Intro to Business (BUA 101) - Study Session 1 PDF

**Study Session 1: Concept of Business (Definitions and Scope of Business and types of business)** Expected Duration: 1week or 2 contact hours ------------------------------------------- **Introduction** In this session, we shall be introducing learners to the course, introduction to business, de...

**Study Session 1: Concept of Business (Definitions and Scope of Business and types of business)** Expected Duration: 1week or 2 contact hours ------------------------------------------- **Introduction** In this session, we shall be introducing learners to the course, introduction to business, defining the term "business" from different perspectives. You will get to know the different views of scholars about the concept of business in relation to when we say somebody is in business, what is expected of a business and what it does offer to businesspersons or group of people who have contributed money to engage in it and the benefits the society and other stakeholders stand to gain from being part of the activity. **1.0 Learning outcomes for study session 1** After studying the session, you should be able to; 1.1 Define business. (SAQ 1.1); and 1.2 Explain the scope of business. (SAQ 1.2) 1.3 Mention types of business (SAQ 1.3) **1.1 Business** **Box 1.1 What is Business?** ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Business is any human activity that is directed at identifying needs and wants of individuals and group of people and satisfying those needs and wants in anticipation of profit. A business is any human activity that provides goods or services to consumers in anticipation of profit, and it includes selling goods and services. Everyone else involved in the process of creating the products and getting it across to the customer is into business or is said to engage in business activity. Whenever we refill our 12kg gas cylinder at a gas filling station, we are completing a process that started with an oil exploration firm detecting an oil deposit, continued with a drilling firm extracting crude oil. And then went through many stages of transportation, refining, and distribution before it finally got to your gas cylinder. A number of people conducted business to fill the gas cylinder. Business, like other management science has not got a precise and universally accepted definition. The term business has been applied to many diverse activities. In fact, different people define business in different ways which makes the definition to be as many as there are authors on the subject. Business, for example, is defined as what individuals for the purpose of making money. In this definition, the term business is viewed as an activity which people primarily do in order to make money. In this regards, we can say that, the food we eat, the cloths we wear, the cars we drive and the books we read are product of business activities. This is because the products mentioned above are produced by people in order to make money. Business in the context of transaction is considered to be a system of events which take place between two or more persons (ie the seller and buyer). Business is any commercial or economic activity that tends towards business profit. The primary, objective of business organizations is to make profit, grow and survive in the environment in which it operates (Eruemegbe, 2015). Transactions such as **trade by barter** practiced in the ancient times, for instance, could be seen as business. Business can also be defined as organization to make **profit**. In this definition, it can be observed that any entity that attempts to make profits is considered to be a business organization. From the foregoing definitions, it could be deduced that the tern business can be said to be an activity; a system and an entity. According to Nickels, McHugh & McHugh (2019), a business is any activity that seeks to provide goods and services to individuals, group of people and organizations while operating at a profit. For an organisation to arrive at profit, a business must offer desired goods, services, jobs to people and other businesses. Also, Business is a broad term, with a typical dictionary definition covering a wide range of meanings. For instance, the Merriam Webster dictionary includes the idea that business is a commercial activity, a commercial or **industrial enterprise**, or economic transactions (Crane, Henrigues, Husted & Matten, 2015). In view of these three distinct dimensions, commercial activity by a non-profit or government organization constitutes a business as well as an economic transaction between two users, but not involving a company (e.g. product sharing) and also, illegal transactions or **informal enterprises** activities that do not take place in the formal economy. Business activities are usually carried out by people referred to as **entrepreneurs**. Entrepreneurs are people who seek out for unsatisfied or partially satisfied needs and invest their resources by way of satisfying the needs adequately. The activities of the entrepreneurs or business as they are otherwise called; are termed as business activities and are normally carried out in organizations referred to as business organizations or business enterprises. **In -- Text Questions (ITQs) 1.1** 1\. Define business? 2\. What does business entail? **In -- Text Answers (ITAs) 1.1** 1*.. Business is any activity that seeks to provide goods and services to individuals, group of people and organizations while operating at a profit.* *2. Business entails identifying needs and wants of individuals and group of people and satisfying those needs and wants at a profit.* **1.2. Scope of Business** In terms of scope, from the macro point of view, business is covering a wide range of meanings. According to the Merriam Webster dictionary, business includes a commercial activity, a commercial or industrial enterprise, or economic transactions (Crane, Henrigues, Husted & Matten, 2015). In view of these three distinct dimensions, commercial activity by a **non-profit** or government organization constitutes a business because it is embarked upon to meet society needs, as well as an economic transaction between two users, but not involving a company (e.g. product sharing) and also, illegal transactions or informal enterprises activities that do not take place in the **formal economy.** In view of this, a business can be interpreted as transactions between two or more people with profit motives or can be said to be an organization set up to accomplish some set targets that are aimed at profit or informal transactions which can either be legal or illegal but end up in benefitting the parties. Also, from the micro point of view, the scope of business can equally be said to be the area in which a company operates, where and what it covers by virtue of its operations and its specific products/services. It may interest you to know that about 90% of businesses in Nigeria are not captured by the Federal Inland Revenue Service and not in the database of the **Corporate Affairs Commission** because they are operating informally. Also, business encompasses commerce and trade. While commerce implies the series of commercial activities that have taken place for the purpose of producing a product beginning from extraction through refining and distribution to gas station and sale into the 12kg of final consumers. Commercial activities have been experienced along the way before this stage considering the fact that crude oil was sold in bulk to one or more oil companies that had refined and then began to sell to stations all over the place. **Trade** equally involves exchange of goods and services for something of value between two parties (money) and it is the final transaction in which a seller provides a finished product and a consumer makes payment in respect of the product i.e. it is the last stage of the commercial process which involves selling of the finished product to the consumer. Commerce and trade are subsets of business. **Fig. 1.1: Author's conceptual;lisation (2024)** Fig. 1.2: Adapted from Understanding Business by Nickels, McHugh & McHugh (2019) **In -- Text Questions (ITQs) 1.2** 1\. Explain the scope of business? 2\. Differentiate between the micro view and macro view of business scope? **In -- Text Answers (ITAs) 1.2** 1*.. Business can be defined as transactions between two or more people with profit motives or can be said to be an organization set up to accomplish some set targets that are aimed at profit or informal transactions which can either be legal or illegal but end up in benefitting the parties. Also, business scope can equally be said to be where and what a business covers by virtue of its operations. Business encompasses commerce and trade.* *2. While the micro-view of business scope focuses on where and what a business covers by virtue of its operations, the macro-view considers all what business entails in view of transactions between two or more people with profit motives or can be said to be an organization set up to accomplish some set targets that are aimed at profit or informal transactions which can either be legal or illegal but end up in benefitting the parties.* **1.3 Types of Business** You may want to ask what the difference between type and kind of business is. While types of business is the distinct business activity that one invests into with the aim of satisfying customers, kind of business is how to organize a business concern in order to carry out any of the types of business. In business, one can choose to be a producer, a processor, manufacturer, intermediary or operate in the servicing industry rather than manufacturing. **1. A producer (Extractive Industry)** is that person who is involved in producing goods and services for distribution. Producers make available the raw materials i.e. in their natural forms. You take an example of a farmer- he is a producer, involve in producing yam, beans, cassava, eggs, Fishing: He goes into the sea and catch fishes for sale to other to use for consumption (Agriculture),. Mining: He dig for minerals like gold, diamond etc. Forestry business: Bringing in timbers into the market to sell to builders etc. All these people are involved in gathering products in their original forms, from **natural resources** such as land and water. These activities are in the extractive industry. **2. Processors (Manufacturing & Construction):** These are businesses for any man that may not be able to produce product from their natural form, what they do is to add value to such product in order to sell it to another buyer. Businesses that change products from their original forms into more finished forms are processors. Take for an example Paper Mills: The paper mills get raw materials from woods, waste paper and produce exercise books, tissue papers - Oil Refineries: Crude oil is gotten from the ground and refine into petrol, diesel, jelly etc - Steel: Raw materials are gotten from various locations and they are turn into steel and steel is produce into another product. These products are transformed into processed goods. Do you consider yam that is turned into yam flour (elubo), cassava that is turned into (Garri). All businesses operating in this fashion are referred to as processors. You may be thinking of manufacturers as the only business people are involved in, when manufacturing is mentioned, but they are not. Manufacturers could combine the activities of producers and processor together to get a finished product. Dangote for instance may have a sugar cane farm, producing sugar cane, Dangote here is a producer: - Sugar cane may be processed into granulated sugar, at this point, he is a processor. A situation where sugar is cubed, packaged makes Dangote a manufacturer and combining all the characteristics of a producer, processor and a manufacturer. Manufacturer therefore turns raw or processed goods into finished goods. **Finished goods** are those products that are produced and ready for the market. Manufactures are business set up to carry out the activities involved in making finished goods out of processed goods. Other examples of Manufacturers are: Bakery: Producing different types of product of various sizes. Automobile factory: make cars out of processed goods like steel, aluminum, glass, plastic etc. Manufacturers are just involved in producing - Consumer goods- you buy in the shops - Consumables- (food, drink, cigarettes) - Consumer durables, which has a longer life (e.g. Radios, domestic appliances, televisions and cars - Producer goods- include Machinery, raw materials, commercial vehicles wares etc. Manufactures are concern with: Product mix-Range of product and brands they produce. Diversified - making a range of goods which may be sold to different markets. **3. Intermediaries** The function of intermediaries is to transport and distribute goods. An intermediary is a business that moves goods from one business to another. These intermediaries are mostly wholesalers and retailers. While a **Wholesaler** is that business man that buys goods from a manufacturer in large quantity and resell to retailers in a smaller quantity. Wholesaler performs the following functions: Buying Selling Dividing or bulk breaking; Transportation; Ware housing; Financing; Risk bearing; Market information; Management services and advice. A **Retailer** is that business that buys goods from a wholesale and resell them directly to the final consumer. Retailers like wholesales perform the function of wholesalers but added are: Breaking the bulk; Give credit to customer; Located close to customer. The manufacturer takes decision on either to sell directly or through an intermediary. There are four main methods. a\. Direct from the producer to the customers; Is the system mostly used by mail order companies. b\. The traditional method is via a wholesaler to a retailer outlets and then to the consumer. c\. Many companies deal directly with retailers particularly large retail chain. Manufacturers that produce goods for tradesmen usually distribute them via a specialist merchant. One important aspect of intermediation business is transportation. As a manufacturer you decide on the best method of transporting goods. Factors determining this are the distance involved; Types of goods; Urgency; and Cost. Customers have to decide on any of these medium of transportation e.g. air transport - It is faster than most methods - Use for goods that are needed urgently. **4. Quaternary (service-based business):** This includes knowledge and information-based economic activities including education, consultation, media and entertainment services**.** It is that business that is increasing in number very rapidly. In Nigeria, the story is not different since the coming in of Obasanjo's administration and attention given to tourism, there has been an increase in service industry and more Nigerian have been employed in service industry. Service business provides services instead of goods to consumers. Service industry are into intangible transactions, which you cannot touch. For instance, such service industry include: Car washes; Mechanics; Doctors; Movie theatres etc. **Service industries** provide: (i). Assistance for Business ; e.g. if you leave your destination to any where in Nigeria with plane you decide to lodge in a hotel before the following morning business discussions, it means that your business has been assisted by service industry. (ii). Banks could equally serve as assistance for business. For instance banks grant credit to business men to carry out their activities. Importer and exporter require bankers to aid them in their businesses. Insurance is another service area that is required to reduce the risk of trading. It covers all standard risk like theft, fire, goods on transit. (iii). Communication is another service area that aid business. It helps because up-to date information is required. This information can be assessed through computers, satellite links and fax machines. \(iv) Service industry employ specialist for instance you need advertising agencies to plan a campaign, design of art work etc **In -- Text Questions (ITQs) 1.3** **Discuss types of business** **In -- Text Answers (ITAs) 1.3** ***Types of business:*** ***A producer (Extractive Industry)** is that person who is involved in producing goods and services for distribution. Producers make available the raw materials i.e. in their natural forms. You take an example of a farmer- he is a producer, involve in producing yam, beans, cassava, eggs, Fishing: He goes into the sea and catch fishes for sale to other to use for consumption (Agriculture),. Mining: He dig for minerals like gold, diamond etc. Forestry business: Bringing in timbers into the market to sell to builders etc.* ***2. Processors (Manufacturing & Construction):** These are business for any man that may not be able to produce product from their natural form, what they do is to add value to such product in order to sell it to another buyer. Businesses that change products from their original forms into more finished forms are processors. Take for an example Paper Mills: The paper mills get raw materials from woods, waste paper and produce exercise books, tissue papers - Oil Refineries: Crude oil is gotten from the ground and refine into petrol, diesel, jelly etc - Steel:* *cigarettes) - Consumer durables, which has a longer life (e.g. Radios, domestic appliances, televisions and cars - Producer goods- include Machinery, raw materials, commercial vehicles wares etc. Manufactures are concern with: Product mix-Range of product and brands they produce. Diversified - making a range of goods which may be sold to different markets.* ***3. Intermediaries*** *The function of intermediaries is to transport and distribute goods. An intermediary is a business that moves goods from one business to another. These intermediaries are mostly wholesalers and retailers.* ***4. Quaternary (service-based business):** This includes knowledge and information-based economic activities including education, consultation, media and entertainment services**.** It is that business that is increasing in number very rapidly.* **Summary of the Study Session 1.** In Study Session 1, you have learned that; 1\. A business is any human activity that provides goods or services to consumers in anticipation of profit, and it includes selling goods and services. Everyone else involved in the process of creating the products and getting it across to the customer is into business or is said to engage in business activity. 2\. Business activities are usually carried out by people referred to as **entrepreneurs**. Entrepreneurs are people who seek out for unsatisfied or partially satisfied needs and invest their resources by way of satisfying the needs adequately. 3\. In terms of scope, from the macro point of view, business is covering a wide range of meanings. According to the Merriam Webster dictionary, business includes a commercial activity, a commercial or industrial enterprise, or economic transactions 4\. Business encompasses commerce and trade. While commerce implies the series of commercial activities that have taken place for the purpose of producing a product beginning from extraction through refining and distribution to gas station and sale Trade involves exchange of goods and services for something of value between two parties (money) and it is the final transaction in which a seller provides a finished product and a consumer makes payment in respect of the product Commerce and trade are subsets of business. 5\. In terms of types of business**,** a producer (Extractive Industry) is that person who is involved in producing goods and services for distribution. Producers make available the raw materials in their original forms. Processors (Manufacturing & Construction): are business for any man that may not be able to produce product from their natural form, what they do is to add value to such product in order to sell it to another buyer. The intermediaries is to transport and distribute goods. Intermediaries are mostly wholesalers and retailers; and Quaternary (service-based business) includes knowledge and information-based economic activities including education, consultation, media and entertainment services. **Self-Assessment Questions (SAQs) for Study Session 1** Now that you have completed this study session, you can assess how well you have achieved its learning outcome by answering the following questions. You can check your answers with the notes on the self-assessment questions at the end of this study session SAQ I.1 (Tests Learning Outcome 1.1) 1\. Define business and discuss what business entails SAQs 1.2 (Tests Learning Outcomes 1.2) Explain the scope of business SAQs 1.3 (Tests Learning Outcomes 1.3) Discuss types of business **Glossary of Terms** 1. **Trade by barter** is the exchange of goods and services between two or more parties without involving money. 2. **Profit** is gain made from business. 3. **Industrial enterprise** is an enterprise which offers a reasonable likelihood of creating large number of employment opportunities and requires so much to establish. 4. **Informal enterprises** are unregistered, unincorporated, uncaptured and small enterprises. 5. **Entrepreneurs** are individuals who take the risk of investing in identified gap for the purpose of satisfying needs/wants at a profit. 6. **Formal economy** is an economy of which the government is fully aware of. 7. **Corporate Affairs Commission** is the Nigerian government establishment for the registration of businesses. 8. **Finished goods** are goods that have been fully transformed into forms that are usable by consumers. 9. **Retailer** is that businessman that sells goods to the final consumer in relatively small quantities for use. 10. **Wholesaler is that businessman who buys in bulk and sell in large quantities to retailers at low prices.** **References** Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2019). *Understanding business* (12^th^ ed.). New York, McGraw Hill Education. Crane, A., Henrogues, I., Husted, B., & Matten, D (2015). Defining the scope of business & Society, *SAGE Publications* 54(4) 427--434. Eruemegbe, G. O. (2015). Impact of business environment on organization performance in Nigeria: a study of union bank of Nigeria. *European Scientific Journal.* /SPECIAL/ edition ISSN: 1857 -- 7881. Chen, F., Meng, S., Zhou, W. (2017). Overview of international business. Second International Symposium on Business Corporation and Development in South-East and South Asia under B&R Initiative Advances in Economics, Business and Management Research, 42, (ISBCD 2017). Yang, J. (2020). Research on the Influence of Business Administration on Enterprise Transformation Advances in Social Science, Education and Humanities Research, volume 523 Proceedings of the 2020 International Conference on Modern Education Management, Innovation and Entrepreneurship and Social Science (MEMIESS 2020). **Study Session 2: Relationship between Business and Administration** **Introduction** Business has been defined as any activity that is tailored at identifying needs and wants and satisfying those needs and wants at a profit. This definition indicates that activity that is being carried out needs to be managed and coordinated with a predetermined profit motive. In view of this, the business must be managed and this is the essence of administration. Expected Duration: 1week or 2 contact hours ------------------------------------------- **2.0 Learning Outcomes for Study Session 2** When you have studied the session, you should be able to; 2.1 Understand and define administration (SAQ 2.1); and 2.2 Discuss relationship between business and administration. (SAQ 2.2) 2.3 Mention types of Administrative organization. (SAQ 2.3) **2.1 Administration** **Box 2.1 Define Administration?** --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Administration is the process by which jobs and functions to be carried out and whose responsibility it is are clearly defined in order to achieve the target goal i. e. is the act of governing and exercising authority as to the execution of a particular task. Administration can either be defined as the process by which jobs and functions to be carried out and whose **responsibility** it is are clearly defined in order to achieve the target; or can be said to be an individual or group of few people who are saddled with the responsibilities of coordinating a business or the entire organization (i.e. the body of people who manage the affairs of an organisation) (Yang, 2020). From business perspective, administration involves the performance of business operations and decision-making as well as the **efficient utilization** of human and material resources to direct activities towards accomplishing desired common goals. The responsibilities and **authorities** at various levels of managerial positions are clearly defined. Administration's main functions include the formulation of broad objectives, plans and policies. It is basically a policy and decision-making function. Administration decides what is to be done and when it is to be done. Administration is important at the top levels of management. The terms management and administration have been used by different management authorities in a manner that sometimes they seem to be one and the same while at some other time; they diverge. According to most of the modern writers like Fayol, Koountz, Alleri and Perry, there is no real distinction between the two terms. Fayol for instance stated "All understandings require planning, organization, command, coordination and control and in order to function properly, all must observe to some general principles, we are no longer confronted with several administrative sciences but with one which can be applied equally well to public and private affairs". Administration works as a link between the organisation's employees and the senior management team. Administrators occupies motivational and inspirational roles in the running of the business of the organization assisting and cooperating with the staff in finding out what the organisation's goals are in the short, medium and long terms. Managers are saddled with administering must have adequate knowledge of the use of human, material and economic resources in the interest of the organization and business. A good manager and administrator must be able to: I. Have good understanding of the concepts and scopes of administration. 2\. See that the staff are managing and scheduling their tasks /jobs **efficiently/effectively** and **professionally**. 3\. Develop efficient and successful administrative qualities 4\. Plan an accurate and beneficial budget for the organisation's profit. Developing a successful administrative qualities **In -- Text Questions (ITQs) 2.1** 1\. Define administration 2\. Discuss four qualities of a good administrator. **In -- Text Answers (ITAs) 2.1** 1*. Administration can either be defined as the process by which jobs and functions to be carried out and whose **responsibility** it is are clearly defined in order to achieve the target; or can be said to be an individual or group of few people who are saddled with the responsibilities of coordinating a business or the entire organization (i.e. the body of people who manage the affairs of an organisation).* *2 a. Have good understanding of the concepts and scopes of administration.* *b. See that the staff are managing and scheduling their tasks /jobs efficiently/effectively and professionally.* *c. Develop efficient and successful administrative qualities* *d. Plan an accurate and beneficial budget for the organisation's profit.* *Developing a successful administrative qualities* **2.2 Relationship between Business and Administration** Businesses must be administered by either individuals or group of individuals. This means people must coordinate the human and material resources of organizations optimally for the purpose of accomplishing the organisational goals and objectives. In our O'level Economics class, we have been taught that there are four factors of production: Labour, capital, land and entrepreneur. The entrepreneur is standing in as the administrator in view of the central role overseeing the smooth running of the day-to-day operations of the organisation's business is occupying. To be successful, every business whether it is large or small, or service based business must develop a healthy business relationship internally and externally. If there is a healthy relationship between an owner/administrators of the company and an organization, then it not only gives the opportunities to make the customer not only for particular time period but also for life long. This will also assist in attracting other people to do business with the organsation. Building the healthy and trusty relationship both within the organization and between service provider and client is very difficult and time consuming process. The business of a company includes relationship within, and then, between many factors like vendors, state, banks, potential customers, service providers, any municipal, federal governmental agencies, customers, banks etc. The business relations are the relation between all the entities that connected to that business either internally or externally. The day-to-day administration of business involves carrying all the stakeholders along for the purpose of accomplishing set goals and objectives and this is a pointer to the fact that the business is well administered. As a single management system, business administration has the following three characteristics: First, **procedural**. As a management system that can ensure the normal operation and development of enterprises and supervise some market behaviours of enterprises, the most prominent feature of business administration is procedural. The introduction of business administration needs its procedural support. As a supervision system to supervise the legitimacy of enterprise behavior, business administration needs to have the perfect legal knowledge to stop any market behaviour that violates the national law. Secondly, business administration plays a guiding role in the behavior and development of enterprises. Before conducting relevant behavior guidance, there should be procedural process preparation to guide relevant enterprises scientifically. in the process of enterprise transformation, business administration needs the procedural process to support related enterprises. With the help of procedural and scientific guidance, enterprises can develop better and faster. Thirdly, **systematicness**. As a scientific and reasonable management system, the supervision function of business administration needs a systematic supervision system. Only with a comprehensive and systematic supervision system, can the business administration realize the supervision and guidance of enterprise behavior to the greatest extent. **In -- Text Questions (ITQs) 2.2** 1\. Explain the relationship between business and administration 2\. State three characteristics of business administration as regards management of enterprises. **In -- Text Answers (ITAs) 2.2** *1.* Businesses must be administered by either individuals or group of individuals. This means people must coordinate the human and material resources of organizations optimally for the purpose of accomplishing the organisational goals and objectives *2. a.* Procedural: Business administration needs to have the perfect legal knowledge to stop any market behaviour that violates the national law. b\. Business administration plays a guiding role in the behavior and development of enterprises. C. Systematicness: the supervision function of business administration needs a systematic supervision system. Only with a comprehensive and systematic supervision system, can the business administration realize the supervision and guidance of enterprise behavior to the greatest extent. **2.3 Types of Administrative Organisation** Hartzell (2000) defined an **Administrative Organisation** as the one in which the jobs or functions to be carried out are clearly defined in order to achieve the target. The responsibilities and authorities at various levels of managerial positions are clearly defined. Administrative organizations can be classified into line organization; line and staff organization; and functional organization. **Line organization**: In this organization the manager has direct authority over his/her respective subordinates through chain of command. The manager has full authority to decide and act with respect to his area of functioning.  **Fig. 2.1:** Adopted from Hartzell (2000): Administrative functions in organisations. **Line and staff organisation:** In this type of organizations, there are two type of authority relationships i.e. true authority and advising authority co-exist most of the managers have line authority to decide and act as in a line organization. However, there are some positions where job is of advisory and supportive nature. Some of the examples are personnel managers, company secretary. **Functional organizations:** Harztell (2006) defined functional organization in which line authority, staff authority and functional authority exist together. A functional authority is a limited form of line authority given to functional experts over certain specialized activities under the normal supervision of managers belonging to other department e.g. if personnel policies are observed in all the departments throughout the organization. Harztell (2006). **In -- Text Questions (ITQs) 2.3** 1\. Define administrative organization. 2\. State types of administrative organisations. **In -- Text Answers (ITAs) 2.3** *1. Administrative Organisation is one in which the jobs or functions to be carried out are clearly defined in order to achieve the target. The responsibilities and authorities at various levels of managerial positions are clearly defined* *2. a. Line organisation* *Line and staff organisation* *Functional organisation* **Summary of the Study Session 2.** 1\. *Administration can either be defined as the process by which jobs and functions to be carried out and whose **responsibility** it is are clearly defined in order to achieve the target; or can be said to be an individual or group of few people who are saddled with the responsibilities of coordinating a business or the entire organization (i.e. the body of people who manage the affairs of an organisation).* *2. Qualities of a good administrator/manager include:* *a.* Having good understanding of the concepts and scopes of administration. b\. See that the staff are managing and scheduling their tasks /jobs efficiently/effectively and professionally. c\. Develop efficient and successful administrative qualities d\. Plan an accurate and beneficial budget for the organisation's profit. Developing a successful administrative qualities. 3\. Administrative organizations can be classified into line organization; line and staff organization; and functional organization. While a line officer/ manager has direct authority over his/her respective subordinates through chain of command. The manager has full authority to decide and act with respect to his area of functioning; line and staff are two type of authority relationships i.e. true authority and advising authority that co-exist and functional organization is that in which line authority, staff authority and functional authority exist together. A functional authority is a limited form of line authority given to functional experts over certain specialized activities under the normal supervision of managers belonging to other department **Self-Assessment Questions (SAQs) for Study Session 2** **SAQs 2.1 (Tests Learning Outcomes 2.1)** 1\. Define administration 2\. Discuss four qualities of a good administrator. **SAQs 2.2 (Tests Learning Outcomes 2.2)** 1\. Explain the relationship between business and administration 2\. State three characteristics of business administration as regards management of enterprises. **SAQs 2.3 (Tests Learning Outcomes 2.3)** 1\. Define administrative organization. 2\. State types of administrative organisations. **Glossary of Terms** 1. **Responsibility is the** state of being accountable for something 2. **Efficiency** means optimum utilization of resources 3. **Effectiveness** means meeting the targets 4. **Authority** is the power to give orders and enforce obidience 5. **Professionally** dealing with issues in a way that relates to a profession 6. **Procedural** relating to an established way of doing something 7. **Systematicness** means methodical in procedure **References** Crane, A., Husted, B., Henriques, I, & Matten, D. (2015). Defining the Scope of Business & Society. *SAGE Publications, 54*(4) 427--434. Biradawa K. (1995) "Introduction to Business" Lecture notes. Department of Business management, University of Maiduguri. Unamka P. C and Ewurum. U.J. F (1995). Business Administration, Enugu Nigeria. Precision printer and Publishers. Gutterman, A. (2023). Organisations.. Yang, J. (2020). Research on the Influence of Business Administration on Enterprise Transformation. Advances in Social Science, *Education and Humanities Research,* 523 Proceedings of the 2020 International Conference on Modern Education Management, Innovation and Entrepreneurship and Social Science (MEMIESS 2020) **Suggested OERs** 1\. JSTOR 2\. Humanities Digital Library 3\. NCBI Bookshelf 4\. DOAB 5\. Open Textbooks Library **Study Session 3: Characteristics of Business, Social, Economic and Legal characteristics of business and Objectives of Business** Expected Duration: 1week or 2 contact hours ------------------------------------------- **Introduction** In the previous study sessions we have discussed business and its purposes and the relationships between business and administration. Now, we will be looking into business unique features, social, economic and legal characteristics of business; and the objectives of business. There should be some compensation for the efforts you make as a businessperson after meeting peoples' needs and wants. The businessperson will always want his/her efforts to result in profit i.e. excess of return on his/her investment after taking some risks through investing his money, time and other resources into the business. Also, businesses do warrant some physical, mental and emotional efforts which do combine to determine the level of success one records in them. **3.0 Learning outcomes for study session 3** When you have studied this session you should be able to:. 3.1 List the characteristics of business (SAQ 3.1) 3.2 Explain economic characteristics of business (SAQ 3.2) 3.2. What are the aims of engaging in business? (SAQ 3.3) **3.1 Characteristics of Business** +-----------------------------------------------------------------------+ | **Box 3.1 List five characteristics of business** | +=======================================================================+ | 1\. Profit motive | | | | 2\. Social activity | | | | 3\. Risky | | | | 4\. Customer satisfaction | | | | 5\. Exchange | +-----------------------------------------------------------------------+ a. **Buying and selling** b. Transfer of goods and services. For every business there must be **exchange** of goods and services for money. c. **Economic activities:** For every organization that is business oriented, it must produce goods and services. d. **Profit motive:** Every business activities it is for profit making. But profitable organizations and some corporation they are established to provide services. e. **Risk and uncertainty:** Every business undertaking must take **risk** and there is always uncertainty. **Uncertainty** may arise as a result of competition, wrong decisions unethical. f. **Continuous process:** A business undertaking must always be in business and not on and off. g. **Customer satisfaction:** Businesses must always be designed in a way that the needs/wants of their **target customers** are met through ensuring value is added to the customer in terms of the functionality of the product. h. **Social activity:** Business is a social activity as it involves interactions of the parties involved. It is an exchange process where two or more people are involved. i. **Creative and dynamic:** Ability to **innovate** and break into new grounds remain the strengths of businesses. In addition to this is the capability to adjust and blend to new changes in the market environment. j. **Optimal use of resources:** Efficient utilization of available resources. k. **Government control:** All business must adhere to the rules and regulations of government through the regulatory authorities. This is put in place not only to ensure sanity in the business environment but also to ensure businesses operate within stipulated laws in the interest of the society. **In -- Text Questions (ITQs) 3.1** 1.List five characteristic of businesses. 2.Explain the customer satisfaction characteristic of a business **In -- Text Answers (ITAs) 3.1** 1*. Five characteristics of businesses include:* *1. Profit motive* *2. Social activity* *3. Risky* *4. Customer satisfaction* *5. Exchange* 2\. *Customer satisfaction characteristic of a business means businesses must always be designed in a way that the needs/wants of their target customers are met through ensuring value is added to the customer in terms of the functionality of the product.* **3.2 Social, Economic and Legal characteristics of business** **a. Social characteristics of business** No business can operate in isolation. Business does interact with its environment which is seen as the totality of the factors, events and influences that surround and affect it. Interactions with social groups and other business organisations are very important and remain the determinant of a business survival. The level of interconnectedness with the social environment through understanding the trends and incorporating them into its operations and activities and taking them into consideration will go a long way to determining the success of the business. The businessman should be aware of the social environment, the family structure, social concerns, attitudes and morals to able to make the best of choices among investment alternatives. Social characteristics of business include: **Contributions from corporate social responsibility:** Originally conceived as ethics and moral obligations, related to altruistic or philanthropic motives, but it has moved to be considered by many as social investments and plain good business. **Non-profit management:** Non-profit organizations (NPO) and management are studied in and include an array of names and institutions, such as nongovernmental organizations, charitable organizations, philanthropic foundations, cooperatives, civil society organizations, and so on. **Social entrepreneurship**: It consists of innovative social value creation by organizations from public, private, civic and hybrid sectors. SE is a source of social change, particularly when the organization can be replicated in other environments. **Inclusive business:** The main idea is to alleviate poverty by integrating lowincome citizens as consumers, employees, producers, suppliers, distributors, retailers and entrepreneurs in the value chain of large companies. **b. Economic characteristics of business** Business is an economic activity and its activities include production, distribution and consumption. While production entails conversion of raw material inputs into products and rendering of services to make profit, distribution entails the transfer of goods and services from the source to consumers through a supply network and consumption involves the usage of the finished goods and services to meet daily needs. Business as an economic activity engages in buying and selling and making use of human and material resources for transformation of inputs and the distribution of the finished goods. **c. Legal characteristics of business** The law recognizes a business as a voluntary association of individuals who make monetary contributions and capital investments to float a business for the purpose of making profit. Where there is no law there is no sin, the agreement reached by floating the business is binding on all. The law serves the role of checking the excesses of members and any deviation from agreed principles, policies, rules and regulations binding the parties. Meanwhile, in the eye of the law, a business is recognised as: 1. An artificial person i.e. a separate legal personality 2. Perpetual succession i.e. continuity 3. Transferable shares (in case of listed companies) 4. Limited liability of its shareholders The stability of the legal terrain of an environment assures businessmen of sanity and assurance that they can always get a fair deal in their investments and financial interactions. Note that all these are not applicable to small unregistered businesses **In -- Text Questions (ITQs) 3.2** 1\. Explain social characteristics of business. 2\. Explain economic characteristics of business. **In -- Text Answers (ITAs) 3.2** **1.** *Social characteristics of business involves Contributions from corporate social responsibility which originally conceived as ethics and moral obligations, related to altruistic or philanthropic motives; Non-profit management such as nongovernmental organizations, charitable organizations, philanthropic foundations, cooperatives, civil society organizations, and so on; Social entrepreneurship which consists of innovative social value creation by organizations from public, private, civic and hybrid sectors. SE is a source of social change, particularly when the organization can be replicated in other environments.; and Inclusive business which entails alleviating poverty by integrating low income citizens as consumers, employees, producers, suppliers, distributors, retailers and entrepreneurs in the value chain of large companies.* *2. Economic activities include production, distribution and consumption. While production entails conversion of raw material inputs into products and rendering of services to make profit, distribution entails the transfer of goods and services from the source to consumers through a supply network and consumption involves the usage of the finished goods and services to meet daily needs.* **3.3 Objectives of Business** i. **Service to consumer**. Consumers are well satisfy as another objective of any business concern. ii. **Profit.** The aim of an organization is to make profit iii. Employee's welfare. Business must maximally want to take care of its workers iv. **Survival**. Every business must have as a goal to continue to survive or exist. v. **Growth**. A business must not only survive, but it must have as goal to be the biggest. vi. **Market share**. Every business concern must be able to carry out its market share to control, aid sale its product to. vii. **Productivity**. It must continue to produce. viii. **Innovation**. Business must try to see that it's the first and best to bring up new ideas. ix. **Social responsibility**. Apart from doing 1-8 it must do to other things that people around the business must benefit. **In -- Text Questions (ITQs) 3.3** 1\. List five objectives of business **In -- Text Answers (ITAs) 3.3** i. ***Service to consumer**: Consumers are well satisfy as another objective of any business concern.* ii. ***Profit.** The aim of an organization is to make profit.* iii. ***Employee welfare:** Business must maximally want to take care of its workers* iv. ***Survival**: Every business must have as a goal to continue to survive or exist.* v. ***Growth**: A business must not only survive, but it must have as goal to be the biggest.* **Summary of the Study Session 3.** **Some of the characteristics of business include:** a. **Buying and selling**: Transfer of goods and services. For every business there must be exchange of goods and services for money. b. **Economic activities:** For every organization that is business oriented, it must produce goods and services. c. **Profit motive:** Every business activities it is for profit making. But profitable organizations and some corporation they are established to provide services. d. **Risk and uncertainty:** Every business undertaking must take risk and there is always uncertainty. Uncertainty may arise as a result of competition, wrong decisions unethical. e. **Continuous process:** A business undertaking must always be in business and not on and off. *2.* Social characteristics of business involves Contributions from corporate social responsibility which originally conceived as ethics and moral obligations, related to altruistic or philanthropic motives; Non-profit management such as nongovernmental organizations, charitable organizations, philanthropic foundations, cooperatives, civil society organizations, and so on; Social entrepreneurship which consists of innovative social value creation by organizations from public, private, civic and hybrid sectors. SE is a source of social change, particularly when the organization can be replicated in other environments.; and Inclusive business which entails alleviating poverty by integrating low income citizens as consumers, employees, producers, suppliers, distributors, retailers and entrepreneurs in the value chain of large companies, while economic activities include production, distribution and consumption. While production entails conversion of raw material inputs into products and rendering of services to make profit, distribution entails the transfer of goods and services from the source to consumers through a supply network and consumption involves the usage of the finished goods and services to meet daily needs and legal activities guarantee curtailment of the excesses of members and any deviation from agreed principles, policies, rules and regulations binding the parties. 3\. **Objectives of business include:** a. **Service to consumer**. Consumers are well satisfy as another objective of any business concern. b. **Profit.** The aim of an organization is to make profit. c. **Employee's welfare**. Business must maximally want to take care of its workers d. **Survival**. Every business must have as a goal to continue to survive or exist. e. **Growth**. A business must not only survive, but it must have as goal to be the biggest. f. **Market share**. Every business concern must be able to carry out its market share to control, aid sale its product to. **Self-Assessment Questions (SAQs) for Study Session 3** **SAQs 3.1 (Tests Learning Outcomes 3.1)** 1\. List five characteristic of businesses. 2\. Explain the customer satisfaction characteristic of a business **SAQs 3.2 (Tests Learning Outcomes 3.2)** 1\. Explain social characteristics of business. 2\. Explain economic characteristics of business. **SAQs 3.3 (Tests Learning Outcomes 33)** List five objectives of business **Glossary of Terms** 1. **Exchange** is an act of taking one thing in return for the other i.e. when you make payment in return for a product. 2. **Risk** is whatever serves as a threat to a business i.e. the potential for harm. 3. **Uncertainty** is an event that is not predictable and can bring negative fortune on the business. 4. **Target customers** are the audience you intend to engage and satisfy their needs in the market. 5. **Customers** are individuals or organisations that patronize your business and buy from you or your organization. 6. **Innovative** means been creative and it is the ability to find new ways of addressing a problem. 7. **Philanthropic motives** is the aim of giving and promoting others welfare.