Functions and responsibilities of a business
Yvonne Harvey, Contributor

The Herbert Morrison High School speaking choir perform during a birthday celebration for the Honourable Louise Bennett-Coverley at the St. James Parish Library, in Montego Bay recently. - Claudine Housen/Staff Photographer

I will begin this topic by indicating the specific or learning objectives. At the end of the lesson, you should be able to:

1. List the functions of a business.

2. Discuss the nature of business organisations and their economic, financial, political and social responsibilities.

Let us start by defining the term 'business'. A business or business unit consists of a person or group of persons engaged in trade or some other commercial activity, with a view to making a profit.

Not all organisations can be regarded as businesses. A non-profit organisation is not a business. For example, a church bazaar may be engaged in selling goods, but it is not a business, if the money made will be given to the church or charity.

On the other hand, a private school operated for a profit by its owners is a business, but a government school, which provides a service to the community, is not. Now, let us go into the functions of a business.

THE FUNCTIONS OF A BUSINESS

The functions that a business carries out depend on its aims, goals and objectives. However, for most businesses, there are three main functions as follows:

1. The production of a good or service to satisfy people's wants

Goods are made through the use of raw materials and other productive resources. They are tangible items. Services are intangible and there are two types - direct or personal and indirect or impersonal.

2. The creation of jobs

Labour is one of the productive resources used to make goods and provide services; therefore, businesses employ labour and in doing so, they create jobs for those seeking employment, thus unemployment is reduced.

3. The creation of profit

Businesses aim to make profit. In the private sector, the aim is to maximise profits or minimise losses. In order to realise a profit, a business must keep its production costs as low as possible and sell its products for more than it costs to produce. Being in business does not in itself guarantee that a profit will be made. Among other things, a successful business must produce goods and services that people want, at a price that they are willing to pay.

Some other functions of a business

1. Businesses aid in the development of the country in which it is located.

2. A business helps to upgrade the skills of the workforce and contributes to the rise in the standard of living.

3. A business promotes local industry by using local raw materials.

The responsibilities of a business fall under four main headings:

1. Economic responsibilities

• To sell goods and services of a high quality at prices that the majority wishing to purchase can do so.
  
• To give export orders priority and to try to increase these orders.
  
• To make a profit.
  
• To improve the good or service.
  
• To contribute towards the improvement of the community.
  
• To create employment.

2. Financial responsibilities

• To make a profit.
• To be in good financial standing with its bankers.
• To plough back profit into the business for expansion.
• To pay shareholders.
• To invest in other productive areas

3. Political responsibilities

• To lobby and vote for parties whose policies coincide with their own wishes.
• To donate to the funds of political parties which they favour.
• To influence government into establishing policies which will benefit their businesses as well as their country.

4. Social responsibilities

These include;

• To develop a good community spirit by donating to charities and sponsoring educational, health and sporting activities.
• To promote the well-being of employees.
• To take part in community clean-up campaigns.
• To maintain homes and community centres.

Now for your assignment. After you have read this lesson and have done some additional reading, write the answer to this question:

(a) What do you understand by, 'a business'? ( 2 marks)

(b) Discuss the reason why not all organisations are regarded as businesses
(4 marks)

(c) Outline two main functions of a business ( 2 marks)

(d) Give three responsibilities of a business under each of the following headings:

(1) Economic
(2) Financial
(3) Political
(4) Social (12 marks)

Total marks: 20

Next week we will look at economic systems. Keep safe until then.

Yvonne Harvey teaches at Glenmuir High School.