Nature of Business Activity

Business as an activity can be divided into :

·        People demanding goods and services. These are the consumers (involved in consumption);

·    People involved in obtaining, arranging and transforming basic materials into finished products. These are the producers (involved in production);

·      People who are not in the above categories are those involved in distributing (distribution) the products to consumers and others. They also can include those involved in providing financial services (e.g. financial institutions).

Business organizations can be classified by the level of activity, by sector, or by legal structure.

Classification by Level of Activity

·   Primary : firms involved in the first stages of productions. These are the extractive industries (e.g. quarrying, mining, agriculture).

·      Secondary : this second stage of production in manufacturing. All manufactured goods are included, e.g. capital or investments goods (plant, buildings, machine tools), durable, consumer goods (e.g. cars, washing machines) or non-durable goods (e.g. food, clothing).

·    Tertiary : firms providing service, e.g. education and others services such as banking, insurance and catering).

Classification by Sector

This is quite simply business into private or public areas.

·        The private sector includes all firms whose ownership is by private enterprise

·        The public sector includes business which is controlled by government. It is worth noting that the public sector may change with different political parties in power.

The government has a part shareholding in some firms and there has been constant changes in those that re under public ownership.

It is obvious that primary, secondary and tertiary activities are all needed efficient production and exchange is needed at both national and international levels in order to raise the standard of living of all in society. There are various types or organization, ownership and control and these may change from time to time as society tries to find the “best” or “optimum” way of fulfilling its needs.

Classification by Legal Structure

The term legal person can refer to any person who can certain legal rights and who has certain legal duties.

·    A sole trader is the most prevalent and simplest form or organization. The owner has complete control and alone in responsible for any debt incurred and has unlimited liability for the business.

·    Partnerships are formed by individual combining and each person becomes partner. This may be to bring in new capital or expertise. These are usually a business unit.