Nature of Business {Types & 11 Functions of Business}

The term “Business” is wide in meaning. It includes all those human activities made for the sake of earning profit through the process of production of goods or buying or selling of goods. A Qualitative Businessman starts business for the sake of earning of money, and money is earned by satisfying human needs and desires with certain things.

What are the different natures of Businesses?

Business activities can be of various kinds. These may be fishing, mining, agriculture, cultivation, banking or industry, whether these may be conducted by a Limited Company or by a Partnership firm or by one man, they assign duties to employees whether the business is done on wholesale or retail level. In short every human activity made to earn income or profit is known as Business.

If the goods are produced to fulfill personal needs only, this activity cannot be called business. Earning of profit is the special mark of business. As compared with commerce and industry the word Business is used in the wide sense. It also includes all those economic factors which help a man to earn profit by satisfying material, spiritual and mental needs of human beings.

There is a close relationship among Business, Industry, Trade and Commerce and they are therefore; taken in the same sense. But sometimes the difference in their meaning becomes very obvious. Briefly speaking Business means earning profit & there are different types of business organizations, Industry means production, commerce denotes means of distribution and transportation of goods. Trade is considered as a part of Commerce.

11 Major Function of Business

1. Creation and Distribution of Utilities

Business involves creation and distribution of goods with the object of earning profit. A business man conducts this process for his own interest. It also includes the mining, communication process and transportation functions.

2. Planning and controlling Function

It is one of the most difficult functions in the business undertaking. It is largely concerned with the determination of policy for plant and following them through production. Any divergence from the target may affect the function to be performed at the next stage. 

3. Technology and Engineering Function

Engineering department in large technical industries advise the supervisors on technical matters. Research, development and designing of the product function is often performed under the engineering department.

4. Finance Function

You do everything to be Financially Independent and this is the most important function in the private enterprise by which all the activities are conducted. The funds are in the custody of treasurer who is liable for all types of payments belonging to money. Credit control, purchase discount, wages and loans are also financial function.

5. Manufacturing Function

Manufacturing is primarily concerned with the conversion of raw material into finished or intermediate. In other words it is the creation of form utility. Manufacturing process may only involve the changing of the nature of the material, as this function is done in refining or chemical industry, But really it includes both the changing of the nature of the material and its form as it is conducted in the steel industry.

6. Personnel Function

The personnel function is conducted by personnel department which is also named as Industrial Relation Department. Usually the following functions are centralized by this department:
  • Organization
  • Establishing policies
  • Staff development as promotion policies, training program
  • Remuneration (i.e. job evaluation, grading, merit rating, establishment of wages and salary structure.)
  • Relationship scheme through trade unions, counseling, etc.
  • Casting and budgeting
  • Record Keeping

7. Accounting Function

Accounting department performs a professional service to business. Accountant or chief accountant is in-charge of this department who conducts and supervises the financing accounting, budgeting and costing activities. regarded as one of the tools of administration.

8. Purchasing Function

It is one of the highly important functions in manufacturing organization. There are several specialists in their respective fields in the purchase department who also increase the efficiency of work and help to maintain reasonable prices of the product. The purchasing function is closely related to sales.

9. Sales Function

It is productive function of business which is generally performed by sales department. It involves transfer of ownership of goods from one hand to another in exchange for money. Sales function also includes grading, where housing, transporting, sorting, collecting and packaging matters. These sales functions are performed with Modern & Traditional Selling Techniques.

10. Organization

Organization is generally regarded as grouping of activities in a coordinated manner with a view to obtaining maximum benefits. In the words of Richard “Organization is the structural relationship between the various factors in an enterprise”. According to this concept three factors of an enterprise i.e. Men, Material and Management are combined to attain the objects of the business. So organization is the relationship between the various objectives and factors.

Some writers refer the word 'organization' to the individuals functioning within an organizational unit as well as to the whole functioning. However, it is advisable that organizational changes should be made according to changed circumstances in order to meet present environment.

11. Importance of Business Organization

Business organization is an act of grouping activities into effective co-operation for specific objective. It is primarily concerned with the creation and distribution of utilities for earning profit. Its study reveals that it covers all spheres, of economic functions and it provides a common link between. the various factors of the business activities.

So effective cooperation among the various factors of production will increase the volume of profit of the enterprise. It guides us to the improved method of organization and operation concerning production, marketing, financing, transporting, and trading.

It restricts wastage of time, material and factory overheads which lower' the cost per unit. It is to be noted that business organization teaches us all methods and principles of office organization and the best way of performing the secretarial functions.

It provides the adequate solution of many business problems. So it has enabled the businessman to conduct the business affairs efficiently. Business organization, thus consists of the skillful activities of the businessman with a view to promoting trades, commerce and industry

TOP 7 Types of Organization

1. Industrial Organization
2. Wholesale Organization
3. Retailing Organization
4. Financial Organization
5. Transport Organization
6. Social Organization
7. Governmental Organization


Industrial Organization

It is the organization of the industrialists and manufacturers who combine material through various factors of production and supply the finished goods or partly finished goods to the wholesalers.

Whole Sales Organization

It is organization of the persons who directly purchase goods from the producers and sell them to the retailing organization in small quantities, He thus plays the role of middleman between producers and retailers, He keeps the stock of one or two goods in large volume. He deals in local or national markets.

Retailing Organization

This class of organization includes the persons who take over the goods from the wholesalers and supply the goods to .consumers. So he is a link between the wholesalers and the consumers. He keeps the various kinds of goods in small quantity. As he keeps close contract with his customers he knows their tastes, fashions and demands and he can provide valuable information to wholesalers and producers.

Financial Organization

This is the organization of the financial institution who provide the depositing and financing facilities to the public. It includes all scheduled or non scheduled banks.

Transportation Organization

The member of this class of organization provides transportation facilities to the public in order to shorter the space and create place utility.

Social Organization

This class of organization is formed with a view to promoting public welfare and for community development such as charitable institution, educational institution, hospital and other social and welfare association. It also plays a very vital role in creating the spirit for the service of man.

Government Organization

This is the organization of the various departments which are directly owned managed and supervised by the government. Such as District Council, corporation, railway, electricity, post and telegraph etc.

Factors To Considers Before Starting a Business From Scratch In Your Country

Demand

Before starting a business, the market is surveyed to know which goods are in demand. The businessman also selects a business which is suitable to him and which he can organize well.

Size of Business

The businessman must keep in view the volume of business. He decides whether he has to do business at small scale or large scale. He may limit his business at the local level; and by adopting the business of a wholesaler, he can extend his business to other market.

Form of Organization

After deciding the size of business, the business man has to plan about the form of organization. He decides whether he has to start business as a sole-proprietor, or as a partnership or in form of Joint Stock Company..

Suitable Location

Suitable location facilitates business and guarantees its success. The premises where following facilities are available are considered best for business: with sufficient supply of raw material, an easy approach to the market for the sale of goods, water, power and quick means of transportation and protection against risks and accidents.

Concession from Govt.

In some enterprises Govt. allows some concession or rebate income to X or in excise duty. In some kinks of business import and export policies are lenient. All these concessions are kept in view before starting a business.

Arrangement of Capital.

Capital is arranged according to the size and bulk of business. Even after the business has Started capital is required for the purchase of raw-material and for the payment of wages and taxes and for miscellaneous, purposes. Capital is arranged keeping in view all these requirements.

Business Policy

Policy is framed before the actual commencement of business. Determination of method of payment and receipts, formula and technique of production are most essentials for the successful business. Future prospects are to be regarded according to the rate of growth. Anyhow policy generally depends upon the nature of business, rate of profit and situation of market.

Availability of a Administrative Personnel and Skilled Workers

If machinery is arranged in business, skilled personnel are also employed to run the machinery and the administration. Qualified persons should be engaged if business is to be conducted on right lines.

Availability of Labor

Laborers are the back-bone of a business. Before starting a business the area is surveyed to know whether sufficient labor is available or not; In order to reduce the cost of production, the local rate of wages of labor is also kept in view. It is better to start business in an area where the wages are low.

Means of Transportation

Developed means of communication and transportation are essential for business. These means help to bring raw-material to the factory and also help to transport finished goods to the local and other markets. If these facilities are not available the cost of production will increase, and the business will suffer.
Nature of Business {Types & 11 Functions of Business} Nature of Business {Types & 11 Functions of Business} Reviewed by Anonymous on 4:34:00 AM Rating: 5

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