Business

environment

Lecture 01
Business and
the business
environment

Lecture 01
 Aim of the unit
• The aim of this unit is to provide students with background knowledge
and understanding of business, the functions of an organisation and
the wider business environments in which organisations operate.
Students will examine the different types of organisations (including
for profit and not for profit), their size and scope (for instance, micro,
SME, transnational and global) and how they operate.

• Students will explore the relationships that organisations have with

their various stakeholders and how the wider external environments
influence and shape business decision-making.

• The knowledge, understanding and skill sets gained in this unit will
help students to choose their own preferred areas of specialism in
future studies and in their professional career.
 What is organization
• “ An organization is a social arrangement
which pursues collective goals, which
controls its own performance and which
• has a boundary separating it from its
environment.”
 CATEGORIES OF ORGANISATION

• A business is always owned by someone.

This can just be one person, or thousands.
So a business can have a number of different
types of ownership depending on the aims
and objectives of the owners.
 CATEGORIES OF ORGANISATION

• Most businesses aim to make profit for their

• owners. Profits may not be the major
objective, but in order to survive a business
will need make a profit in the long term. Some
organizations however will be ‘not-for-profit’,
such as charities or government-run
corporations.
 LEGAL STRUCTURE FOR A NEW BUSINESS

• Creating a new business is an exciting

• undertaking for any personal financial
advisor. One of the first tasks that is needed
to address this is to determine the best legal
structure for the new business. Selecting the
appropriate business structure will help
determine the best way to treat income and
assets.
 LEGAL STRUCTURE FOR A NEW BUSINESS

• Choosing an inappropriate business structure

• could result in personal risk for the
company's losses and subject the
organization to unnecessary taxes.
 MAJOR TYPES OF COMPANIES

• Privately owned companies do not sell their

• company securities to the public, and are
owned within a set amount of individuals
privately. The majority of these ownerships
are held by families, including Appliance
Traders Ltd., National Baking Company Ltd.,
and Shoppers Fair Supermarket.
 MAJOR TYPES OF COMPANIES

• Publicly owned companies are those that

trade their securities publicly, so anyone can
buy stock in the company, as a way to
finance the business. Examples of these are
:- National Commercial Bank
• Ltd,Seprod Ltd. and Jamaica Money Market
Brokers Ltd.
•
 GOVERNMENT

• The part of the economy concerned

• with providing basic government services. The
composition of the public sector varies by
country, but in most countries the public sector
includes such services as the police, military,
public roads, public transit, primary education and
healthcare for the poor. The public sector might
provide services that non-payer cannot be
excluded from (such as street lighting), services
which benefit all of society rather than just the
individual who uses the service (such as public
education), and services that encourage equal
opportunity.
 Use public sector in a sentence

• “ Companies within the public sector can be

one of two types - either funded directly by
the government or publicly owned where a
majority of the company's shares are owned
by the government. ”
 VOLUNTARY ORGANISATION

• A voluntary association is a group or

• organization that people may join or leave
freely, that is free of external control, and
whose purpose, goals, and methods are up to
the members to determine. Sociologically,
voluntary associations are often seen as vital
to the functioning of equality, specially by
providing a way for individuals to become
involved in public life beyond the privacy of
home and family
 CO-OPERATIVE

• In many ways a cooperative is like any other

business; but in several important ways it's
unique and different. A cooperative business
belongs to the people who use it—
• people who have organized to provide
themselves with the goods and services they
need.
 CO-OPERATIVE

• These member-owners share equally in the

control of their cooperative. They meet at
regular intervals, hear detailed reports, and
elect directors from among themselves. The
• directors, in turn, hire management to handle
the day-to-day affairs of the cooperative in a
way that services the members' interests.
 CO-OPERATIVE

• Members invest in shares in the business to

provide capital for a strong and efficient
operation. All net savings (profits)
• left after bills are paid and money is set aside
for operations and improvements, are
returned to co-op members
 CHARITABLE

• Charitable organizations are a kind of business

that fits within the nonprofit organization (NPO)
category. In general, this type of entity is
sometimes referred to as a charity or foundation,
which can be run publicly or privately. Some
charities may be centered around religious,
educational or other public interest activities that
are charitable in nature. Depending upon the
• location of the charity, the legal definition of
• what constitutes a charitable organization may
• vary according to its country of origin.
 SECTORS OF THE ECONOMY

• Producers create goods and services to satisfy

• consumers needs and wants. Producers can be
• grouped into different sectors of the economy
• according to whether they are involved with
• the extraction of raw materials
• (primary), transforming raw materials into semi-
finished goods or finished goods (secondary) or
• the provision of services(tertiary). Each sector is
• interdependent
 SECTORS OF THE ECONOMY

• PRIMARY SECTOR: The primary sector of the

economy can be classified as the "extractive"
industry. These include the industries that produce
or extract raw materials. Farmers are an example
of primary
• sector workers, as food items are collected as raw
materials, such as wheat and milk, are taken from
the farm and made into other products such as
bread and cheese. Other industries include the
mining industries, such as coal, iron ore or oil,
which extract the raw materials from the ground
that will be converted into other useful items.
 SECTORS OF THE ECONOMY

• SECONDARY SECTOR:
• The secondary sector of the economy is comprised
of the manufacturing industries. The manufacturing
industries take raw materials and produce products.
For example, the steel can be used to manufacture
cars. Carpenters take wood and make homes,
furniture. Not all manufacturing companies
manufacture a complete product. Semi-
manufacturing companies produce parts to be used
in other products that have several stages of
production, such as automobiles.
 SECTORS OF THE ECONOMY

• TERTIARY SECTOR
• The tertiary sector involves the supplying of
• services to consumers and businesses. This
sector
• provides services to the general population and
• business, including retail, sales, transportation
• and restaurants. The types of workers in this
• sector include restaurant bartenders,
• accountants and pilots..