Nature 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. Man starts business for the sake of earning of money, and money is earned by satisfying human needs and desires with certain things.

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, 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 fulfil 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 of profit, Industry means production, commerce denotes means of distribution and transportation of goods. Trade is considered as a part of Commerce.

Function of Business

Creation and Distribution of Utilities

Business involves creation and distribution of goods with 1he object of earning profit. A business man conducts this process for his own interest. It also includes the mining, communication and transportation functions.
Reading: Types of Business Organizations

Planning and controlling Function


It is one of the most difficult functions in 1he 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.

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.

Finance Function

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.

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.

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
Reading: Finance Problems for Small Businesses in Pakistan 

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.

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.

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.

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.
Reading:Tax Types

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.

Business Organization

Business Organization is an act of grouping activities into effective co-operation to obtain the objectives of the business. In other words, it is the structural relationship between the persons who deal with the overall organizational management in enterprise for specific purposes. In the words of Haney, “It is more or less independent complex of land, labor and capital, organized and directed for productive purposes by entrepreneurial ability”.

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