Introduction to Business Management – SS3 Commerce Lesson Note (First Term)

Business is the sum of all activities involved in the creation and distribution of goods and services for profit. Business management is the act of planning, organising, directing and controlling business resources to attain set objectives.

Behavioural objectives

1. Define business and business management.
2. State the four functions and the three levels of management.
3. List the four classes of business.
4. State the four resources of a business.
5. Explain what the objectives of a business are.
6. State at least five objectives of a business.

What are business and business management?

Business is any activity that creates and distributes goods and services for profit, and business management is the way those activities are run.

• Business: all activities involved in the creation and distribution of goods and services for profit.
• Businessman: a person who owns or runs a business in order to make profit.
• Management: the process of getting work done through people and other resources to reach set goals.
• Business management: the act of planning, organising, directing and controlling business resources to attain set objectives.

What are the functions of management?

There are four functions of management: planning, organising, directing and controlling.

• Planning: deciding in advance what to do, how to do it and when.
• Organising: arranging resources, duties and workers so that the plan can be carried out.
• Directing: guiding, instructing and motivating workers to do their tasks.
• Controlling: comparing actual results with the plan and correcting any difference.

What are the levels of management?

There are three levels of management in a large business: top, middle and lower.

Why is business important?

Business is important because it supplies goods and services, creates jobs, gives income and provides taxes for the government.

• Goods and services: business supplies the things people need, such as food, clothing and banking.
• Employment: business gives people jobs and so reduces unemployment.
• Income: workers earn wages and owners earn profit, which raises living standards.
• Taxes: businesses pay taxes that help the government provide roads, schools and hospitals.
• Development: business activity helps the economy to grow and use its resources.

What are the classes of business?

There are four classes of business: primary (extractive), processing (conversion), distributive (commercial) and services.

What are the resources of a business?

A business has four resources: money, materials, management and opportunities.

• Money: all the funds available to the business, such as cash, shares and working capital.
• Materials: tools, machinery, equipment and raw materials required to operate the business.
• Management: the resource that plans, directs, controls and organises other resources so that operations can take place.
• Opportunities: identified chances calling for acquisition, creation, preservation or distribution of saleable values to customers.

What are the objectives of a business?

The objectives of a business are the ends towards which its activities are aimed.

• Objectives: the ends towards which an activity is aimed.
• Objectives of a firm: the purpose for which the firm is in business.
• Use of objectives: they state where the business organisation wants to be.
• Who fixes them: usually the owners and top management. In a company, the board of directors does this on behalf of shareholders.

What are examples of business objectives?

Common business objectives include the eight below, and maximising profit is the primary one.

1. To maximise profits: to earn as much surplus as possible after paying all costs. This is the primary objective.
2. To minimise losses: to keep costs low so that expenses do not exceed income.
3. To stay solvent: to be able to pay debts when they fall due.
4. To produce goods and render services: to supply what customers need.
5. To provide employment opportunities: to create jobs for people in the community.
6. To protect the interest of its workers: to pay fair wages and give safe working conditions.
7. To achieve, maintain or increase a particular market share: to hold or grow the share of total sales in a market.
8. Social objectives: duties to society, such as payment of taxes.

Evaluation

1. Define the following terms: (a) business, (b) businessman.
2. Mention four ways in which business is important to the individual or society.
3. Define management.
4. State five objectives of a business.

Assignment

Reading assignment

• Essential Commerce for Senior Secondary Schools by O.A. Longe, pages 231 to 239

Weekend assignment

1. Which of the following is not a business resource? (a) Man (b) Materials (c) Markets (d) Machines
2. Which of the following is the most important business resource? (a) Money (b) Management (c) Materials (d) Manpower
3. Which of the following clearly defines business? (a) The process of planning, coordinating, organising and controlling (b) The act of buying and selling (c) Sole proprietorship, partnership and public limited companies (d) Any production activity undertaken for profit motive
4. Which of the following is the primary objective of business? (a) Maximisation of sales (b) Maximisation of output (c) Maximisation of profit (d) Maximisation of costs
5. In which class of business would doctors, teachers and entertainers be grouped? (a) Extractive (b) Services (c) Processing/conversion (d) Commercial

Theory

1. List two objectives of a firm (business organisation).
2. Who decides or fixes these objectives in a business organisation?