Topic: DEFINTION OF BUSINESS

Business can be seen as the work relating to the production, buying and
selling of goods and services.
According to Prof. Owen, Business is defined as an enterprise engaged in
the production and distribution of goods for sale in the market or rendering of
services for price.
A business is an organized effort and activity of individual to produce and
sell goods or rendering of services for profit.
MEANING OF PROFIT
Profit can be seen as the access of the total revenue generated by a
business over the operating expenses of the business, I.e. profit is the financial
benefit realized when revenue generated from a business activity exceed the
expenses, cost and taxes involved in generating the activity in question.
IMPORTANCE OF PROFIT
1. Profit enables the business to grow and expand.
2. profit is essential for the survival of the business.
3. Profit is an indicator of measuring the efficiency of the business.
4. Profit is a reward of risk taking by a business.
5. Profit can be used to increase the volume of the business.
6. Profit can be used to meet future contingencies.
7. Profit enhances the ability of a business to involve in social responsibility.
Topic: BUSINESS RESOURCES
A resource is any factor that is necessary to accomplish a goal or carryout
activity, hence, business resources are the basic factor of production and input in
to the production process in each organization. They are the input which are
required for effect and efficient running of a business concern. They include:
1. Human resources.
2. Money resources (finance).
3. Material resources.
4. Machine resources.

1. Human Resources: Human resources are the personnels needed to work in the
business using the available resources. They plan, control, organized and
coordinate all other resources to achieve maximum efficiency. These resources
may compare of both skilled and unskilled employers.
2. Money Resources (Finance): This has to do with finances needed to run the
activity of the business (organization) such as purcoment of raw materials,
employee’s salaries, office equipment, furniture etc.
3. Material Resources: This has to do with all input (i.e raw materials or semi-
finished raw materials) need in the production process that will eventually
produce good or services.
4. Machine Resources: These resources are basically used to transform raw
materials into semi-finished product or finished product.
Topic:` BUSINESS OBJECTIVE
The objective of a business is simply the purpose of which the business is
established and this could be in form of a vision and mission statement. That is,
objective of a business is derived from the vision and mission statement of a
business.
MEANING OF VISION
Vision can be defined as a dream which the promotes (owner) of an
organization had about the future of their venture i.e, a vision is a category of
intension, that are broad in nature, all-inclusive and forward thinking.
The vision sets the frame work for determining the purpose, goal and
objectives of an organization’s future.
MEANING OF MISSION STATEMENT
A mission statement is a statement that identifies the scope of a business
operations in product and market terms it tries to answer the question of “what is
our business”.
Thompson (1997) define mission statement as the “essential purpose of the
organization concerning, particularly why it is in existence the nature of the
business” and the consumes it seeks to serve and satisfy.
OBJECTIVES OF BUSINESS
The following are some of the objectives of a business.
1. To derive maximum profit.
2. To provide quality and cheap goods to consumer.
3. To protect the interest of their workers.
4. To provide job opportunities for people.
5. To provide goods and services that will meet the need for consumers.
6. To help solve some of the country’s social problems e.g environmental
pollution.
7. To raise standard of living e.t.c
IMPORTANCE OF BUSINESS
1. Business creates employment opportunities.
2. To provide consumers with product or services that satisfies their specific
needs.
3. It provides individuals and the society as a home with a means of exchange.
4. It makes contribution to the society.
5. It creates wealth.
6. It enhances efficient allocation of resources.
7. It converts resources into goods and services that satisfies human needs.
CAUSES OF SMALL BUSINESS FAILURE IN NIGERIA
1. Lack of adequate planning.
2. Poor flexibility report.
3. Incompetent management.
4. Underpricing goods or pricing.
5. Starting the business with little capital.
6. Unfavourable government policies.
7. Wrong choice of product selection etc.

DEFINTION OF MANAGEMENT
Management can be defined as the process of planning, organizing,
directing and controlling. It is simply getting things done through and with people
i.e, Management is a process that is concerned with the formulation of strategies,
plan, policies and programs with a view of achieving set organizational goals.
FUNCTIONS OF MANAGEMENT
The following are the basic functions of managements
1. Planning
2. Organizing
3. Directing
4. Controlling
5. Staffing
6. Motivation
7. Communication
1. Planning: this is a blue print of what is to be done and how to do it.
2. Organizing: this has to do with arrangement of staff within the organization to
achieve set goals.
3. Directing: this function involves getting people to carryout decisions in order
to achieve the desired goal.
4. Controlling: this means setting of standards that set as a desirable
measurement for achieving set goals.
5. Staffing: it deals with the people in the organization-concerns recruitment of
staffs, induction and orientation, compensation, training, conflict
management.
6. Motivation: this simply mean encouragement of the employees to work or put
in their best effort in order to achieve high productivity and set goals.
7. Communication: this is the transfer of information and ide with expected fee
back among the people.
Topic: BUSINESS ENVIRONMENT
Business environment can be defined as a series of factors or conditions
that are internal or external to the business but which have influence of the
operations of the business enterprise.
IMPORTANCE OF BUSIENSS ENVIRONMENT
1. It helps in identifying the business opportunity.
2. It helps in tapping useful resources.
3. It helps the business in coping with changes.
4. It helps or assists business in planning.
5. It helps in improving performances.
CLASSIFICATION O BUSINESS ENVIRONMENT
Business environments can be classified into the following;
1. Internal Business Environment and
2. External Business Environment

1. Internal Business Environment: is under the control of the business

organization. It is a component of the business environment which are
composed of various elements which are present within the organizations.
They include: The employees (staffs), managements and the cooperative
culture.
Diagrammatically, the following are some of the factors or elements of the
internal business environment.
i. Value system: this consists of all the components that are part of the
regulatory framework, such as culture, climate, work processes,
management practices and the norms of the organizations.
ii. Vision, Mission and Objective: the company or business vision describes
its future position, the mission defines the company’s business and the
reason for its existence while the objective imply the ultimate aim of the
company and the way to reach those ends.
iii. Organizational Structure: the structure of the organization determines the
way in which activities are directed in the organization so as to reach the
ultimate goal. These activities include the delegation of tasks, coordination,
the composition of the board of directions, level of professionalization and
supervision.
iv. Cooperate Culture: also called organizational structure refers to the values,
beliefs and behaviour of the organization, that ascertain the way I n which
employers and managements communicates and manage the external
supervision.
v. Human Resources: the successful or failure of an organization highly
depends on the huma resources of the organization, hence human
resources is the most valuable asset of an organization e.g employees.
vi. Physical Resources and Tech Capabilities: refers to the tangible assets of
the organization that plays an important role in ascertaining the
competitive capability of the company, while the technical capabilities
imply the technical know-how of the organizations.

2. External Business Environment: this represents various factors outside the

company’s control. That is, the external business environment is not under the
control of the company.
The external business environment can further be sub-divided into the following;
i. External Micro Environment
ii. External Macro Environment
i. External Micro Environment: the external micro environment sometimes
referred to as task or operating environment. The micro external forces
have an important effect on the business operations of a firm/organization.
 That is, it consists of elements whose decisions and activities have
immediate impulse in the operations of the business enterprise. These
includes (a)customers (b) suppliers (iii) competitors (d) distributors (e)
labour union (f) creditors (g) investors (h) community (i) debtor

ii. External Macro Environment: the external macro environment is

sometimes referred to as the general external business environment.
The macro environment consists of the external force which the
business has no control over. The major components or factors of the
external macro environment.
a. Socio-cultural environment.
b. Technological environment
c. Economic environment
d. Political environment
e. Legal environment
f. Demographical environment.
a. Socio – Cultural Environment: a business organization must take into
consideration the beliefs, attitudes, needs, values, life styles and ethnicity of
the people. The socio-cultural attitude of the people will definitely affect their
consumption pattern. For example : sharia states which do not allow alcohol
consumption or sale will make the selling of alcohol drinks very difficult or
even a crime.
15th Feb, 2023
FORMS OF BUSINESS OWNERSHIP
Forms of business ownership
The following are the forms of business in which ownership can be
established or operated.
1. Sole proprietorship
2. Partnership
3. Corporation (Limited liability company).
4. Co-operative society

SOLE PROPRIETORSHIP: this can also be called sole trade. It is a form of business
enterprise owned, managed, financed and controlled by one person or individual.
The sole proprietor bears the risk of operating the business and take the
responsibility for all his decisions and liabilities.

Sources of Fund for a Sole Proprietorship

i. Personal savings.
ii. Loan from friends or family members.
iii. Loan or overdraft from banks
iv. Trade credit i.e purchasing goods on credit from suppliers.
v. Grant/loan from government.
Advantages of Sole proprietorship
i. The owner takes all the profit alone.
ii. The proprietor is the boss of the business.
iii. Start-up requires small capital.
iv. It is easy to establish,
v. It encourages quick decision making.
vi. Payment of lower taxes.
vii. Flexibility of selling varieties of goods.
viii. The owner shows personal commitment, etc.
Disadvantages of Sole proprietorship
i. The proprietor bears losses and risks alone.
ii. The death of the owner might lead to the end of the business.
iii. Problem of management.
iv. The liability of the proprietor is unlimited.
v. Difficulty in raising capital.
vi. It is not a legal entity.

PARTNERSHIP FORM OF BUSINESS

The partnership Act of 1890, defines partnership “as a relationship which
subsists between persons carrying on business in common with a view of making
profit. Hence, partnership is simply an association of coming together of two or
more persons with the common purpose or objective of making a profit through
the pursuit of a lawful business. The people forming the partnership or
association are called Partners.
Kind of Partners
i. Active partner.
ii. General partner.
iii. Limited partner.
iv. Minimal or Quasi partner.
v. Sleeping or Dormant partner.

i. Active Partner: An active partner contributes capital to the formation and

financing of the business and also takes active part or role in the day-to-day
management and running of the business.
ii. General Partner: this type of partners takes active part in the management
of the business and they are personally liable for all obligations of the
business enterprise or form. That is, they are liable to the full extent of
their estate for debts incurred by the partnership.
iii. Limited Partner: These are partners whose liability is limited to the cash or
property then contributed to the partnership. The limited partners are not
permitted by law to participate in the day-to-day running and management
of the business.
iv. Nominal Partner: this type of partner allows his name to be used in the
business. This partner neither contributed capital nor take part in the
management of the business.
v. Sleep or Dormant Partner: A dormant partner takes no part in the conduct
and management of the partnership business and equally receives no
salary.
Partnership Deed/Agreement
Partnership deed also called partnership agreement is a document drawn
up to clarify the respective positions of the partners in partnership business.
Contents of Partnership Deed
i. The capital to be contributed by each partner.
ii. The ratio in which profits (or losses) are to be shared.
iii. The rate of interest, if any, to be charge on partners’ drawings.
iv. The rate of interest, if any, to be paid on capital before the profits are
shared.
v. Salary to be paid to partners.
vi. Arrangement for the admission of new partners.
vii. Arrangement for the admission of new partners.
viii. Procedures to be carried out when a partner retires or dies.
Advantages of Partnership
i. Capital comes from different partners.
Research for more

CORPORATION (Limited Liability Company)

 A Corporation is large or group of companies authorized to act as a single
entity created by individual, stockholders/shareholders, with the purpose of
operating for profit.
The corporation is seen as artificial persons which are allowed to enter into
contracts, has the ability to sue and be sued, owned assets remit federal and
states taxes, borrow money from financial institutions.
The creation of a corporation company involves a legal process called
incorporation; and these processes are stipulated in the companies and Allied
Matter Act of 2020 (CAMA 2020) as amended. The status of an incorporated
corporation (company) gives the business entity a distinct feature that protects its
owners from being personally liable in the event of a law-suit or legal claim,
because the corporate is a legal entity that is separate from the owners.
Corporations are required to have what is called Board of Directors. These
directors are elected by the shareholder of the company or corporation during
their Annual General Meeting (AGM).
Types of Limited Company/Corporations
1. Private Limited Liability Company: A company is a private company when its
memorandum and Article of Association state and with a maximum member
(shareholders) of Fifty, and restrict the transfer of its shares without the prior
notice of the members of the company. Private Limited Company cannot invite
the public to subscribe for any of its share or debenture, unless authorized by
law.
2. Public Limited Company/Corporation: A public company is any company other
than a private company and there is no maximum limited of membership – i.e
shareholders as is the case in private company. In public company members
(shareholders) are free to sell off or transfer their shares without any prior
notice to the members of the company.

CO-OPERATIVE SOCIETY
Co-operative society is a business organization registered under the law,
and it is form to improve the welfare of its members economically. It is a
“Voluntary association of individuals united by common bond, who have come
together to pursue their economic goals for their own benefits”.
Types of Cooperative Societies
i. Producer co-operative.
ii. Retail co-operative.
iii. Wholesale co-operative.
iv. Consumers co-operative.
v. Credit and thrift co-operative.
vi. Multi-purpose co-operative etc.

Source of Fund to Cooperative Society

i. Share purchased by members.
ii. Registration fee (Entrance fee).
iii. Interest on loan given to members.
iv. Undistributed profit or income etc.

Advantages of Cooperative society

i. Encouraging saving habits among their members
ii. Ensure low price of goods for members
iii. All members have equal rights
iv. Rendering of financial assistance to their members
v. Facilitate easy loan facilities for members
vi. Try to improve members structure of living etc.

Disadvantages of cooperative society

i. Difficulties of recovering all loans from members
ii. Lack of adequate capital or fund to run the society
iii. Misappropriation of fund by officers of the society
iv. Capital cannot be raised from the capital market
Low dividend payout to members etc.
Topic: BUSINESS ORGANIZATIONAL STRUCTURE
Definition of an Organization
An organization is a group of people bound together to provide unity of
action for the achievement of set objectives.
Types/Classification of Organization
Organization can be classified into two broad heading, which include (i) Formal
Organization, and (ii) Informal Organization.

i. Formal Organization: this can be seen as a planned pattern of group

behavior designed to achieve an objective. In a formal organization, the line
or chain of command and coordination of activities are clearly defined.
ii. Informal Organization: these types of organization can be seen as the
human interaction that occurs simultaneously and naturally without
specific planning.

Features of Organization
1. It comprises of individuals and group of individuals.
2. It is oriented toward achieving a common goal.
3. It has different functions.
4. It has intended rational co-ordinations.
5. It is a part of a larger environment.
6. It has boundary that limits the nature and types of activities it performs.
Some Principles of Management
1. Clarity of Objectives: The aims and objectives of an organization are the
strategies and means of achieving these objectives must be clearly stated to
enable employees strive towards achieving the planned objectives.
2. Span of Control: This has to do with the number of subordinates under the
direct supervision of a manager to ensure efficiency and effectiveness.
3. Unity of Command: This principle states that, subordinates should receive
instructions from their boss only. That is, the principle of unity of command
 states that a subordinate should be accountable to one and only one superior
at a time. The essence of unity of command is to avoid conflicting instructors.
4. Authority and Responsibility: A person has authority if he has the right to
command and expect obedience from the subordinate. Authority and
responsibility should be properly stated and both should match each other, i.e
authority should be commensurate with responsibility for effective supervisor.
5. Unity of Direction: People engage in the same kind of activities must have
objectives in a single plan. This means that the corporate interest must
supersede individual interest.
6. Channel of Communication: communication in the organization is expected to
flow upward and downward and this should be made clear to avoid conflicts.

Definition of Organizational Structure:

An Organizational structure is a system that outline how certain activities
are directed in order to achieve the goals of an organization. An organization
structure identifies responsibilities for each job position and the relations among
those positions. The organizational structure determines how information flows
between levels within the company.
For example, in a centralized structure, decisions flow from the top-down, while
in a decentralized structure, decision-making power is distributor among various
levels of the organization.
A firm’s organizational structure can be illustrated with an organization
chart, which shows the interaction among job position.
This chart indicates the chain of command, which identifies the job positions to
which all types of employees must report. The chain of command also indicates
who is responsible for various activities an d it helps employees to know who is
responsible for each type of task.

Definition of Organizational Chart

An organization chart is a diagrammatic representation of the relationship
between the various organs of the organization. That is, organizational chart is a
diagram of an organization’s structure showing the departments functions and
positions in the organization and how they are related.
Uses of Organizational Chart
i. It shows the flow of line of authority and responsibility.
ii. It shows the various positions in an organization.
iii. It shows the span of control within the organization
iv. It shows the whole structure of the organization.
v. It shows the relationship between various organs in the organization.
vi. It shows the boundary of each position holders.
 A SIMPLE ORGANIZATIONAL CHART OF A COMPANY

Types of Organizational Structure

1. Line Organization structure.
2. Line and staff organization.
3. Functional organization structure.

1. LINE ORGANIZATION STRUCTURE: in a typical line organization, authority

flows on a straight line from the board of directors to the managing director
and to lower management levels. Every line has identified responsibilities and
authorities assigned to him and has the supporting staff to execute the
functions. A manager with line authority is answerable for the performance of
 his subordinates and the flow of authority and responsibility is usually straight
or direct and accountability is easily established.
Advantages of Line Organization Structure
1. It is simple and is easily understood by the employees and management.
2. It is good for small organizations where specialization is not very important.
3. Decision making at all level is made easy and simple.
4. Discipline always maintained.
5. It makes for unity of command with a reasonable span of control.
Disadvantages of Line Organization structure
1. It is not suitable for large organization.
2. It is auto-crate.
3. There may be much pressure and demand on the managers.
4. Lack of specialization at the supervisory level.
5. Too much authority may be assigned to a very few persons.

Line Organization Chart

2. `Line and Staff Organization Structure: this form of structure resembles the
line structure only that specialist are included in the organizational
arrangements. Decisions are made by line executives with the advice of staff
executive. Staff executive are expert in their fields – accountants, lawyers,
personnel specialist, engineers etc. They advise the line executives who are
directly responsible for the immediate attainment of the organizational goals.
Advantages of Line and Staff Organizational Structure
1. There is efficiency through specialization.
2. Division of duties among general individuals is achieved.
3. Decision making can be enriched because ideas can be shared.
4. Better technical advice to line managers by experts.
5. Unity of command is maintained.

Disadvantages of Line and Staff Organizational

1. Increase in overhead cost because of staff specialist cost.
2. Technical ambiguity of ideas to the line manager.
3. Staff managers have no line authority etc.
Line and Staff Organizational Chart

Or
 In the charts above, the solid lines represent the flow of authority and the
dashed or broken lines indicates a staff or advisory relationship.
The advertising manager can advise salesman but he has no direct control
over them.
3. Functional Organization Structure: this is a type of organization set up where
certain functional relationship exist between functional managers and line
managers. For example, the personnel manager has a functional responsibility
for all the activities concerning personnel in all the departments of the
organization even though each employee has his own manager in their
department.
Advantages of Functional Organization Structure
1. Experts are allowed to make use of their expertise for the betterment of the
company.
2. It simplifies training by narrowing the job area.
3. Experts advise is available to each worker.
4. It encourages division of labour.
5. It encourages flexibility.
Disadvantages of Functional Organization Structure
1. Overlap of authority.
2. Result in confusion of employee because of many experts.
3. Lack of fixed line responsibility.
4. Problem of who to be help accountable.
5. There may be lack of effective control etc.
Functional Organizational Chart