NATURE AND SCOPE

OF BUSINESS
INTRODUCTION
• A Business organization is an entity aimed at
carrying on commercial enterprises by providing
goods or services, to meet needs of the
customers.
• All business organizations have the common
features such as formal structure, aim to achieve
objectives, use of resources, requirement of
direction, and legal regulations controlling them.
MEANING OF BUSINESS
• The term ‘business’ is derived from the word
‘busy’. Business means work, efforts and acts of
people which are connected with the production
of wealth.
• Business is an economic activity, which is related
with continuous and regular production and
distribution of goods and services for satisfying
human wants.
 DEFINITIONS OF BUSINESS
Stephenson The regular production or purchase and sale of goods un dertaken with an
objective of earning profit and acquiring wealth through the satisfaction of
human wants.
Dicksee Business refers to a form of activity conducted with an objec tive of earning
profits for the benefit of those on whose behalf the activity is conducted.

Lewis Henry Human activity directed towards producing or acquiring wealth through
buying and selling of goods.
C.F. Abbot Business without profit is not business.
L.H. Hanery Business may be define as human activities directed towards production or
acquiring wealth through buying and selling goods
Dictio nary of Business may be defined as any and all of those activities con nected with the
Busi ness and production and exchange of goods or services and the financial affairs
Finance
connected with the these activities.
CONCEPT OF BUSINESS
• Business is an important activity of human beings. The word
‘business’ means ‘a state of being busy’.
• All economical activity undertaking with a view to earn profit
thus the satisfaction of human wants can be term as a business.
• Involves regular production, distribution and exchange of
goods and services with an objective of earning prof it by
satisfying the unlimited wanted of human being.
• All business activates are meant for earning profit by satisfying
consumers.
2 CONCEPT OF
BUSINESS
1. Traditional Concepts

• The traditional concepts explains that the

business of business is to earn profit
thought production and marketing of
products may be of different types for
example physical goods, services, ideas and
maximize only profit as per traditional
concepts
2. Modern Concepts
• Consumer satisfaction is the central point of
modern concepts of business. Profit can be
earned by maintaining social responsibility. It
survives to include every aspects of human
civilization.
• It views the modern business as a socio-economic
institution which always responsible towards the
society.
 11
FEATURES/CHARACTERISTICS/
NATURE OF BUSINESS
• 1. Exchange of Goods and Services
• All business activities are directly or indirectly concerned with
the exchange of goods or services for money or money’s worth.
• 2. Deals in Numerous Transactions
• In business, the exchange of goods and services is a regular
feature.
• A businessman regularly deals in a number of transactions and
not just one or two transactions.
• 3. Profit is the Main Objective
• The business is carried on with the intention of earning a profit.
• The profit is a reward for the services of a businessman
• 4. Business Skills for Economic Success
• Anyone cannot run a business. To be a good businessman,
one needs to have good business qualities and skills.
• A businessman needs experience and skill to run a business.
• 5. Risks and Uncertainties
• Business is subject to risks and uncertainties. Some risks,
such as risks of loss due to fire and theft can be insured.
• There are also uncertainties, such as loss due to change in
demand or fall in price cannot be insured and must be
borne by the businessman.
• 6. Buyer and Seller
• Every business transaction has minimum two parties that is a buyer
and a seller.
• Business is nothing but a contract or an agreement between buyer
and seller
• 7. Connected with Production
• Business activity may be connected with production of goods or
services.
• In this case, it is called as industrial activity. The industry may be
primary or secondary.
• 8. Marketing and Distribution of Goods
• Business activity may be concerned with marketing or distribution of
goods in which case it is called as commercial activity
• 9. Deals in Goods and Services
• In business there has to be dealings in goods and service.
Goods May Be Divided Into Following Two Categories:-
• 1.Consumer goods: Goods which are used by final
consumer for consumption are called consumer goods
e.g. T.V., Soaps, etc.
• 2. Producer Goods: Goods used by producer for further
production are called producers goods e.g. Machinery,
equipment, etc. Services are intangible but can be
exchanged for value like providing transport,
warehousing and insurance services, etc
• 10. To Satisfy Human Wants
• The businessman also desires to satisfy human wants
through conduct of business.
• By producing and supplying various commodities,
businessmen try to promote consumer’s satisfaction.
• 11. Social Obligations
• Modern business is service oriented. Modern
businessmen are conscious of their social responsibility.
• Today’s business is service-oriented rather than profit-
oriented.
HUMAN OCCUPATION
• Human occupation is defined as the doing of work (paid and
unpaid), play or activities of daily living within a temporal,
physical and sociocultural context that characterizes much of
human life.
• The focus is on everyday life rather than illness or disability.
• it emphasizes the importance of an occupation-focused, client-
centred, holistic and evidence-based approach in enabling
people to engage in occupations that provide meaning and
satisfaction and that support their physical and emotional well-
being.
NATURE AND SCOPE
OF BUSINESS
PROFESSION
• A profession is something a little more than a
job, it is a career for someone that wants to be
part of society, who becomes competent in their
chosen sector through training; maintains their
skills through continuing professional
development (CPD); and commits to behaving
ethically, to protect the interests of the public.
• A Profession is a disciplined group of individuals who adhere to ethical
standards and who hold themselves out as, and are accepted by the public
as possessing special knowledge and skills in a widely recognized body of
learning derived from research, education and training at a high level, and
who are prepared to apply this knowledge and exercise these skills in the
interest of others.
• It is inherent in the definition of a Profession that a code of ethics governs
the activities of each Profession.
• Such codes require behavior and practice beyond the personal moral
obligations of an individual.
• They define and demand high standards of behavior in respect to the
services provided to the public and in dealing with professional colleagues.
• Further, these codes are enforced by the Profession and are
acknowledged and accepted by the community.
 EMPLOYMENT
• Employment is an agreement between an employer and an employee that the
employee will provide certain services on the job. The employment agreement
ensures that:
• The work will occur in the employer’s designated workplace (which can a
telecommuter’s home)
• The work is designed to accomplish the employer organization’s goals and
mission
• In exchange for work performed, the employee receives compensation
• An employment agreement for an individual employee can be verbal, written in
an email, or it can be a job offer letter.
The offer of employment can be implied in an interview or written in a formal,
official employment contract.
DIVISION OF BUSINESS
• A corporate division, also known as a business division, is a discrete part
of a company that may operate under the same name and legal
responsibility or as a separate corporate and legal entity under another
business name.
• A division of a business, sometimes called a business sector or business
unit (segment), is one of the parts into which a business, organization or
company is divided.
• The divisions are distinct parts of that business.
• If these divisions are all part of the same company, then that company is
legally responsible for all of the obligations and debts of the divisions.
Profitability
• One of the most essential and common traits among
effective businesses is the ability to make a profit in the face
of competition.
• Profitability allows businesses not only to expand and grow,
but to remain fiscally stable and earn money for their
owners.
• To profit, a business must take in more money than it pays
out. Controlling costs and marketing desirable products or
services are important elements in turning a profit.
Human Resources
• Effective businesses manage their human resources efficiently.
• This includes;
• hiring the right workers,
• expanding the workforce as needed and
• providing pay and benefits that find a balance between adequate
compensation and reasonable cost to the business.
• Making the most of human resources extends to management
techniques, such as motivating employees with recognition and
incentives.
• Retaining highly-skilled workers is also important.
Customer Relations
• Customer relations refer to the interactions between a company’s
representatives and its customers, as well as the views customers hold
toward the business.
• An effective business must devote resources to customer relations and
develop a policy for handling complaints, soliciting customer feedback
and addressing public-relations issues.
• Larger businesses use customer-service departments to process
merchandise returns, log complaints and administer surveys.
• Whatever the scale, customer service can help a business gain new
customers through a positive reputation and keep existing customers,
making it easier to generate profits
Effective Marketing
• Businesses of all sizes employ marketing techniques to make
customers aware of their goods and services.
• Marketing plays a role in customer relations, since it is one
way in which businesses interact with their customers.
• But marketing also involves the power of persuasion and, in
some cases, an informative aspect that seeks to reach
customers about a particular product or promotion.
• Marketing campaigns position businesses and attract
customers and profits.
Product
• A product is anything that can be offered to a market to satisfy a want or need.
It can be a physical good, a service, or even an idea.
• In the product structure, the divisions are organized by products.
• For example, a tools manufacturer may set up divisions for hand tools, power tools and
custom tools.
• A software manufacturer may set up divisions for operating system products
and office productivity solutions.
• A financial consulting firm may set up divisions for accounting services, tax
planning services and investor relations services.
• Corporate-level executives must track the sales and prof its of these divisions
and coordinate their business strategies to optimize profitability for the entire
company.
Geography
• In the geography structure, the divisions are organized by the
company’s geographic operating areas.
• The product design and manufacturing in these structures could be
centralized, or they could be functional units within each geographic
division.
• The geographies could be within one country or they could be global
regions. The geographic structure may be layered:
• for example, one set of divisions for regions within a country, and an
outer set for the Americas, Asia-Pacific and Africa
Market
• In the market structure, the divisions are organized by the customer
segments served by the company.
• For example, if an office products manufacturer sells its goods to
individuals, small businesses and medium-sized businesses, it may set up a
separate division for each one of those customer markets.
• This would allow them to design marketing and support strategies
appropriate for their customer needs.
• For example, a self-employed consultant is likely to either buy online or
from a physical store.
• However, small and medium-sized businesses may need to be served by
one or more dedicated account managers.
Hybrid
• Divisions may also be a hybrid of one or more of the product,
geography and market structures.
• For example, an automobile manufacturer could have
geographic divisions for the Americas, Asia-Pacific and other
regions in addition to product divisions for each of its
models.
• A software manufacturer may have divisions for its products
in addition to divisions to serve its customer markets, such as
home offices and large businesses.