NATURE AND SCOPE OF BUSINESS MANAGEMENT
In our day-to-day life, we use words like business, commerce, trade. industry, etc. quite often. These words have a definite meaning in 'Business Organisation'. In this introductory unit, you will learn the exact connotation of such terms. You will also learn the distinction between economic and non-economic activities, objectives of the business, the classification of business activities, the importance of 'organization, and the role of the entrepreneur in business.
All of us participate in various kinds of works from the time we get up from bed in the morning till the time we go to sleep at night. We get up from bed in the morning; brush our teeth, take bath, and get breakfast. Then children go to school or college to study, elders go to the office or factory or shop or field to work, and housewives work at home. In the evening all of us come back home, take food and sleep. All the activities in which we, thus, participate from morning till night are called 'human activities'..
If you closely examine human activities, you will find that some of these produce economic benefits e.g., working in a factory or in an office or at the farm,. Some other activities like brushing teeth, making breakfast, going to school, playing, cooking food for the family, etc., do not produce any direct economic benefits.
Thus, we can classify human activities into two groups:
(1) non*economic activities, and
(2) economic activities.
1. NO economic Activities: These are the activities that are conducted by human beings due to love and affection, social obligation, religious obligation, physical requirement, patriotism, etc.. but not for earning money. The housewife cooking for the family, children going to school and playing games, people going to a temple or a mosque for prayer, a social worker working for the uplift of the poor, etc., are some such examples. Persons who participate in such activities do not gel any direct economic benefit.
2. Economic Activities: These are activities that are undertaken by human beings for earning money or livelihood. These economic activities are concerned with production, exchange. and distribution of goods and services. For example, a doctor working in the hospital, a teacher working in a school,, an employee going to his office, a farmer working in the field, etc are all doing this to earn or her livelihood or to acquire wealth.
We can further classify these economic activities into three groups:
(b) profession, and
Classification of human activities.
a) Business: Any activity carried primarily with the object of earning a profit can be called a business activity. This objective of earning profit is achieved by production and/or exchange of want satisfying goods and services. Therefore, we can define business as "any activity concerned with the production and/or exchange of want satisfying goods and services carried with a view of earning profit". Production of soaps, sale of eggs, production of TV sets, transport, etc., are some examples of business. A person who is engaged in business is called a businessman or entrepreneur. Similarly, a firm formed for the purpose of carrying a business activity is called a business enterprise or a business firm. You will learn in detail about business later in this unit.
b) Profession: An activity that involves the rendering of personalized services of a specialized nature, based on professing! knowledge, education, and training is called a. profession. Services rendered by doctors, lawyers, chartered accountants, etc., come under this category. Generally, for each category of profession, there would be a professional body. For example, the Bar Council of India is the professional body of lawyers that guides and regulates the law profession in India. The professional body prescribes the nature and type of educational qualifications and training required to practice the concerned profession. A professional should become a member of a concerned professional body and follow the code of conduct prescribed by such a body. Professionals charge some fee for the professional service they render.
C) Employment: Any activity assigned to a person by the employer under an agreement or rules of service comes under the category of employment. A person who undertakes such activity is called an employee. For performing such activity, the employee receives remuneration from the employer in the form of wage or salary, allowance, bonus, etc.
Employment is also called 'service'. Working in a factory, office, hotel, college, etc., are a few examples of employment. Even professionally qualified persons also work as employees in various organizations. For example, doctors employed in government and private hospitals, engineers employed in a factory, etc.
Although business, profession, and employment are distinguished from each other, they are also inter-dependent. Business enterprises provide employment to a large number of people in the country. Similarly, professionals like engineers, chartered accountants, cost accountants, management consultants, legal experts, doctors, etc., work with business firms for tackling complicated technical problems. Thus, business enterprises provide 'employment ~pportunities. to professionals and the general public. At the same time, the success of the business is dependent on its employees and professionals working with it.