Businesses organization (Introduction, Goals ,Nature Objectives & Classification of business activities)

Introduction

Business denotes busi-ness, that is, the state of being busy—in any activity in which one keeps himself busy. Business is the sum of total activities that are connected with the production, purchase, and sale of goods and services with the main objective of earning profit.

Business is an economic activity in which individuals or organizations engage in the production, exchange, or provision of goods and services to satisfy the needs and wants of consumers. It involves various activities such as manufacturing, trading, finance, marketing, and management.

In a business, the primary objective is to generate profit by offering products or services that customers are willing to pay for. Businesses typically aim to maximize their revenue while minimizing costs to achieve profitability. They may operate in different forms, including sole proprietorships, partnerships, corporations, or cooperatives.

Businesses also play a significant role in the economy, as they contribute to job creation, economic growth, and the overall development of a country. They can have a local, national, or global scope, and their size can range from small startups to large multinational corporations.

To succeed, businesses need to understand their target market, develop competitive strategies, manage resources effectively, maintain good customer relations, and adapt to changes in the business environment. They also need to comply with legal and ethical standards while ensuring sustainable practices.

Overall, business encompasses the activities involved in the production and exchange of goods and services, with the aim of generating profit and contributing to economic growth.

Business Goals

Business goals are the specific objectives that a company sets to guide its actions and efforts toward success and growth. These goals are essential for defining the direction and purpose of the business. Let’s explain each of the business goals you mentioned:

1. Making Profit: One of the primary goals of any business is to generate a profit. Profitability ensures that the revenue earned from selling goods or services exceeds the total expenses incurred in running the business. Profit allows the company to reinvest in the business, expand operations, and reward stakeholders.
2. Customer Services: Providing excellent customer service is crucial for any business. The goal is to meet and exceed customer expectations, ensuring customer satisfaction and loyalty. Satisfied customers are more likely to become repeat buyers and recommend the business to others.
3. Survival: Ensuring the survival of the business is a fundamental goal, especially in the early stages. It involves managing costs, maintaining cash flow, and adapting to changing market conditions to avoid failure and remain competitive.
4. Growth: Business growth is about expanding the company’s operations, market share, and profitability. Growth can be achieved through increasing sales, entering new markets, introducing new products, or acquiring other businesses.
5. Employee Welfare: Taking care of employees’ well-being is essential for a successful business. This goal includes providing fair wages, benefits, and a positive work environment to attract and retain talented employees.
6. Quality: Delivering high-quality products or services is critical to building a positive reputation and customer trust. The goal is to consistently meet or exceed quality standards to satisfy customers and maintain a competitive edge.
7. Innovate: Innovation is about finding new and better ways of doing things, developing new products, or improving existing ones. This goal keeps the business relevant and competitive in a rapidly changing market. Innovation normally means to change processes or creating more effective processes, products and ideas. Nowadays, business is ever-changing and dynamic. To keep up with the growing competition a businessman has to introduce efficient design, latest trends, upgraded machinery, new techniques, etc.
8. Resources: Efficiently managing resources, including financial, human, and material resources, is a vital goal. Proper resource management ensures optimal utilization and cost-effectiveness.
9. Society: Business is a division of society .Businesses have numerous obligations towards society. They should ensure employment opportunities are provided along with creating a sustainable environment.

Setting clear and achievable goals in these areas allows a business to create a roadmap for success, make informed decisions, and align the efforts of employees towards a common purpose. Regularly evaluating and adjusting these goals based on internal and external factors helps businesses stay agile and responsive to market dynamics.

Nature of Business

The nature of business encompasses various aspects that define the economic activity conducted by individuals or organizations. Let’s explain each of these aspects:

1. Economic Activity: Business involves economic activities that revolve around the production, distribution, and consumption of goods and services. It is a vital component of any economy, as it drives growth and contributes to overall prosperity.
2. Dealing in Goods and Services: Businesses engage in the buying and selling of goods and services. Goods refer to tangible products such as clothing, electronics, or vehicles, while services are intangible offerings like banking, healthcare, or consulting.
3. Production & Exchange of Goods & Services: Businesses are involved in the production of goods or the provision of services to meet the needs and demands of consumers. These products are then exchanged in the market for money or other goods.
4. Continuity & Regularity: Business activities are typically continuous and regular. Companies aim to operate over the long term, providing consistent products or services to customers. This continuity allows them to build customer trust and loyalty.
5. Profit Motive: The primary objective of most businesses is to make a profit. Profit motive drives entrepreneurs and companies to innovate, produce efficiently, and offer competitive prices to attract customers and maximize earnings.
6. Risk Element: Business involves an element of risk. Entrepreneurs and businesses invest capital and resources in the hope of making a profit, but there is always the possibility of financial losses due to various factors like market fluctuations, competition, or unforeseen events.

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Objectives of Business Organization

Business organizations have diverse objectives that encompass economic, social, human, national, and global dimensions. Let’s elaborate on each of these objectives:

1. Economic Objectives: Economic objectives are centered on financial performance and profitability. Business organizations aim to maximize profits, increase revenue, and achieve cost efficiency to ensure financial sustainability and growth.
2. Social Objectives: Social objectives focus on contributing positively to society and the well-being of communities. Businesses may engage in corporate social responsibility initiatives, support charitable causes, and adopt sustainable practices to make a positive impact on society.
3. Human Objectives: Human objectives pertain to the well-being and development of employees. Businesses aim to create a conducive work environment, provide opportunities for growth and skill development, and prioritize employee satisfaction and engagement.
4. National Objectives: National objectives are aligned with the interests and development of the country in which the business operates. This can include creating job opportunities, supporting economic growth, and adhering to national laws and regulations.
5. Global Objectives: Global objectives are relevant for businesses operating in international markets. Companies may aim to expand their presence globally, comply with international standards, and engage in sustainable practices that transcend borders.

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Classification of Business Activities

Business organizations can be classified based on their activities into two broad categories: Industry and Commerce.

Industry

Industry primarily refers to all such business activities concerned with production, raising, or processing of goods and services. It processes raw materials or semi-finished goods into finished goods. Extracting raw materials from earth’s surface, manufacturing goods and commodities, producing crops, fish, flowers, etc., constructing buildings, dams, roads etc. are all examples of industry.

These activities are called industrial activities, and the units engaged in these activities are known as industrial enterprises. However, in a broader sense, provision of services like banking, insurance, and transport also form part of industries known as tertiary industries.

Classification of Industries

Classification of industry based on nature of activity involved.

1. Primary Industries

Primary industries refer to the activities of extraction of natural resources like coal, oil, minerals etc. and reproduction and development of living organisms like plants and animals etc. Primary industries can be categorised as extractive and genetic industries. All the are industries engaged in rearing and breeding animals and birds and growing plants or flowers for sale and are known as genetic industries. Genetic industries are growing in number which include Horticulture (growing fruits and vegetables), Floriculture (growing flowers), Dairy Farming, Poultry Farming, Pisiculture (breeding fish) etc.

2. Secondary Industries

The products of primary industries are normally used as raw materials to produce a variety of finished goods. It is the secondary industry that uses the products of primary industry as its raw materials. The activities of secondary industries may be of manufacturing or construction. Manufacturing industries are engaged in producing finished goods out of raw materials or semi-finished products. For example, cotton is used to produce textile, timber to produce furniture, bauxite to produce alumina.

The industries engaged in erection of buildings, dams, bridges, roadways, railways, canals, tunnels, etc. are known as construction industries. They make use of the products of other industries and construct different types of structures as per the requirements of the customers.

3. Tertiary Industries

These industries are basically concerned with the generation or processing of various services and facilitate the functioning of primary and secondary industries as well as activities of trade. These include service industries like banking, insurance, transport etc. Film industry, which provides entertainment to the individuals, produces films; tourism industry which provides services to the individual by facilitating their travel, booking of tickets and hotel rooms etc. are also included in this category.

Commerce

Commerce refers to the activities related to buying and selling goods and services. It involves the exchange of products between producers and consumers. Commerce can be further categorized into two types:

1. Trade: Trade involves the buying and selling of goods and services. There are two main types of trade:

• Domestic Trade: Domestic trade involves the exchange of goods and services within the boundaries of a country. It encompasses retail and wholesale trade.
• International Trade: International trade refers to the exchange of goods and services between different countries. It involves importing and exporting products to and from foreign markets.

2. Aids to Trade: To facilitate buying and selling of goods (trade) a variety of other activities are required to be performed. These include, transport of goods, storage of goods, financial transactions, insurance of goods etc. For example, when a company at Chennai buys goods from Delhi or imports it from Singapore, it needs to undertake most of the following activities, in addition to buying and selling of goods.

Carrying of goods physically from Delhi or Singapore to Chennai (called Transportation)

Systematic storage of goods once the goods are received at Chennai (called Warehousing)

Arranging money and making payments to the seller through banks and other sources (called Banking)

Covering risk of damage or loss of goods in transit from Delhi or Singapore or while it is in store (called Insurance)

Exchange of information with each other through postal and telecom services (called Communication)

Advertising: In today’s competitive market, it is not possible for a businessman to sit and wait for customer after investing heavily in business. To attract customers towards his product, a producer has to provide full knowledge of his product to the customer. Advertising does this properly. Advertisement enhances the knowledge of the customer about the products available in the market and with the help of this knowledge, a customer takes decision about the purchase of the product. In this way, advertisement enhances the knowledge of the customers and eliminates the hindrance of information.

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