nature and aims of business

Nature and Aims of Business

The Philippine EconomyThe Role of Business

Business DefinedKinds of Business

Objectives of Business

Low productivity in the workplaceGraft and corruption in the governmentThe declining value of the pesoUnfavorable balance of trade

Although most Filipinos dream of affluence, it seems to be one that is impossible to attain. This mostly so because the Philippine Economy has always been saddled with difficulties which appeared to be insurmountable.

The Philippine Economy

Serious concern affectingPhilippine Economic Development

In spite of the great obstacles hampering economic growth, the Philippine Economy continues to grow, albeit very slowly. Moreover, the Philippine economy does not fare well in comparison with other countries situated in the Far East.

• Business success has always been associated with economic growth. Adequate capital, however, is a prerequisite to the existence of a business firm.

• Business success is highly dependent on the availability of capital. Apart from availability, however, its proper management is a key ingredient in the survival and growth of business.

Studies made along the topic of managing the finance activities of business indicate that the major reason for business failure is; businessman’s lack of sufficient skills in managing finance. This alone provides us with enough reason to study business finance.

• Under the free enterprise system, the growth of the economy lies in the ability of private individuals to achieve economic objectives. The quest for profit is usually undertaken by engagement in business activities.

• Business firm and government are oriented towards the provision of goods and services to the society. Regarding this task, however, private business firms assume the major role.

The Role of Business

• Under the system, firms are free to complete with each other. This atmosphere makes possible the offering of new or improved products and services to the society. The standard of living is raised or lowered depending to a large extent on the performance of business firms.

• Business is largely responsible for bringing into the market a wide array of products and services which were not previously available. High technology items like latest cell phone models, video equipment, portable computers and many other find their way in the open market. This happens even as business continues to provide mankind with basic necessities like food and shelter.

• Even movies of different kinds are made possible by business firms. Such is the importance of the role attributed to business that even communist countries like China and Vietnam have allowed, to a great extent, the operation of business entities as a means to develop their economies. Profit-making has been adapted as a measure to motivate enterprising persons to engage in business.

• Is any lawful economic activity concerned with the production and/or distribution of goods and services for profit.

• An entity is still a business if its objective is to make profits.

• The amount of capital investment, the size of the organization, and the number of employees are also immaterial in determining if an economic activity qualifies as business.

Business Defined

Business may be classified in several ways. As to the nature of the principal activity performed, it consists of three main divisions:

•Commerce• Industry•Services

Kinds of Business

BUSINESS

COMMERCE

Trading

Buy and Sell

Merchandising

Marketing

Assembling of Goods

Grading

Warehousing

Transportation

insurance and financing

INDUSTRY

Genetic

Extractive

Manufacturing

Construction

SERVICES

Finance

recreation

Personal

Figure 1. Kinds of Business

• Business firms which are engaged in the buying and selling of goods and services are classified as those falling under commerce. Also include: trading, merchandising, marketing

Examples of commerce as kinds of business are;

Super Markets, Sari-Sari stores, Dry goods store, Importers

Commerce

Industries are those mainly concerned with production.

Consumer’s Goods - Goods produced are those which may be intended for ultimate consumption.Producer’s Goods - Those which are intended for use of business and industry.

Industry

Industry may be further classified into the following:Genetic Industries – are businesses involved in agriculture, forestry, and fish culture.Extractive Industries – Businesses involved in the extraction of goods from natural resources which include mining, lumbering, hunting and fishing.

Agriculture

Mining

Manufacturing - are those which convert raw materials into finished products.Examples are firms engaged in the manufacture of drugs, plastics, food, liquor, footwear, motor Cars, tools, office supplies, household appliances

Manufacturing

ManufacturingMotor Cars

Construction Industries – consists of firms engaged in building infrastructures like:• Airports• Seaports• Dams• Highways

A service business is one which sells services to buyers. Service firms may be classified as:

RecreationExamples:•Movie houses• Television• Radio stations• Theaters for Drama and stage presentations

Services

Personal Examples:

•Restaurants•Barber shops•Transportations•Hotels•Tailoring Shops

Services

FinanceExample:• Banks• Insurance Companies• Investment Houses• Financing Institution• Credit Unions• Savings and Loans Associations

A business is established primarily for profit. At times, short-term and long-term profits are sacrificed in order to attain other goals such as:• Political Influence• Family control of the Business• Community Involvement


To survive and grow, business firms must attain the following multiple objectives:

1. The provision of products and services to the community;

2. The satisfaction of personal objectives like:• profits for owners• adequate salaries and compensation• psychic income for all, including pride

in work, security, recognition, and acceptance


3. Protection and enhancement of the human and physical resources of society

4. Economy and effectiveness of operation


Thank you!