Business Activity
Business Activity and Classification
- Business activity comprises actions undertaken by organisations for the production, sale or distribution of goods or services.
- Primary sector: Involves acquiring raw materials. For example, farming, mining, fishing.
- Secondary sector: Involves manufacturing or construction. Here raw materials are converted into finished goods or products.
- Tertiary sector: Involves providing services to other people and businesses. Examples include banking, retailing, education.
The Business Enterprise and Objectives
- A business enterprise is an organisation which is involved in commercial, industrial or professional activities.
- Understanding business objectives is key, as they dictate the direction and scope of the organisation.
- Common business objectives include: Profit maximisation, business expansion or growth, survival, social objectives, shareholder value, customer satisfaction.
Business Environment
- The business environment includes all factors, internal and external, that influence how a business operates.
- Internal environment is comprised of factors within the organisation that can be controlled. For instance, personnel, company policy, capital assets are some examples.
- External environment holds factors external to the business which cannot be controlled. It includes aspects like political factors, legal issues, economic factors, socio-cultural forces, technology, competition.
- An enterprise should be adaptable to changing environmental factors to secure its long-term survival and growth.
Business Structure and Organisation
- Understanding business structure is essential as it provides a blueprint of how different components and levels within a business interact and operate.
- Key types of business structures include: Sole traders (run by single individual), Partnerships (business owned by two or more people), Private Limited Companies (owned by shareholders and run by directors, shares not available to public), Public Limited Companies (similar to private limited companies, but shares are available to the public).
- Operational function, human resources function, marketing function and finance function are the four key components of organisational structure.
Business Planning and Growth
- Strategic planning includes setting objectives, analysing the business environment and developing a roadmap for achieving the goals.
- Business growth can be organic (through increasing output, enhancing sales, opening new branches) or inorganic (through mergers, acquisitions or takeovers).
- Understanding business cycle is crucial as it affects overall economic environment which in turn influences business growth and profitability.
- Bundling and branding, improving product quality, entering new markets, price adjustment are several strategies for growth.
Role of Business in Society
- Businesses play a critical role in society from creating jobs, paying taxes, innovating, contributing to economic growth and general welfare.
- Business enterprises are expected to follow ethical codes and corporate social responsibility.
- Corporate Social Responsibility involves businesses making decisions that are ethical beyond the scope of law, protecting the interest of both stakeholders and general public. It embraces eco-friendly practices, contribution to community development, ensuring fair practices and respect for workers' rights.