What is a Business?
The term “business” describes the activities of individuals, institutions or organizations to promote and distribute goods and services satisfying human wants in society at large.
Table of Contents
The business also refers to the activity of providing goods or services to customers in exchange for money or other valuable considerations. It involves various economic transactions, such as production, distribution, and consumption, with the aim of generating profit and creating value. Businesses can take various forms, including sole proprietorships, partnerships, corporations, and other legal entities.
The primary goal of a business is to meet the needs and wants of customers by offering products or services that they find valuable. To achieve this, businesses engage in various activities, such as identifying market opportunities, developing products or services, marketing and promoting them, and ultimately selling them to customers.
Businesses also need to manage their internal operations efficiently, including aspects such as finance, human resources, operations, and strategy. They must make decisions regarding pricing, supply chain management, hiring and training employees, financial planning, and more.
Successful businesses strive to create value for their customers, shareholders, employees, and society at large. They aim to achieve profitability, sustainability, and growth by understanding market dynamics, identifying competitive advantages, and adapting to changing environments. Good business practices also involve ethical considerations, such as responsible corporate behavior, social responsibility, and environmental sustainability.
Overall, business encompasses a wide range of activities aimed at creating, delivering, and capturing value in the marketplace. It plays a vital role in economic development, job creation, innovation, and the overall functioning of societies.
Objectives of business
The objectives of a business can vary depending on its nature, industry, and specific circumstances. However, there are several common objectives that many businesses strive to achieve. Here are some of the main objectives of a typical business:
1. Profitability: One of the primary objectives of most businesses is to generate profits and ensure financial sustainability. Profitability allows a business to invest in growth, reward stakeholders, and provide a return on investment for owners or shareholders.
2. Growth and Expansion: Many businesses aim to expand their operations, increase their market share, and grow their customer base. This can be achieved through strategies such as entering new markets, developing new products or services, or acquiring other businesses.
3. Customer Satisfaction: Businesses often strive to deliver high-quality products or services that meet or exceed customer expectations. Satisfied customers are more likely to become loyal and repeat customers, which can lead to increased sales and positive word-of-mouth referrals.
4. Innovation and Adaptation: In today’s dynamic business environment, staying competitive often requires businesses to innovate and adapt to changes. Objectives related to innovation can include developing new technologies, improving processes, or introducing innovative products or services to meet evolving customer needs.
5. Employee Engagement and Development: Businesses recognize the importance of a motivated and skilled workforce. Objectives related to employees can involve creating a positive work environment, providing opportunities for growth and development, and fostering a culture that values and engages employees.
6. Social Responsibility: Many businesses aim to have a positive impact on society and the environment. Objectives related to social responsibility can include implementing sustainable practices, supporting community initiatives, and ensuring ethical business conduct.
7. Financial Stability and Risk Management: Businesses strive to maintain financial stability by managing risks effectively. Objectives related to financial stability may involve controlling costs, managing cash flow, diversifying revenue streams, and implementing risk management strategies.
8. Producing goods and services that satisfy customers’ needs and desires.
8. Creating employment opportunities.
10. Maintaining and improving the standard of living of people in the society for better health and well being.
11. Providing social amenities.
Classification of business according to the activities they engage in are as follows.
- Basic extractive production such as farming, forestry, mining, fishing etc.
- Processing or secondary production such as construction, manufacturing, printing, oil refinery etc.
- Distribution (Commercial industry) such as retail and wholesale trading, transportation, warehousing, advertising etc.
- Services-local state federal government services professional services such as law, surveying, medicine, insurance, real estate, finance, publicity, personal services.
Businesses can also be classified into various categories based on the activities they engage in. Here are some common classifications:
1. Manufacturing Business: These businesses engage in the production and manufacturing of goods. They may involve processes such as assembling, processing raw materials, and creating finished products.
2. Retail Business: Retail businesses are involved in the sale of goods directly to consumers. They operate through physical stores, online platforms, or a combination of both. Retailers may offer a wide range of products or specialize in a specific industry.
3. Service Business: Service-oriented businesses provide intangible services rather than physical products. Examples include consulting firms, healthcare providers, law firms, salons, and repair services.
4. Wholesale Business: Wholesale businesses act as intermediaries between manufacturers or producers and retailers. They buy goods in large quantities from manufacturers and sell them in smaller quantities to retailers or other businesses.
5. E-commerce Business: E-commerce businesses operate primarily online, selling products or services through electronic platforms. They may have their own websites or use third-party online marketplaces.
6. Financial Business: Financial institutions and businesses provide financial services such as banking, insurance, investment management, and accounting. These businesses deal with money, investments, and financial transactions.
7. Hospitality and Tourism Business: This category includes businesses involved in accommodation, restaurants, travel agencies, tour operators, and other services related to the hospitality and tourism industry.
8. Real Estate Business: Real estate businesses deal with buying, selling, and renting properties, both residential and commercial. This sector also includes property development and property management companies.
9. Agriculture and Farming Business: These businesses engage in farming, cultivation, and the production of agricultural products, including crops, livestock, and fisheries.
10. Transportation and Logistics Business: Companies in this sector provide transportation services, such as shipping, logistics, freight forwarding, and courier services.
11. Technology and Software Business: Technology-based businesses develop, sell, or provide software, hardware, IT services, telecommunications, and other technology-related products and services.
12. Construction and Engineering Business: These businesses are involved in the construction of buildings, infrastructure projects, engineering services, architectural design, and project management.
Please note that these classifications are not mutually exclusive, and many businesses can fall into multiple categories depending on their range of activities.
TYPES OF BUSINESS ORGANISATION
The following are the major types of business units.
(i) The sole trader.
(ii) The partnership.
(iii) The limited liability companies-private and public.
(iv) The statutory corporations.
(v) The cooperative societies
(vi) The trade association chambers of commerce, employers and manufacturers Associations.
(vii) The civil services and local authorities.