THE NATURE & SCOPE OF BUSINESS ACTIVITIES

Introduction:

When you hear the word “Business” what image do you have in your mind? Some think of job; others of merchants whom they patronize as consumers, and still others of the firms that make up the world’s economy.

The term can apply to many kinds of enterprise. Business provides the bulk of people’s employment and the variety of products they enjoy.

The word business means all-profit-seeking activities and enterprises that provide goods and services that an economic system needs. Some businesses provide/produce tangible goods such as automobiles breakfast cereals, bread, semovita, yam flour, bean flour, computer chips etc. others provide services such as insurance, car rentals and lodging.

Business is also the economical pulse of a nation, the means through which the standards of living of people improves. Profit motives are the primary mechanism for accomplishing the goals of business. Profit is the difference between a company’s revenue (receipts) and expenditures.

Formally, it is the financial rewards received by successful business people who take the risks involved in business. Profits provide the incentives for people to start companies and expand business and to offer consistently high quality competitive goods and services.

It should be noted that the business concepts discussed here also encompass not-for-profit organizations firms with primary objectives other than returning profits for their owners. The not-for-profits organizations in Nigeria that operate are over one million and they employ people including volunteers in their organizations. This sector includes libraries, churches, religions and human service organizations, political parties and Labour Unions.

To succeed, companies must deal responsible with employees, consumers/customers, suppliers, competitors units of government agencies and the general public.

Most of the businesses in Nigeria, large and small belong to the so called private enterprises, system/organized private sector/ in which their success or failure depends in how much they match and counter the offerings of competitors in the Nigerian business environment.

Competition is the battle among businesses for consumer acceptance. Sales and profits are the barometer to measure such acceptance. Competition is the mechanism that guarantees that the private enterprises system will continue to offer the goods& services that provide high living standards and sophisticated life styles. Few businesses escape the influence of competition. Even the not-for-profit organizations.

Other definitions of business:

Business can be seen as all profit directed economic and commercial activities that provide goods and services necessary to a nation’s standard of living.

Business is the human activity concerned with material things: manufacturing aeroplanes, erecting buildings and producing paper boxes, lending money, trading stocks and selling insurance; operating a railroad, managing a store stove and distributing goods … etc. It is the activity that deals with producing and distributing of goods and services.

Business is an institution organized and operated to provide goods and services under the incentives of private gain. Business does not mean just the business firm. A business firm may be seen as a productive economic unit, entity or organization. Example of business firms are NB, Guinness Brewery Plc. Shoprite, Roban Stores, Emenite etc.

Role of Business

1.         Business organizations make important economic contributions to our material welfare and survival. Most of the goods we use flow out from the many business firms around us.

2.         Business plan, utilize and organize the national resources thereby generating income, that supports consumption.

3.         Business organizations also make tax contributions which provide revenues for government activities.

4.         Employment for workers.

5.         Government obtains goods and services from businesses as well as funds to pay for their operations.

6.         Business come second to government in the order of importance and power. Government has a great share of power and authority while businesses control a lot of know-how and technology. Note that government however regulates the activities and operations of business enterprises through laws and legislation it makes.

Obligations of the Business

• To customers
• To workers
• To management: it may be recognized and rewarded according to the fruits of its decisions allocation of resources; promotion of human values and protecting the interests of society.
• To competitors
• To investors
• To the public

That the enterprise will strive in all its operations and relations to promote the general welfare, cultural, educational and social events that encourage productivity and ethics.

Resources of Business

These are the basic factors of production: land, capital, labour and entrepreneurship. Government also is listed as a factor of production because it provides many services which are very essential in the operation of the business system.

The art of concentrating, controlling, planning and directing the other three factors of production is called entrepreneurship.

Business Incentives

The primary difference between business and other social institutions such as government, family trade unions is the element of seeking private gain. However, there are other differences such as the methods of utilizing resources and the organization of the internal parts of the institutions but profit making appears to be the most outstanding. (Ejiofor, 2008)

Other objectives of business are

• Growth
• Prestige
• Service
• Size of the market
• Public acceptance

The objectives serve to encourage businesses to operate and function effectively.

Why study business

1.         Career selection

2.         Business ownership

3.         Facing the problem of society (these societal problem are employment and its reward system; taxation, the price level; inflation, industrial safety, communications, transportation etc.

4.         Satisfaction

a.         The reward for studying Business can be exciting and rewarding as engineering, law, chemistry or physics.

b.         Business concepts nowadays are being copied in government administration and other educational establishments.

c.         Wide exposure: It is an interdisciplinary subject. It depends on findings from science, psychology, economics, sociology and anthropology.

d.         Practical approach: Business knowledge is tested by practice.

Businessmen have developed advanced knowledge of assessing firm’s performance including accounting statements, budgets, quality control etc.

Basic features of production management; introduction; types of industrial organizations; manufacturing vs. service organizations. The goals vary according to each industrial organizations types.

Fields of business organization:

• Production
• Marketing
• Finance
• Personnel
• Production system

Types of production processes

• Extractive;
• Fabricating; Synthetic
• Assembling
• Analytical

What is business?

Definitions

1.         An organized activity: All-profit-directed economic and commercial activities that provide goods and services necessary to a nation’s standard of living.

2.         A human activity concerned with material things: manufacturing airplanes erecting building, producing paper boxes, lending money etc.

3.         Business is a complete endeavor which contains a myriad of different actions difficult to be expressed in one definition.

4.         Business as in institution, organized and operated to provide goods and services under the incentive of private gain e.g. individuals and group of persons working to achieve a common goal.

Business does not just mean the business firms. A business firm may be seen as a productive economic unit, entity or organizations e.g. NB, Guinness, Innoson, Dangote, North West Oil & Gas.

To understand business, we must also think of management, administrations and operation of the business firm as well as the environment or the surrounding climate within which business is carried on.

Business does not exclusively involve economic aspects of life. There are other areas such as human relations, ethics, social responsibility etc.

To know what a business is we have to start with its purpose. Its purpose must lie outside of the business itself. It must lie in the society since business enterprise is an organ of society (Drucker, 2001). The only one valid.

Purpose of business

The main purpose of business is to create a customer. Markets are not creates by God, nature or economic forces but by business people. The want a business satisfies may have been felt by the customer before he or she was offered the means of satisfying it. Like food in a famine, it may have dominated the customer’s life and filled all his walking moments but it remained a potential want until the action of business people converted it into effective demand. Only then, is there a customer and a market. Sometimes the want may have been unfelt by a potential customer: no one knew that he wanted a Xerox machine or a computer until these became available. There may have been no want until business action created it-by innovation, by credit, by advertising or by salesmanship. The business action creates the customers. So it is the customer who determines what a business is. It is the customer alone whose willingness to pay for a good or for a service that converts economic resources into wealth, things into goods. What the customer buys and considers value is never just a product. It is the utility that is, what a product or service does for him.

Purpose of Business

Two basic functions: Marketing and Innovationmarketing starts just like Dangote stated: with the customer his demographics, his realities, his needs, his values. It does not ask: what do we want to sell? It asks, what does the customer want to buy? It does not say, this is what our product or service does. It says: these are the satisfactions the customer looks for, values and needs.

Innovation is defined as the task of endowing human and material resources with new and greater wealth producing capacity. Managers must learn to convert society’s needs into opportunities for profitable business. This is also a definition of innovation. (Drucker, 2001)

Public and Private Administration

Some scholars contend that administration, whether public or non-public is one, has the same fundamental characteristics and should therefore not be separated for the purpose of study. Fayol (1949), Follet (1941) and Urwick (1938) are among the scholars who hold this line of thought. Scholars who hold the view that there exists difference between public and private administration include Simon (1946) and Appleby (1978). Drawing from.eminent scholars and authors, Tonwe (1998), Onah (2008), Sharma et al (2011) and Laxmikanth ( 2005) have agreed on certain areas of difference and similarities between public and private Administration. Specifically these have been articulated and explained by Tonwe (1998) as follows:

Differences between Public and Private Administration

• Political direction: A fundamental difference between public and private administration is anchored on political direction. Public administration is subject to political direction. A public administrator has no option but to carry out orders or programmes as dictated by the political executive. On the other hand, private administration is not subjected to political direction, except during grave emergency situations. E.g the grounding of Sosolisoand Chanchangiairlines by President Obasanjo in December 2005. Usually, the goals or objectives of private administration are fashioned out to serve their own ends. Again in this era of COVID-19, the government of MuhammaduBuhari imposed a lockdown on Lagos, Ogun states and the Federal Capital territory at the onset of the pandemic in Nigeria.

• Nature of Environment: The immediate environments of public and private administration are different. While public administrative agencies inhabit political environments, private commercial business inhabits an economic environment. Because of the difference in the immediate environment of public and Private Administration, they are not only subject to different influences, but also respond to issues differently. While public administration is more concerned with ensuring political stability and may give in to pressure of interest groups at great financial cost, private administration is more concerned with the economic benefits that may accrue from whatever decision that is taken (Njoku, 2014).

• Operational Freedom: Another point of difference between public and private administration arises from operational freedom. Public administration agencies are required to conform strictly to rules and regulations laid down for them. They cannot deviate, even if such deviation will be of benefit to the people being served. In contrast, in private administration, the acts and decisions of private business enterprises need not conform to existing rules and regulations, or precedents as long as such acts and decisions achieve the goals of the organization. A manager in a private business concern may set aside the rule that before contracts are awarded, tenders must be invited from registered contractors and awards the contract directly to a reputable company, if in his opinion the company stands to gain more in terms of time and money that would be saved. Public administrative agencies do not have, such discretionary powers, Thus, while public administration is rigid in its operational style, private administration is flexible. Due process is usually applied in public administration.

• Motive: Welfare versus Profit: Public administration is conducted with the primary motivate of service. The ruling principle in public administration is public welfare. To this end, all available resources are tapped to provide basic amenities and services, which will ensure a good standard of living for the citizenry. In contrast, private administration is conducted with the primary motive of making profit. No business organization will attempt to undertake a project if from the out set, it is obvious that such a venture will not yield profit in the short or long run.

• Difference in the attitude of the citizenry towards both: The conception of the citizenry and their attitude towards public and private administration reveal another point of departure between the two. People generally see government as an institution, which concerned with the welfare of all and as such should be given maximum support In contrast, the common man is less concerned about the happenings in the private sector.

• Nature of activities: Another point of departure between public and private administration arises from the nature of activities undertaken by both. The core activities of public administration have an aura of urgency about them, which does to exist in private administration. Activities such as law and order, health, defense and justice with which public administration is concerned require round the clock attention, as these activities are vital to the very survival of the society. Neglect of such activities for just one day is bound to lead to disastrous consequences to society. This is not the case in the private administration as the activities undertaken by business organizations are not vital to the very survival of the society.

• Orientation towards how the Public should be treated: Impartiality and equal treatment of all is an essential feature of the operational principles of Public Administration. The Public Administrator is expected as per laid down rules and regulations to be uniform in his dealings with the public. He is not expected to show favor or disfavor to anyone, rather, he is expected to be consistent and impartial in his dealings with the public. In private administration, the adoption of the principle of uniformity in dealings with the public is not critical to the operations of business concerns as discrimination en one client and another is practiced. A business concern may decide who to give or not to give credit facility at will without any serious consequences.

• Efficiency: Private administration is seen by some to be synonymous with efficiency. The clamor for a business man’s government to the commercialization and privatization of the whole machinery of government drives home the point that in the thinking of many people, the level of efficiency in private administration, is superior to that of public administration. This is traceable to differences in operational -style. In private administration, there is differential wage payment as incentive to increase production and to attract more experienced staff from rival organizations as to attract improving and adopting new management techniques. In contrast, public administration is ~aid to be characterized by poor incentives to workers, corruption extravagance, red tape and inefficiency.

• Public responsibility: Public administration is subject to the principle of public responsibility. In private administration, business concerns do not have such responsibility towards the public.

• Financial control: Another point of departure between public and private administration arises from how their finances are controlled. Public administration is subject to the principle of external financial control. In all democratic countries it is not the executive that controls finance. It is the legislature, which approves the budget submitted to It by the executive and also ensures that the budget is implemented as approved.Finance and administration are not completely separated in the case of private administration.

Public and Private Administration – Similarities

Those who hold the view that public and private administration are the same and should not be separated for the purpose of study, give the following reasons among others to buttress their contention (Tonwe,1998):

1.         Similarity in skills required: The skills required in the operations of public and private administration are the same. These may be clerical, accounting, managerial or technical skills. The training of an accountant or an engineer in the university equips him or her to do the job of an accountant or an engineer regardless of whether he or she is employed in the public or private sector. The occasional exchange or personnel between the public and private sectors can further buttress the point of similarity in skills.

2.         Use of same techniques and practices: Business techniques, practices and standards have increasingly been adopted in public administration. The emergence of government corporations and the commercialization of government corporations as well as outright privatization in some cases makes public administration adopt the organization and methods of business management.

3.         Big business organization and bureaucracy: The dynamism usually associated with business enterprises is very difficult to discern when the business enterprise become very large. The problem of impersonality, inflexibility rigidity as well as consistency and conformity in relation to their employees and the general public, which are usually associated with public institutions, which by their very nature are large institutions become glaring features of big business organizations.

4.         Sensitivity to the political climate: The issue of sensitivity to the political environment is not exclusive to public administration alone. Many a times, the decisions of large business organizations are also dictated by purely political considerations especially when it borders on their good image and survival. Many big business organizations, especially the multi nationals in Nigeria have been involved in a number of activities and projects such as award of scholarship to Nigerians to study at the secondary and tertiary levels construction of roads, clinics, supply of electricity and water to communities in their areas of operation. These companies have also been very generous in providing funds to support different programmes at local, state and national levels

PUBLIC ADMINISTRATION AND OTHER DISCIPLINES

Public Administration as an autonomous and distinct academic discipline enjoys a robust relationship with other social science disciplines and other cognate fields of study. It relates well with politics/political science, Law, History, Psychology, Sociology, Economics, Business Administration and many others.

Public Administration and Political Science

These two fields of study have the closest affinity and relationship. Public Administration was a sub-field of political Science before it was separated and became a distinct and autonomous subject of study. Even with the separation; the two disciplines still share several things in common. The theories and principles of political science still serve as theories and principles of public Administration. It is equally contended that politics/political Science set the task for administration. Also while political Science/Politics focus on policy formulation, Administration is concerned with policy implementation.

Public Administration and History

History is concerned with the record of past data, events and experiences. This makes it indispensable to the study of public Administration. A good understanding of contemporary issues in public Administration must rely on I records of the past for comparison. Comparative Public Administration, Development Administration, Organizational Behavior and other cognate issues in Public Administration can be better understood with the benefit of hindsight provided by History.

Public Administration and Law

Law is a body of rules and regulations that regulate human conduct. Public Administration operates within the framework of the laws of the state. Hence, law regulates administrative actions. More so, a branch of law­Administrative Law is studied in public Administration while Administration is equally studied in Law programs. This is because the knowledge of one advances the source of the other and Law especially serves as a guide to public administrative actions. It is through administrative processes that public laws and policies are executed·

Public Administration and Sociology

The discipline of Sociology focuses on the study of society, groups of people and social institutions and their relationships. Some scholars regard sociology as the mother of the social sciences. Hence, Public Administration and Sociology are closely related. Some concepts and issues such as gender studies/discrimination, ethnicity, class, status and several othersare borrowed from sociology. Some other Important issues In public administration such as the theory of Bureaucracy were pioneered by a popular 6ociologist­Marx Weber.

Public Administration and Psychology

Psychology as a social science focuses on the study of human behavior. This has prominently impacted on the study of public administration and enriched its practice. Several psychological studies have been found to be very useful and relevant in the study and practice of Public· Administration. Psychologists have developed techniques which have been adopted in Public Administration, this include motivation techniques, training techniques such as role playing, interview techniques and several other aspects of public personnel administration which were adopted from social psychology.

Elton Mayo’s social psychological experiment in his Human relation theory is also very relevant in public administration especially in leadership issues. This shows that the two disciplines are closely related and a good knowledge of psychology would enhance the performance of a public administrator.

Public Administration and Economics

Contemporary Public Administrative policies/issues are defined by basically economic motives in modern states Economic parameters are standards forthe measurement of achievements of public Administrators in modern states. Hence, Public Administrators adopt economicmeasures in their efforts to meet the needs and the demands of citizens. These include measures or policies to create employment opportunities, improve standard of living of the people, establish and sustain industries, etc. It is therefore, necessary that Public Administrators must have a good knowledge of economic issues such as public financial management, revenue allocation, etc.

Public Administration and Business Administration

Public Administration and Business Administration are closely related. The two disciplines apply the same theoretical frameworks in their study and focus on similar issues. In some universities and polytechnics, they are mounted in the same faculty. A good example is Ebonyi State University, Abakiliki. It is therefore difficult to separate Public Administration from Business Administration especially as they borrow concepts and principles from each other. For instance, the principles of management (Henri Fayol’s fourteen principles) and theories of motivation apply to both disciplines.

Differences between Public Administration and Business Administration

This can be summarized in briefs points as follows:

• Subject to political direction
• Difference in environment (Public – political environment) while business admin inhabit economic environment. Consequently, benefits derivable differ.
• Operational freedom or discretional powers of operation e.g. contract awards decision. Rigidity vs. Flexibility in operations.
• Motive (welfare vs. profit) in its conduct of business.
• Differences in the attitude of/conception of people to the two institutional and private concern.
• Nature of activities and urgency e.g. law and order, health, security and justice. These are vital to survival of society.
• Impartiality and equity in treatment of public
• Efficiency in service delivery. Public service delivery is characterized by poor incentives xxxxx extravagance, red tapism and inefficiency.
• Public responsibility is inherent in Public Admin while it is not in Bus. Admin.
• External financial control

Similarities between Public Administration and Business Administration

1.         Same skills acquired to perform the same job in public sector and private people ingrate to and from both sectors based on this.

2.         Use of some techniques and practices. Think of commercialize and privatize of government enterprises

3.         Big business organizations and bureaucracy.

4.         Sensitive to political xxxxxx considerations in decision making; especially as it affects good image and survival. Big MNLs award scholarship, CSRs build health centres, water project in their areas of operations.

ROLE OF BUSINESS

Business organisations make important economic contributions to our material welfare and survival. Most of the goods we use flow out from the many business enterprises around us. Businesses utilize, plan, and organize the national resources, thereby generating income that supports consumption. Our business enterprises also make substantial tax contributions, which provide revenues for government activities. Consumers buy and use the output of businesses to satisfy their needs. Workers are provided ample employment opportunities and income necessary to purchase goods and services in a modern society. Governments obtain goods and services from businesses as well as funds to pay for their operations.

Each business enterprise makes a specific contribution depending on its objectives or mission. Some produce raw materials, or process these materials, distribute products, or provide service, while others fabricate the raw materials into useful ‘goods or products. Manufacturing is responsible for the production of many industrial and consumer goods. Transportation, communication, and other utilities make easier the operation of other businesses. Finance, real estate, and insurance playa role in the transfer, control, and protection of assets. Service industries provide intangibles which preserve our lives and property. Agricultural businesses provide food, feed, and fibre.

Business come second to governments in the order of importance and power. Government has a great share of power and authority while businesses control a lot of know-how and technology. In fact all government organizations get all the goods and services they utilize from business enterprises. The fund that businesses contribute to government is quite substantial. Government, however, regulates the activities and operations of business enterprises through the myriad of laws and regulations it makes. Government has much in business and in modern times, government has shown that business is a creature of government. For the smooth functioning of society, business and government co-operate in many ways.

OBLIGATIONS OF THE BUSINESSMAN

Anyone who owns a business enterprises assumes an enormous obligation for himself, the family, the entire society and the people who work in the enterprises. Any failure in business is an economic loss to many persons or groups in the society. For example, when a retailer’s business fails, he probably owes money to several wholesalers or manufacturers and other creditors who invariably absorb part of the loss. A businessman, therefore, has the following obligations:

1.         To Customers: That they may have the best products and services at the lowest cost, according to the rules of fairness to all engaged in production and distribution.

2.         To Workers: To preserve their employment with all its rights and rewards and to expect fair contribution from them under conditions approved by the law and our social ethics.

3.         To Management: That it may be recognized and rewarded according to the fruits of its decisions, allocation of resources, promotion of human values, and protecting the interest of others.

4.         To Competitors: That there will be no unfair practices and foul means of competing. Smuggling, counterfeiting and substandard goods are condemnable measures of doing harm to competitors.

5.         To investors: That their investment and interests will be safeguard through the best management judgments and decisions. Efforts will be made to open up profitable investments opportunities so that profits can accrue to the investors after expenses have been deducted.

6.         To the Public: That the enterprise will strive in all its operations and relations to promote the general welfare, cultural, educational and social events that encourage high productivity and ethical obligations and to observe faithfully the laws of the land. Business social responsibility is taken up in chapter six.

RESOURCES OF BUSINESS

In the study of business, as in the study of Economics, it is important to understand the basic factors of production: land, labour, capital and entrepreneurship. The basic features of these are given below.

1.         Natural Resources or Land: The productive capacity of any society is in part explained by its natural resources of land. The ability of Nigeria to produce goods and services is related to her having fertile soil, minerals in the ground, water and timber sources, enough air space, and a reliable climate. Land in this context is used to denote the surface of the earth, everything beneath that surface, and everything above. Land provides opportunities for the discovery of new raw materials. Solar energy is a new source of provision of energy and the jungles are also being explored for ores of all kinds.

2.         Labour:Labour is the human effort, either physical or mental, which is used in theproduction of goods and services. It is labour that converts raw materials into finished goods and distributes them to consumers. Again, human intelligence creates the complex machines that are used for production, and it is human intelligence that guides their uses. The source of inspiration in industry remains the human mind.

3.         Capital: Capital greatly enhances the productivity of labour and management. Capital can be described as all of the things that workers use in production and distribution, namely, tools, warehouses, factories, machinery, buildings and other equipment. Capital, however, has a variety of meanings and in some cases the term “capital” is also used when referring to the money invested in business.

4.         Government: Because government provides many services which are essential in the operation of the business system, it is often listed as a factor of production by some scholars. Some of the important services provided by government are hospitals, streets and highways, police and fire protection, courts that settle disputes, post offices, telephones, and other public utilities.

5.         Entrepreneurship: The factors of land, labour, and capital must be combined effectively in such a way as to produce tangible products of value. The art of concentrating, controlling, planning and directing the other three factors is entrepreneurship. The entrepreneur may not be actively involved in the physical activities of production. The nature and functions of the entrepreneur are taken up in Chapter Seven.

BUSINESS INCENTIVES AND PROFIT

The primary difference between business and other social institutions such as government, family, trade unions, is the element of seekingprivate gain. There are other differences such as the methods of utilizing resources and the structure and organisation of the internal parts of the institution, but profit making appears to be the most outstanding. Apart from profit, there are some other objectives which serve as complementary incentives such as growth, prestige, service, size of the market, and public acceptance. Profit is however supreme in the hierarchy of objectives or incentives that encourage businesses to operate and function effectively.

In Nigeria, except businesses strictly financed by states or federal government, most others are financed primarily by private capital which expects a return on investments in the form of interest or profits. Federal and state owned enterprises are increasingly being expected to produce large profits. If the expected return is not realized over a period of time, the capital will be withdrawn and the enterprise will fail. Profit is that part of income that remains after cost have been deducted. It is in simple arithmetic, income less costs. Profits are the supreme incentive to start businesses. Although people may have so many other reasons for going into business, profit is nearly always one of them. Without profits a business firm cannot expand and grow. When costs exceed incomes the firm becomes incapable of paying its debts and soon collapses. Profits are therefore an integral part of the very existence of a business.