Nature of Business – Business is economic activity. Business risk can be defined as uncertainties or unexpected events, which are beyond control. In simple words, we can say business risk means a chance of incurring losses or less profit than expected. These factors cannot be controlled by the businessmen and these can result in a decline in profit or can also lead to a loss.
A nature of business is a multi dimensional object and thus when one asks about nature of the organization, it can’t be answered in one line. There are different perspectives and perceptions and questions that describe the organization in different ways.
Types of Nature of Business
- Economic Activities
- Exchange of Goods and Services
- Profit Motives
- Risk and Uncertainty
- Continuity Transactions
- Creation of utility
- Consumer Satisfaction
- Satisfying Social Needs
Scope of Business
Business activities may be divided into four categories:
- Related to production of goods
- Rendering of services
- Distribution of goods
- Distribution of assistance
Business activities broadly into main two categories:
Classification of Industry
- Primary and Genetic Industry:- Related to reproduction and multiplication of certain species of animals and plants with the object of earning profit
- Extractive Industry:- Engaged in raising some form of wealth from soil, climate air water or from beneath the surface of earth
- Construction Industry:- Creation of infrastructure for the smooth the development of the economy.
- Manufacturing Industry:- Conversion of raw material into finished goods
- Analytical Industry
- Processing Industry
- Synthetic Industry
Classification of Commerce
It is concerned with the exchange of goods. Includes all those activities related to transfer goods from the place of manufacture to ultimate consumers.
Commerce embrace all those processes which help to break the barriers between producers and consumers. It is sum total of these processes which are engaged in removal of hindrances of trade, place and time in the exchange of commodities.
Two Types of Commerce
- Aids to trade
Organization of Business
The nature of the organisation can be discussed by following concepts :
- Organization as a Group : Organisation can be defined as an identifiable group of people who contribute their efforts towards the attainment of goals. People form groups or organisation and pool their efforts by defining and dividing various activities. Responsibility and authority.
- Organization as a process : As a process, organisation is concerned with arranging in a logical and orderly manner the activities of all the employees, it specifies how the duties are to be divided among the departments and the employees, it also creates relationship of one job to another and lays down the scope or limits of authority and responsibility.
- Organization as a structure : Organisation structure is the structure of human relationships or the network of horizontal and vertical dimensions designed to accomplish common objectives. It is a and staff structures. Structure denotes the pattern of relationships among positions and jobs with the objective of accomplishment of enterprise objectives.
- Organization as a social system : The existence of social implies that the organization environment is one of the dynamic changes, rather than the static set of relations. All parts of the system are interdependent and subject to influence by any other part. From sociology, we learn that organizations are social systems. Consequently, activities therein are governed by social laws as well as psychological laws.
- Formed on the basis of mutual interest : Mutual interest is represented by the statement “Organization need people, and people also need organization.” Organization have a human purpose. They are formed and maintained on the basis of some mutuality of interest among the participants.
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