personnel emoluments, wages and salaries.
- Cash control.
- To ensure that profit justifies investments.
- To ensure that resources are managed adequately.
c) Production Department: This department produces goods under the direction of the production manager who is the head of the department. The functions of this department are:
- Cost control.
- To produce goods of right quality.
- To produce goods of actual quantity.
- To research and develop new products.
- To design products.
- Production of goods at the right time.
d) Marketing Department: This is concerned with the marketing, sales and distribution of goods produced. Its key functions are:
- To advertise.
- To sell goods.
- To make market research.
- Distribution of goods.
- Consumers’ orientation.
e) Purchasing Department: The purchasing department makes arrangement for purchase of all items required by the business. They perform functions such as:
- Purchase of raw materials.
- Purchase of assets.
- Storage and control of stock.
- Warehousing of goods.
- Maintaining accurate record of sources of materials.
SOCIAL RESPONSIBILITIES OF A BUSINESS
A business enterprise is not profit oriented alone; it is also set up to contribute to the welfare of the people in its environment. The social responsibilities of the business to the society are classified as follows:
a) Responsibilities to the Community
- Provision of Quality Goods and Services: The business will provide quality goods and services at affordable prices.
- Developmental Programmes: Businesses do provide funds to carry out developmental programmes in the rural areas or community where they are located.
- Employment of Community Members: Members of the community are provided with job opportunities in the business operating in their area.
- Controlling Pollution: A business has a responsibility to control environmental pollution, e.g. water, land, sound and air pollution resulting from their operations.
- Provision of Social Amenities: A business provides social amenities like water, good roads, electricity etc to the community.
- Support for Sports and Games: They give support to games and sports through sponsorship.
- Award of Scholarships: Some companies do award scholarships to students from the business community.
b) Responsibilities to the Government
- Payment of Taxes: It is the responsibility of a business to pay tax as at and when due.
- Complying with Rules and Regulations: Business organisations must comply with the rules and regulations governing their operations.
- Employment of Citizens: They normally offer employment opportunities to the citizens.
- Acceptance of Government Role in Business Affairs: Business organisations must as a matter of necessity accept the role of government in business affairs of the country.
c) Responsibilities to the Consumers
- Truth in Advertising: Business organisations usually avoid fake and misleading advertising.
- Provision of Quality Products: Products sold to the consumers must be of good quality and should be provided at affordable prices.
- Provision of After Sales Services: After sales services like maintenance, transportation and installation are rendered to customers in some cases.
- Provision of Pre-sales Services: They can provide services like credit facilities or storage facilities to store the products.
- Educating the Customers: Customers are educated on the use to which the products are put.
- Prevention of Product Defects: They ensure that defective products are not sold to the public.
- Attending to Customers’ Complaint: Business organisations must listen to and act on the complaints of the customers.
d) Responsibilities to the Shareholders
- Distribution of Dividends: It is the responsibility of the business organisation to pay dividends to the shareholders.
- Ensure Business Profitability: There must be effective and efficient performance of the business operations for profitability.
- Annual General Meeting: The business ought to organise the holding of Annual General Meetings.
- Preparation of Statement of Accounts: The statement of accounts must be released to show the operations of the business.
e) Responsibilities to the Employees
- Recruitment and Promotion: There must be non-discriminatory recruitment and promotion policies.
- Payment of Remuneration: The business has the responsibility of paying wages and salaries on time.
- Provision of Conducive Working Environment: They are to provide reasonably safe place for work.
- Job Satisfaction: They must ensure job satisfaction.
- Welfare Package: They have the responsibility to take good care of welfare matters.
- Training Facilities: They should organise training programmes for their employees or send them to seminars etc.
f) Environmental Responsibilities
- Reduction of Pollution: They must reduce the rate of pollution in the environment.
- Waste Treatment: They have to treat their waste before disposal to make them harmless.
- Proper Disposal of Waste: Waste are to be properly disposed to prevent outbreak of diseases.