NILE UNIVERSITY OF NIGERIA

COURSE CODE & TITLE:

BUA 101
Introduction to Business I

LECTURE 1: Business
 LECTURE OUTLINE
1. Meaning of Business.

2. Types of Business.

3. Characteristics of Business.

4. Objectives of Business.

5. Resources Businesses Use.

6. Stakeholders in Business.

7. Roles Played by Some Key Stakeholders in Business.

8. Understanding Basic Business Terms.

9. Advantages & Disadvantages of Owning a Business.

Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session

 MEANING OF BUSINESS
A business is any activity that provides products or services desired by
customers in order to make profit. Businesses identify people’s needs,
wants, and goals and then create products/services to satisfy such needs
and wants.

Difference between Products and Services

Products are tangible commodities such as cars, computers, and food items.

Services, on the other hand, are intangible commodities like insurance,

healthcare, education, etc.

Businesses therefore are primarily involved in the provision of products

and services for satisfaction of people’s needs in the society. Examples of
businesses include: the Coca-Cola Company, Emirates Airline, the Dangote
Group, and Globacom Nigeria Limited.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 TYPES OF BUSINESS
There are three (3) ways of categorizing business firms. Businesses
can be categorized according to size or profit-motive or according to
sector. Thus, there are:

 Microenterprises, Small and Medium-Sized Enterprises (or

SMEs) and large enterprises.

 For-profit organizations and nonprofit organizations.

Manufacturing
 Introduction to Business I businesses and service
(BUA 101) – Harmattan Semester of businesses.
2023/2024 Academic Session
 TYPES OF BUSINESS ACCORDING TO SIZE

When classified according to size, businesses may be microenterprises or SMEs or

large enterprises.

Meanings of Microenterprises, SMEs, and Large Enterprises

A microenterprise. may be defined as a small scale business owned by one person

and it is usually home-based. Microenterprises typically have very few employees
(from 5 to 10 persons) and they are established with small amounts of capital

Small and medium-sized enterprises or simply SMEs are also types of business.
Small enterprises have 50 or fewer workers and are managed by their owners on
daily basis. Medium-sized enterprises, on the other hand, employ 51 to 500
workers and are also managed by their owners on a day-to-day basis.

Large enterprises are types of business with more than 500 employees and may
have domestic or global market presence.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
TYPES OF BUSINESS ACCORDING TO PROFIT MOTIVE

Business organizations are sometimes classified on the basis of their

profit motives (as either for-profit or nonprofit organizations).

For-Profit Organizations and Nonprofit Organizations

By definition, for-profit organizations or businesses are those which are

motivated to gain profits from their activities and operations. Private
companies are good examples of businesses that are profit-oriented.

Businesses which are not driven to gather profits are nonprofit

organizations. Such businesses of course strive to achieve some
financial gains. But they use these gains to provide social services for
individuals in the society. Examples of nonprofit organizations are:
charities, foundations, public institutions, etc.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 TYPES OF BUSINESS ACCORDING TO SECTOR

Another method of classifying businesses is according to sector. This method classifies

businesses on the basis of the economic sectors in which they operate. A business may
be in the manufacturing sector or in the service sector of the economy. Thus, there are
manufacturing businesses and service businesses.

Manufacturing Businesses and Service Businesses

Businesses that produce tangible goods are referred to as “manufacturing businesses.”
One such firm is the Dangote Cement Plc which is considered to be the largest
indigenous manufacturing business in the country.

Manufacturing businesses convert raw materials obtained from suppliers into finished
products through some production processes.

Service businesses are firms which provide intangible products to customers e.g. travel
(provided by airline companies), accommodation (provided by hotels), and medical check-
ups (by hospitals).
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 CHARACTERISTICS OF BUSINESS

Businesses have the following characteristics:

 Businesses exchange, sale, or transfer goods and services for money.

 Businesses take risks and they always deal with uncertainties.

 Businesses produce goods and services to satisfy customer needs

and wants.

 Businesses are established for the purpose of making profit. But

there exist businesses which are nonprofit in nature; they are
established just to provide social services.

 Continuity and regularity: businesses are established to always be in

operations.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 OBJECTIVES OF BUSINESS
Every business must have the following as its goals and objectives:

 Profit: the main objective of a business is to maximize profit.

 Survival: a business must have it as a goal to survive and exist.

 Growth: it is the aim of every business to grow and expand.

 Market share: every business aims to gain and control some share of the market in its
industry.

 Productivity: every business aims to continue production.

 Innovation: businesses always seek to introduce new ideas and products.

 Employee welfare: it is the goal of a business entity to take care of its employees.

 Customer service: it is the objective of a business to serve its customers well.

 Social responsibility: it is the goal of a business to contribute to the betterment of the society,
for example, through charity and philanthropic works.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 RESOURCES BUSINESSES USE
What resources do business organizations use to produce goods and services? Business
firms rely on the following resources (also referred to as “factors of production”) in order
to provide commodities for consumers:

 Natural Resources:
These are resources that can be used in their natural forms. The most obvious
natural resource that is commonly used by businesses is “land.”

 Human Resources:
Human resources are the people who perform job tasks in a business. They may
contribute to the production processes and operations of business firms either by
their physical abilities or mental abilities.

 Capital:
Capital includes machinery, equipment, tools, and other physical facilities that
businesses make use of in their manufacturing processes.

 Entrepreneurship:
Entrepreneurship is the creation of ideas, and the willingness to take risks; the
act of creating, organizing, and managing a business successfully.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 STAKEHOLDERS IN BUSINESS

Stakeholders are all the people who stand to gain or lose from the operations and activities of a business. They are,
therefore, participants in business. They include, among other things, the following:

 business owners,

 creditors,

 employees,

 suppliers,

 customers,

 surrounding communities, and

 government.

All of the above stakeholders are affected by the products, policies, and practices of businesses, hence, their concerns
need to be addressed. The challenge for business organizations is to balance as much as possible the divergent needs
of all their stakeholders.

Some of these stakeholders are discussed next.

Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session

STAKEHOLDERS IN BUSINESS EXPLAINED

 Business Owners:
Owners are the people who invest in a business. They are sometimes referred to as
stockholders or shareholders.

 Creditors:
Creditors are financial institutions or individuals who provide loans and/or debts for
business firms.

 Employees:
These are people hired to conduct business operations. They carry out job tasks in a
business. The size of a business firm determines the number of employees it hires.

 Suppliers:
They are people who provide firms with raw materials in order to produce goods and
services. The performance of a firm is partially dependent on the ability of suppliers to
deliver materials on time.

 Customers:
Customers are those individuals (and organizations) who patronize the goods and services
of business firms. Firms cannot survive without customers. To attract customers, a firm
must offer desired products or services at a reasonable prices and quality levels.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 ROLES OF STAKEHOLDERS IN BUSINESS
Here is a very simple diagram that presents some of the key stakeholders described
previously and the roles that they play in business.

Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session

 SOME BASIC BUSINESS TERMS
In the world of business, there are a number of terms and concepts which are used while
carrying out transactions. Below are a few such terms. Understanding the meanings of these
basic terminologies will help you succeed in the business world.

 Profit: the amount of money a business earns above what it spends for salaries and
other expenses.

 Revenue: the total amount of money a business takes in during a given time period
by selling goods or services.

 Expenses: the costs of purchasing all goods and services needed to run and operate
a business.

 Loss: occurs when a business’ expenses exceed its revenues.

 Risk: the opportunity or chance that a business takes of losing its resources on an
investment that may not prove profitable.

 Industry: a group of firms producing similar commodities.

Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
 ADVANTAGES & DISADVANTAGES OF OWNING A BUSINESS

Being a business person has its advantages and disadvantages. On this PowerPoint slide and
the next, some of the pros and cons of being in business are discussed. Below is a list
showing some of the advantages of owning a business entity.

The Advantages

 Independence: being your own boss.

 Lifestyle: because you are in charge you decide when and where you want to work.

 Financial rewards: running your own business gives you a chance to make more
money than if you were employed by someone else.

 Learning opportunities: as a business owner, you will be involved in all aspects of

your business.

 Personal satisfaction: as a business owner, you will be able to work in a field that you
really enjoy, and you will gain personal satisfaction from watching your business grow
and become successful.
Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session
ADVANTAGES & DISADVANTAGES OF OWNING A BUSINESS (CONTINUED)

Disadvantages of Owning a Business

 Financial risk: the financial resources needed to start and grow a business can
be extensive, and if things do not go well, you may face substantial financial loss.
In addition, you have no guaranteed income as a business owner.

 Stress: you will have a bewildering array of things to worry about. Such things
as: competition, employee grievances, bills, equipment breakdowns, and customer
problems will pose serious challenges for you.

 Time commitment: running a business is extremely time consuming. In fact, you

will probably have less free time than you would have working for someone else.

 Undesirable duties: firing of workers.

Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session

Introduction to Business I (BUA 101) – Harmattan Semester of 2023/2024 Academic Session