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The Main Functions of a Business

A Business is a legal form of undertaking that deals in goods and services. It produces and exchanges products and services for profit and wealth. There are many different forms of Business, such as a sole trader, Hindu Undivided Family, partnership firm, joint stock company, cooperative undertaking, and more. In this article, we’ll explore the main functions of these forms of Business. Here’s a quick rundown of the functions you’ll need to know.

Profit motive

The profit motive is a powerful motivator for businesses. It is the basic human desire to increase the value of a product or service by making a profit. It is this motivation that directs business resources to the most valuable areas of the market. In doing so, businesses act in the interests of the buyer and the seller, which leads to a greater total well-being in society. Without the profit motive, people would choose to participate in less lucrative activities.

There are many different examples of how profit motives affect the purchasing decisions of people. For example, if you want to produce a dresser for $10, you have to sell it for more than $20. Without customers, profit-oriented businesses will never generate a profit. Therefore, it is important to understand that profits are not the only source of success. In order to be successful, businesses must ensure that they have a steady stream of customers.

Legal forms of a business

When you decide to start a business, one of the most important decisions you’ll have to make is what legal form it should take. Different business forms have different tax and liability implications and require different approaches to profits and losses. A sole proprietorship is an excellent option for a one-person company, as the risk of personal liability from business debts is minimal. However, a corporation may be preferable for larger enterprises.

For those who have massive assets and want to create a separate legal entity, a limited liability company may be the best choice for them. These entities are incorporated under the Business Organizations Act and provide a way for business owners to file personal taxes on their company’s earnings. Limited liability companies are most suitable for businesses with high risk and massive assets. However, it is important to understand that limited liability companies are not suitable for all businesses.

Personnel function

The role of the personnel department in a business has declined over time due to employee mobility and devolution of HR responsibilities to line managers. One advertising company owner claimed that line managers were now the key decision-makers on personnel issues. In response to such claims, the personnel function has undergone a transformation in recent years. To understand the new role of the personnel function in a business, we need to take a closer look at the historical development of the function.

The HR/personnel function in a SME is a hybrid between an administrative PA system and a fullfledged HRM approach. As a result, it may not play an especially critical role from both an administrative and strategic perspective. In fact, shifting from an operational to strategic role may prove difficult for HR managers. In such circumstances, an organizational chart is required to determine the role of HR/personnel within a business.

Finance function

The Finance function is a key part of the business management process. This department is responsible for determining how much money a company needs to grow and develop, and for making prudent financial decisions that ensure the firm has sufficient funds to meet its day-today expenses. In addition to budgeting, this department also analyzes economic trends to determine the best financial policies for a business. The Finance function also develops longrange plans for the firm’s activities, including cash management and asset valuation. It is also responsible for preparing the firm’s financial statements and reporting on the effectiveness of its internal control systems.

Today’s finance function is becoming increasingly digital, which will allow it to become an integrated partner with the business. This new technology will allow finance teams to become more efficient, while at the same time transforming the role of finance from one that relies on internal data to become a business partner. It is imperative for the Finance function to transition from an inward-looking function to an outward-looking one to remain relevant in the business world.

Trade cycles

The business cycle is a pattern of fluctuation in economic activity that occurs in a nation’s economy. The expansion stage of a business cycle results in a rise in economic indicators, including employment, output, wages, and profits. Debtors are generally paying their debts on time, and investment is high. This cycle continues for as long as economic conditions are favorable. In contrast, contraction periods occur during periods of economic weakness, and this is the case when business activity declines.

The NBER analyzes data to determine the phases of the business cycle. There are four major phases in a full business cycle, and they are triggered by three factors: supply and demand, availability of capital, and consumer confidence. When confidence is high, business activity tends to expand, and when it declines, the economy goes into recession. Similarly, when jungle scout is low, business activity will contract. Fortunately, a business cycle can help predict future events.

Risky nature of a business

A business is at risk due to the fact that the process it employs is prone to failure. It may fail because of a manufacturing machine breaking down, labor unrest, or even changing trends. Other risks are due to political unrest and natural disasters. Some businesses even face loss of assets due to natural disasters. It is essential to have comprehensive insurance coverage to protect the company from these risks. The risky nature of a business can also be due to human factors like agitation and negligence on the part of employees.

Risk in business means that the business may not achieve the anticipated profits or the targeted profit. The nature of the risk varies depending on the type of business. Large corporations usually carry higher risks than small businesses. All businesses face some level of risk. Risks can be classified as strategic risks, or the possibility that a business may be forced to take a different course of action due to changes in customer preferences. It is therefore necessary to have a real-time feedback system to evaluate the risks in the business and take the necessary steps to minimize them.