THE BUSINESS AND ORGANIZATION
Attributes of the term ‘Business’
Business has been defined as an organization of the people with varied skills, which uses property or talents, to produce goods or services, which can be sold to others for more than their costs. Or it may be considered as the system through which economic activity is organized and directed by those who seek to make a profit. Business includes lawful activity carried on continuously, which involves buying and selling, or manufacturing, or financing, or the rendering of a service for money.
Business should be defined in three dimensions:
1. Who is being satisfied?
2. What is being satisfied?
3. How customer needs are being satisfied?
Stake holders in Business
Stake holders are the individuals and groups who can affect by the strategic outcomes achieved and who have enforceable claims on a firm’s performance. Stake holders can support the effective strategic management of an organization. It can be divided into: 1. Internal Stakeholders which could include shareholders, employees, managers and directors 2. External Stakeholders which could include customers, suppliers, government, banks/creditors, trade unions and mass media
Stake holder’s Analysis:
• Identify the stake holders.
• Identify the stake holders expectations interests and concerns • Identify the claims stakeholders are likely to make on the organization • Identify the stakeholders who are most important from the organizations perspective. • Identify the strategic challenges involved in managing the stakeholder relationship. What are the different forms of business organizations?
1. Sole Proprietorship- a business which is owned and/or managed by one person. Advantages:
← Easy to set up
← All profits go to owner
← Owner has total control
← Few regulations to follow
← Limited expertise
← Hard to raise money
← Owner has all the risks
← Hard to attract talented employees
2. Partnership- two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing profits among themselves. Advantages:
← Easy to start
← Skills and talents are pooled
← More money available
← Conflicts between partners
← Profits must be shared
← Owners share all risks
3. Corporation- is a juridical personality created by the operation of the law having the right to sue and be sued. Advantages:
← Easier to raise money
← Easy to expand
← Easy to transfer ownership
← Losses limited to investment
← Costs more to start up
← Complex to organize
← More regulations
← Higher taxes
What are the different types of business?
1. Service Business- provides services for a fee. Examples are salon, internet café, schools, etc. 2. Merchandising- buys and sells goods without changing the original form. Examples are department store, boutique, bookstore, etc. 3. Manufacturing- turns raw materials into finished products. Examples are factories making canned goods, factory making shoes, etc.
Reasons for entering into business
There are several reasons why people venture into business including: 1. Social approval. It gives businessman a high social standing in the community. 2. Profit. This is the reward for venturing into business. 3. Service. Some businessmen are not only after profit but service to the community and employees. 4. Personal satisfaction. It is a way of life and a pattern of existence as well. 5. Livelihood. People venture into business to earn a living. 6. Power. The expectation of rising up to positions, power and prestige. 7. Protection. Business provides financial security.
Attributes of the term ‘Organization’
An organization in the broad sense is a collection of persons working...