Session x:

xxxxxxxxxxxxxx
Dr. Magnus Ugwa
Department of Business Administration
magnus.ugwa@ccu.edu.ng

www.ccu.edu.ng
 BUS 101 INTRODUCTION TO
BUSINESS I

• BUS 101
 COURSE OUTLINE
• Concept of Business and Administration
• Characteristics of Business
• Objectives of Business
• Environment of Business
• Environmental factors that affect Business
• Functions of Business
• Relationship between the functions of Business
• Forms of Business ownership
 COURSE OUTLINE CONT.
• Business organizational structure
• Business expectation from society
• Society expectation from Business
• Privatization and Commercialization
 CONCEPT OF BUSINESS AND
ADMINISTRATION
• BUSINESS: A Business is any legal activity that involves
two or more persons who are into production of goods
and services for the satisfaction of human want and
achievement of objectives.
• ADMINISTRATION: This is the process of managing
other persons’ business.
 CHARACTERISTICS OF
BUSINESS
• Business must be legally accepted.
• Business must involve at least two people.
• Business must produce goods and or services.
• Goods and services should satisfy human want.
• Business should lead to achievement of objectives.
 OBJECTIVES OF BUSINESS
• Survival
• Growth
• Social responsibility
• Maximization of shareholders wealth (Profit making).
 ENVIRONMENT OF BUSINESS
• Environment of business has to do with the human elements that a business
must interact with for smooth and easy operations. The human elements
includes;
• Employees
• Customers
• Shareholders
• Host community
• Government
• Competitors
• Creditors
• Suppliers
• Society
 EVIRONMENTAL FACTORS THAT
AFFECTS BUSINESS
• Natural factor
• Economic factor
• Socio-cultural factor
• Political factor
• Legal factor
• Technological factor
•
 FUNCTIONS OF BUSINESS
• Production function
• Marketing function
• Finance function
• Human resources function
• Research and development function
 FUNCTIONS OF BUSINESS CONT.
• PRODUTION FUNCTION: Production is the process of
coordinating men and materials to create from raw materials,
goods and services that will satisfy human needs and wants.
Production could also be seen as the process of increasing
the utility of goods or services to satisfy human wants. The
essence or purpose of establishing a business is to produce
either goods or services. Goods has to do with tangible things
that can be seen and or touch example, shoes, bulbs etc while
services has to do with intangibles which satisfies human
utilities, example educational services, transport services etc.
The product of Coal City University as a business is qualified
graduates.
 FUNCTIONS OF BUSINESS CONT.
• FINANCE FUNCTION: Accounting is a very important
aspect of business management, negligent of which will
lead to a business failure. Every business manager and
or owner needs good financial information in order to
provide sound solution to such questions as: what are the
most viable business opportunities to invest in? Or will
the profits be sufficient? Etc. It is therefore one of the
organic functions of a business to source for and manage
finances for the sustainability of the business.
 FUNCTIONS OF BUSINESS CONT.
• HUMAN RESOURCES FUNCTION: Personnel or staff of
an organization is considered the most potent and
oftentimes the most, difficult of all organizations resources
to manage. Because of its special nature, the personnel
function in most organizations is given special attention
with the creation of human resources departments
responsible for personnel management. The human
resources function is an aspect of general management
and concerns the methodical and systematic discharge of
all the activities that have to be carried out where people
are employed, especially in large numbers.
 FUNCTIONS OF BUSINESS CONT.
• MARKETING FUNCTION: Marketing is the process
identifying, anticipating and satisfying customer’s
requirement profitably. It is said that production is not
complete until it gets to the hands of final consumers. The
process of looking for the customers and ensuring that
what is produced gets to them at a profit margin is known
as marketing
 FUNCTIONS OF BUSINESS CONT.
RESEARCH AND DEVELOPMENT: Research is the
process of finding dependable solutions to existing
problems. Businesses like every human being always
have problems. The problems of business ranges from
lack of adequate finance, shortages of personnel, poor
patronage of customers etc. Businesses must strive to
find solutions to whatever problems confronting them
otherwise such business will naturally collapse. The
process of identifying and proffering dependable solutions
to the problems is called research and development.
 FORMS OF BUSINESS
OWNERSHIP
• There are four major forms of business ownership
namely;
• Sole proprietorship
• Partnership
• Corporation
• Cooperatives
 SOLE PROPRIETORSHIP
• This is a form of business ownership in which the owner
works in the business as well as manages the business.
• CHARACTERISTICS OF SOLE PROPRIETORSHIP
1. The owner provides the money for investment in the
business either from savings or by loans.
2. The owner manages the business
3. The owner makes decisions or policies
4. The owner usually works in the business
 CHARACTERISTICS OF SOLE PROPRIETORSHIP CONT.

5. The owner is responsible for acts of the business.

6. The owner is personally liable for all debts of the
business
7. All profits go to the sole owner.
 ADVANTAGES OF SOLE
PROPRIETORSHIP
• Ownership of all profit
• Ease and low cost of organization.
• Freedom and Promptness of action.
• Tax savings
• Personal incentive and satisfaction.
• High Credit Standing.
• Secrecy
• Ease of Dissolution.
 DISADVANTAGES OF SOLE
PROPRIETORSHIP
• Unlimited Liability
• Limitation on size.
• Difficulties of Management
• Lack of opportunity for employees
• Lack of continuity
 PARTNERSHIP FORM OF
BUSINESS
• A partnership is a form of business activity that involves two or
more who voluntarily and willingly contributed their resources
together with the sole aim of maximizing their wealth.
CHARACTERISTICS OF PARTNERSHIP
1. A partnership is based on legal agreement or contract
between the partners.
2. It operates under the laws of the land to protect both the
partner and persons associated with the business.
3. Partners share equally in policy formation and management.
 CHARACTERISTICS OF PARTNERSHIP CONT.

4. Decisions are based on the majority vote of partners.

5. Partners are joint owners and share in profit according to
the terms of the agreement.
6. Each partner is responsible for the things done or
promised by any other partners in the management of the
business.
7. Each partner is responsible for the total debt of this
partnership regardless of his share on the investment.
8. A partnership is terminated automatically upon death,
retirement or resignation of a partner.
 CONTENTS OF DEEDS OF
PARTNERSHIP
• The name of the firm
• The name of the partners
• The locations and types of business
• The length of life of the partnership agreement
• The distribution of profits and losses
• The amount of capital each partner contributes
• The rate of interest if any, payable on capital
• A provision for salaries of partners.
 CONTENTS OF DEEDS OF
PARTNERSHIP CONT.
• A limitation on withdrawals
• The manner in which the accounts are to be kept and
audited.
• A statement for procedure in the admission of a new
partner.
• The method that will be followed in the event of
dissolution of the partnership.
 ADVANTAGES OF A
PARTNERSHIP
• Sufficient amount of capital
• Better credit standing
• Collective Judgment and management know how
• Valuable employees are retained
• Personal interest is enhanced
• Individual rights are protected
 DISADVANTAGES OF A
PARTNERSHIP
• Partners have unlimited liability
• Lack of continuity
• Difficulty in management
• Tied up investment
• The size of the firm is usually limited.
 KINDS OF PARTNERS
• GENERAL PARTNER: This is a partner who has unlimited
liability for the debt of the firm.
• LIMITED PARTNER: This is a partner who does not assume
responsibility for the debts beyond the amount of his
investment.
• SECRET PARTNERS: Is a partner who is active in affairs of
a partnership but who is not known to the public as a partner.
• SILENT PARTNER: Is a partner who is known to the public
as a partner but does not take active part in the management
of the firm.
 KINDS OF PARTNERS CONT.
• DORMANT OR SLEEPING PARTNER: Is a partner who does
not take an active part in the management and who is not
known to the public as a partner.
• NOMINAL PARTNER: Is a partner who is not actually a
partner but who publicly announces himself as a partner even
though he does not share in the profits or does not have
investment in the business.
• SENIOR PARTNER: Is a partner who has a substantial
investment in the firm, who receives relatively larger
percentage of the profits.
• JUNIOR: Is a newly admitted partner.
 LIMITED LIABILITY COMPANY
• One of the most important developments in modern
industries and organizations is the introduction of the
principles of Limited Liability. By this is meant that the
liability of the shareholders is limited to the fully paid up
value of the share he holds. If the company should find
itself in difficulties financially, the shareholder can lose no
more than the amount he has invested. In the absence of
Limited Liability, the unfortunate shareholder may have to
sell private possessions to meet the debts of the
company.
 TYPES OF COMPANIES
• There are two main types of companies. The Private
company and the public company.
1. THE PRIVATE COMPANY: This kind of company has
two important features;
a. The member of shareholders may be as few as two but
the maximum most not exceed fifty, excluding past and
present employees of the company.
b. A shareholder is not permitted to transfer his share
without the consent of the company and cannot invite
the general public to subscribe for share.
 TYPES OF COMPANIES CONT.
2. The Public Company: The characteristics of the
company are as follow.
a. There must be at least seven shareholders, but no
maximum number is set.
b. A document known as the Articles of Association is
usually complied. This article gives particulars of the
internal working of the proposed company including
such things as voting rights of shareholders and the
powers and duties of directors.
 TYPES OF COMPANIES CONT.
c. This type of company register with the Registrar of
companies after which a prospectus can be issued and
an appeal made to the general public to subscribe for its
shares.
d. The public limited company is able to raise very large of
money from small investors as well as large businesses.
 ADVANTAGES OF LIMITED
LIABILITY COMPANIES
• LIMITED LIABILITY OF MEMBERS: Members are liable
to the company and public only to the extent of their
investment in the company. This is to say that if a limited
liability company is in financial difficulty, the shareholders
can loose no more than the amount he invested.
• LAGER CAPITAL OUTLAY: This is so because limited
liability companies can float shares through the stock
exchange. This way they can raise a lot of money for the
operations of the business.
 ADVANTAGES OF LIMITED
LIABILITY COMPANIES CONT.
• CONTINUITY: The death of a shareholder does not affect
the existence of the company. The dead persons’ shares
will be transferred to another person. This is unlike in
partnership or sole proprietorship where the death of
partners ends the existing company.
• OWNERSHIP CAN BE TRANSFERRED: Ownership can
be transferred in limited liability company simple by
transfer of shares.
 ADVANTAGES OF LIMITED
LIABILITY COMPANIES CONT.
• A LEGAL ENTITY: As a legal entity, a limited liability
company can be sued or it can sue in its own name.
• LIABILITY TO MEMBERS ACTION: No member can bind
the company or other members through their action
except as appointed agent eg. Directors, Officers etc.
 DISADVANTAGES OF LIMITED
LIABILITY COMPANIES
1. LACK OF PRIVACY: Companies rarely keep
confidential documents since they are required by law
to publish accounts annually.
2. OWNERS DIFFERENT FROM MGT: The shareholders
are usually different from the managers. The managers
take all the operational decisions with little input from
owners. Also because owners are different from
management, there is an impersonal attitude in
existence because managers see themselves as
employees.
 DISADVANTAGES OF LIMITED
LIABILITY COMPANIES CONT.
3. INFLEXIBILITY: Changes in the business environment
cannot readily be made because the article of association
and memorandum of association must be followed strictly.
Board members on behalf of the shareholders must take
decisions.
4. TAXATION: Law subject to tax because it is an entity
recognized Profit of Limited Liability Company.
5. COST OF ORGANIZATION: Organization cost is high
because company is usually large.
 CO-OPERATIVES
• A co-orperative business is a voluntary and democratic
association with variable membership and variable capital
who have pooled themselves and their resources
together on mutual self help basic to form a business
enterprises. The main purpose of such business is to
provide goods and services to their members.
 TYPES OF COOPERATIVES
1. PRODUCER COOPERATIVE: Eg Farmers, Craftsmen,
Fishermen etc.
2. CONSUMER COOPERATIVES: They aim at making
goods available to consumer at a very reasonable price.
They also ensure that goods are available to
consumers unadulterated. So they generally protect
consumers interest.
 TYPES OF COOPERATIVES CONT.
3. CREDIT COOPERATIVE: Credit cooperatives
encourage members to safe and they help those who
need credit for productive purposes to secure the loan.
4. MARKETING COOPERATIVE: They serve their
members in the following ways; They assemble members’
produce, find a profitable market to sell them, they
provide storage facilities to members, undertake
processing packing grading and fixing of fair prices. They
also regulate sales to avoid over supply.
 CHARACTERISTICS OF
COOPERATIVES
• The cooperative organization ordinarily operates under
the provisions of a charter authorized by the laws of the
state of the federal government.
• The management is by an elected board of directors and
officers. Each member has one vote regardless of the
number of shares he owns.
• Capital is provided by sale of shares and pay
membership fees. Usually, a fixed rate of return is set on
shares.
 CHARACTERISTICS OF
COOPERATIVES CONT.
• Cooperatives operate on the principle that goods and
services will be priced at cost to members, hence there is
no profit. An accumulation of funds resulting from
operation is returned to members as dividends.
• Members are not liable for the debts of a cooperative.
• Death or withdrawal of a member does not normally affect
the operations of a cooperative.
 ADVANTAGES OF
COOPERATIVES
• It is democratically managed and organized
• There is no conflict of interest among members.
• There is usually reduction of consumer cost for goods
and services since the association passed its gain or its
members.
 DISADVANTAGES OF
COOPERATIVES
• It is said that the cooperative society’s members lack
business experiences.
• It is a frequent criticism that the cooperative societies are
able to compete unfairly against the other retail stores
because their profits are exempted from cooperation tax.
• Another criticism often leveled against cooperatives is
that some cooperative societies involve their fund for
political purposes.
 ORGANIZATIONAL STRUCTURE
• Organizational structure is the concept that shows how
authorities and responsibilities flow in an organization
from the top of the organization down to the bottom of the
organization. Organization’s structure shows clearly who
is responsible to what ,who reports to who and who is
answerable to what.
 TYPES OF ORGANIZATIONAL
STRUCTURE
• There are two major types of organizational structure;
1. Line organizational structure.
2. Line and staff organizational structure
LINE ORGANIZATIONAL STRUCTURE: This is that part of
organizational structure that contain the workers their
activities are traceable directly to the production of
goods and services. The structure contain the line staff.
LINE AND STAFF STRUCTURE: This is the part of the
structure that contain the workers their activities are not
traceable to the production of goods and services.
 BUSINESS EXPECTATION FROM SOCIETY

1. Provision of Infrastructure and Utilities.

2. Provision of human and material resources.
3. Patronage.
4. Security
5. Peaceful business environment
 SOCIETY EXPECTATION FROM BUSINESS

1. Increased standard of living.

2. Preservation resources.
3. Economic operations
4. Social responsibility
5. Fair competition
6. Preservation of basic institutions
 SOCIETY EXPECTATION FROM
BUSINESS CONT.
• FAIR COMPETITION: Because people must conduct their
affairs in such a manner, the rights of others, whether in
business or not are not interfered with more than is
necessary for healthy competition. That is monopolistic and
unfair competition methods should be avoided.
• PRESERVATION OF BASIC INSTITUTIONS: Ownership of
private property, freedom of contract and freedom of
investment are essential features of our business
environment and abuse of these institutions will certainly
weaken them and reduce the probability that they will
continue unchanged.
 SOCIETY EXPECTATION FROM
BUSINESS CONT.
• SOCIAL RESPONSIBILITY: More and more business people
coming to accept the need for a broader concept of business
responsibility to the community. No law forces a business to
contribute to educational, entertainment or their beautifying of the
community and sometimes educational and cultural programmes on
a large scale through radio and television e.g
• INCREASED STANDARD OF LIVING: Since business is the major
source of income in many societies and goods and services that
business provides sets the basic standard of living for every
member of the society, business has great power to increase or
decrease the standard of living. For instance, the host community of
business will benefit from employment which the business will
create for establishing in the community.
 SOCIETY EXPECTATION FROM
BUSINESS CONT.
• PRESERVATION OF RESOURCES: Goods cannot be
produced without raw materials and the supply of many vital
resources is fixed and cannot be increased hence business has
the responsibility to use these resources efficiently and to
create as much wealth and as little waste as possible.
• ECONOMIC OPERATIONS: The continued striving for
efficiency is characteristic of any good business. This is a
necessary element in the business organization’s responsibility
to itself and society. Efficient operation makes more goods and
services available at lower cost, thus aiding in the conservation
of resources and contributing to an increase in the standard of
living.
 BUSINESS EXPECTION FROM
SOCIETY
• PROVISION OF INFRASTRUCTURE AND UTILITIES: For any organization
to operate effectively in any environment, there must exit the required
infrastructure like accessible roads for easy movement of factors of
production and finished goods. There should also be enough land for
building the factory and for possible expansion, supply of electricity, water
and good telephone are pre-requisites for proper functioning of business
activities.
• PROVOSION OF HUMAN AND MATERIAL RESOURCES: The first
element of an organization is persons. Without people to interact and do the
work of the organization, there would be no organization. An organization
can be successful only if society can provide manpower with necessary
skills. Most businesses are sited where the needed raw materials are
available and business expects that the owners of these resources should
be willing to allow business to make use of these resources.
 BUSINESS EXPECTION FROM
SOCIETY CONT.
• STABLE ENVIRONMENT (Political and Social): For any
organization to thrive, there is need for stable environment
both political and social. With constant change in government
or community dispute, the operations of business would be
affected. There may be interruption in supply of factors of
production in the marketing of finished goods.
• PATRONAGE: Business produce goods or services and
these goods or services must be sold r marketed. Business
expects the society to patronize it by being able and willing to
pay a satisfactory price for its goods or services for business
to exist or prosper.
 BUSINESS EXPECTION FROM
SOCIETY CONT.
• GOVERNMENT PROTECTION AND ASSISTANCE:
Business cannot operate if the legal system is
antagonistic to it. Government makes laws and
regulations for business and these permit business to
operate and own property, building in certain zoned areas
etc. Business expects that government sets favourable
laws and regulations to protect business activities.
Government sometimes waves taxes for business,
provides facilities or even gives grants.
 PRIVATIZATION AND
COMMERCIALIZATION
• PRIVATIZATION: This is the process of transferring totally
government owned establishment to private individual or
group of individuals. E.g NEPA formally owned by
government now transferred to some private individuals
with the name EEDC and the likes.
• COMMERCIALIZATION: This is the process of converting
a non profit making organization to a profit organization.
 NEED FOR PRIVATIZATION AND
COMMERCIALIZATION
1. It relieves the government of its financial burden.
2. It enables the manager of a privatized company inject
private sector efficiency and profitability into the
enterprise.
3. It enhances a more equitable distribution of wealth and
the location of industries and infrastructures area that
may not otherwise be considered viable.
4. It will enhance the growth of the Nigerian Capital
Market.
5. It help to create more employment opportunities.
Coal City University is an Innovative and Globally focused university that offers students
Quality you can count on!

www.ccu.edu.ng