According to Boone and Kurtz (2003) business consists of all profit-seeking activities and enterprises that provide goods and services necessary to an economic system, of course at a profit. The profit is made on behalf of the owner (Symons and Adams 1993).
Business provides people with food, clothing, housing, medical care and transport and most everything else that makes life easier and better. There are businesses that will produce goods such as automobiles (Toyota), breakfast cereals (proctor & Gamble), computers (dell), cooking oil (Bidco) others will provide services such as insurance (Madison, BlueShield), banking services (KCB, Equity), car rental (Kenatco and Avis).
A business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main objectives the receipt or generation of financial returns in exchange for work and acceptance of risk. Notable exceptions include cooperative enterprises and state-owned enterprises. Socialist systems involve government agencies, public ownership, stateo wnership or direct worker ownership of enterprises and assets that would be run as businesses in a capitalist economy. The distinction between these institutions and a business is that socialist institutions often have alternative or additional goals aside from maximizing or turning a profit.
The term “business” has at least three usages, depending on the scope — the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as “the music business” and compound forms such as agribusiness, or the broadest meaning to include all activity the community of suppliers of goods and services.
Business Studies, the study of the management of individuals to maintain collective productivity to accomplish particular creative and productive goals (usually to generate profit), is taught as an academic subject in many schools.
Profit represent the rewards that business people who have taken the risk in starting and running the entity. This may be different from accountant thought of profit-difference between the firm’s revenue and expenditures. Therefore the definition leaves out the nonprofit businesses.
Nonprofit organization is an organization that serves a specific cause and is not intended to make profits. We need to note that even though the motive of these organizations is not to make profit they are run like a business.
In discussing business it is important to look at the factors of production which are the inputs required businesses for effective operations. There are four factors of production namely: natural resources, capital, human resources and entrepreneurship. Each of these factors has corresponding payment. Human resources are the people or workers who are able to perform work for the business, they contribute their skills and abilities and in return they get paid in form of salaries and wages. Capital includes equipment, machinery, tools and physical facilities that the business uses in its daily operation. Technology, which is knowledge or tools, used to produce products or services, falls under the capital and has revolutionized the way business operates; it has helped achieve efficiency and speed for most activities in business.
Entrepreneurship on the other hand is the creation of business ideas and the willingness to take risk in pursuing those ideas.
Historical Development of Business
Business history can be traced in six eras; the colonial period, the industrial revolution, the age of industrial entrepreneur, the production era, the marketing era and the relationship era(Boone & Kurtz). In the following paragraphs we discuss activities under each era.
The colonial period
This was the period prior to 1776, and emphasize was rural and agricultural production. There were small towns that functioned as the market place for farmers and craftspeople, in Kenya for example we had town such as Karatina serving as such city though much later in terms of years. The economy success was primarily dependent on the farming.
The industrial Revolution
This was around 1760-1800s’. Business started to move towards mass production and use of semi-skilled workers as well as the use of machines. Some of the benefits that firms were able to get include cost savings from economies of scale and use of machines. Also business growth meant that they could be able to purchase raw materials in bulk. Specialization of labor also improved production a great deal. It is during this period that agriculture became mechanized, and factories sprang up in cities.
Key stakeholders in a business
Business to be successful must involve other people. These people affect and are affected the business and hence they have an interest in business, we call them stakeholders. These are the company, owners, customers (internal and external), collaboration and competitors.
A company is an arrangement for running the business. It refers to the business itself. It is the organization of people, the buildings and equipment and other resources neede to operate a business. It is the process or system of core activities necessary to run the business. Companies can take many forms ranging from an individual who works on his own to a large corporation that operates in dozen of countries.
These are the people who provide the capital to the business. If you recall we said that an entrepreneur is the person who come up with the business idea and is willing to take risk. More often than not entrepreneurs may not have the capital to finance the venture, it is at this point that they may allow other people to invest in the business and become coowners. Stockholders/shareholders are investors who become co-owners or partial owners of firms buying the firm’s stock. (Madura, 2007)
These are the people who buy companies products or services from the business. The company exchanges goods and services for a price with its customers. A group of customers is known as a market. Business will attract customers provision of quality desired goods and services at reasonable prices. More than ever before businesses are realizing the importance that their employees play in ensuring that their customers are satisfied. Toward this endeavor firms are now classifying their employees as the internal customer and giving them their deserved attention.
These are persons or organizations that work with the company but are not part of it. They are often specialists who provide special services and supply raw materials, component, parts or production equipments for use in the production of other goods and services. They include banks, creditors, accounting firms, retailers, personnel agents, suppliers etc. they are often referred to as alliances, networks, informal partners etc.
These are the rival companies engaged in the business as ones company. Competitors are interested in selling their products and services to a company’s existing or potential customers. All competitors who produce similar goods and services are referred to as an industry. A company strives to obtain an edge or a competitive advantage over industry competitors. This implies being superior or different from competitor in a way.
1. Profitability- To an economist, profit is the reward for risk-taking; to accountant it is the difference between revenue and expenditure. Business will try to maximize profit a notion most economists hails while there are people who goes for satisfying- i.e. the business will decide on a profit level it considers being satisfactory.
2. Survival- Organizations and people faced with death will sacrifice possible future gain for life e.g. Uchumi supermarket when it was revived.
3. Prestige- The businesses do seek prestige from high quality products, from care from the environment, from the use of latest technology or from the care of their employees.
4. Growth- This could be based on the fact that as the business grows it tends to enjoy economies of scale. It could also recruit from the owner’s desire to grow or to limit or eliminate competitors so that there will be more scope for greater profits e.g. equity bank.
5. Social responsibility- A business can also exist to serve the society, business produce their commodities to the society. There are some businesses that exist to serve public as their sole priority.