Business And Its Environment | High School Business Studies Form 1

1. Business- Any activity that is carried out by an individual or an organization concerning provision of goods and services with a view to making profit
2. Profit- what the business earns above what it spends in providing goods and services to the people who need them

1. To provide goods and services- satisfy the needs and wants of buyers by providing them with goods and services
2. To create employment - provide job opportunities through which members of society can earn money
3. To earn profit- Profit is the primary goal of carrying out business operations
4. As an outlet of new innovation- Some businesses provide unique goods and services which may not be existing in society
5. To be as own boss- Some people run businesses so as to be in full control of the operations
6. To utilize extra resources- make use of money or property which is not being put to profitably use at a given time
7. To offer special services- provide services that raise the living standard of people
8. To utilize spare time- make use of extra time at their disposal and in the process make some extra money

Business Activities

Business activities are activities which involve the provision of goods or services with an aim of earning a
Can be grouped into:
a) Extraction :- involves obtaining goods from their natural setting e.g. mining, farming, quarrying
b) Processing :- involves the conversion of raw materials into more useful products without combining it with other goods eg Maize Flour Milling
c) Manufacturing :- involves combining different raw materials to come up with one final product E.g Baking
d) Construction :- involves building of structures such as houses
e) Distribution of goods :- involves moving goods from where they are produced to where they are needed. Done by Distributors eg Wholesalers.
f) Trade :- involves buying and selling of goods with a view of making a profit. Done by traders
g) Provisions of services :- involves human acts which could be mental or physical e.g haircutting, entertaining.

Non-Business Activities

A best example can be that of charity (or donations group).

Definition: Refers to conditions or factors which surround and affect business operations

• Internal environment: factors within the business Unit itself.
• External environment: factors outside the business

Internal Environment (Micro-Environment)

- Can be their strengths or weaknesses and can be controlled fully by the business.
- Strengths tend to improve the performance of the firm while weaknesses tend to affect the operations of the business negatively

1) Objectives of the business - targets or goals that are set by the owners or managers of a business to be achieved. They influence the strategies and resources required.
2) Management policies and style - Management refers to the people who are responsible for directing the day-to-day operations of a business. A policy is a course of action of action for achieving set objectives, which is adopted by a business.
3) Business structure - This is the formal arrangement of activities that are carried out at various levels of the organization so that objectives of the business can be achieved
4) Business Resources - A resource refers to anything that can be used to achieve an objective, E.g Human resource (employees), Financial resource (money), Physical resources (e.g Machinery), Technology (e.g Internet)
5) Research and development - It generates new ideas, skills and better methods of doing things either by generating new products and services or how customers prefer its goods and services
6) Business culture - a combination of employees expectations, beliefs and values within the business
7) Owners - provide finances/resources to start and run the business and also make decisions concerning operations of the business.

External Environment (Macro-Environment)

- Affect the business from the outside.
- Some of these factors offer business opportunities while others may create threats.
- Business have limited or no control over external environmental factors and should therefore try to do adjust in order to cope with them

operating environment - factors that can be influenced to some extent
remote environment - factors that cannot be influenced at all