BUS 102:INTRODUCTION TO BUSINESS II LECTURE NOTES CONTD. (PROF. ADEYEYE, MR. CASSIUS OGAR & MRS UMEZE)

6. CLASSIFICATION OF BUSINESS The following are various forms of classification: 1. Classification by sectors – according to the major areas of business, e.g. agriculture, transport, banking, manufacturing or industrial. 2. Classification by sectors – In terms of public and private sector businesses. Government or state owned businesses are classified as public sector businesses or corporations. Private sector businesses are owned by individuals, groups and incorporated companies. 3. Classification by structure – Businesses could be incorporated or unincorporated. 4. Classification based on the level of activities – Primary, secondary or tertiary businesses. Primary businesses have no value added. They are sold in their natural forms, e.g. farming and extractive industries. Secondary businesses have value added to primary products through processing or manufacturing. Tertiary businesses render services in addition to adding value, e.g. hotel and fashion designing.

7. FACTORS THAT AFFECT BUSINESS ORGANIZATIONS IN NIGERIA Major factors include: 1. Global economic forces – Cutting across nations of the world, e.g. the global economic meltdown. 2. Macro-economic variables – inflation, interest and exchange rates. 3. Government/Political factors – Fiscal and monetary policies, import and export regulations. 4. State of infrastructural facilities – Power, water supply, road network. 5. Security – Boko Haram insurgency, kidnapping and abduction. 6. Youth restiveness associated with unemployment. 7. Rate of technological development – Lag behind developed nations and use of obsolete technologies. 8. Religious and cultural bias – The Sharia states. 9. Inadequate capital especially for small scale enterprises. 10. Attitudinal impediments – General perception that every thing imported is superior to locally produced. 11. Management related problems – Including boardroom crises, sterile and ineffective management and nepotism.

8. THE ROLE OF GOVERNMENT IN BUSINESS Objectives of government involvement in business – See Bus 101 Lecture notes. Methods of government involvement in business – See Bus 101 Lecture notes.

9. IMPACT OF BUDGETING AND NATIONAL ROLLING PLAN ON BUSINESS ORGANIZATIONS A budget is a quantitative expression of a plan of action, in monetary terms, over a specified period of time, usually one year. Both government and corporate bodies are involved in budgeting. At governmental level, a budget is a quantitative expression of government fiscal policies and their corresponding financial plan, where revenues are estimated for specific expenditure. The national rolling plan, on the other hand, is a flexible medium-term projection of three to four years, which form the basis of annual budgets and revised each year in the light of changing macro-economic variables. In Nigeria, the Fiscal Responsibility Act of 2007 renamed the rolling plan as the Medium Term Expenditure Framework (MTEF), which covers a period of three years and revised annually to form the basis of annual budget. State governments are expected to prepare their corresponding MTEF. Budgeting and the national rolling plan, now known as Medium Term Expenditure Framework, have far reaching impact on business organizations. These include: 1. Government capital projects have direct effect on performance of business organizations e.g. road network and power supply. 2. The level of government spending, whether surplus or deficit budgeting, impacts positively or negatively on general business activity level. 3. Changes in fiscal policies, e.g. tax rate, will affect the profitability of business organizations. 4. Changes in interest and exchange rates will affect availability of bank credits and foreign transactions of business organizations. 5. Changes in import restrictions or liberalization have direct bearing on domestic industrial development.

10. REGIONAL AND GLOBAL BUSINESS ENVIRONMENT The world has become a global village in the present era of computer revolution. Business transactions across the globe can now be more easily concluded than ever before. Regional and international bodies are in place to facilitate the flow of business across national borders. These include Economic Community of West African States (ECOWAS) at the regional level, The African Union (AU) at continental level and the World Bank, International Monetary Fund (IMF) and World Trade Organization (WTO), amongst others, at the global level. These bodies are formed to promote world peace and foster mutual cooperation in socio-economic development and free flow of trade amongst nations of the world. In spite of these regional and international groupings, doing business in a foreign nation still remains subjected to special environmental factors. These include: 1. Socio-cultural factors – Differences in cultural background, language and ethical bias. 2. Political factors – Different political ideologies pose varying political risks to foreign business organizations ranging from political interference to outright nationalization. 3. Climatic factors – May pose serious problem of adaptation to foreign nationals. 4. Technological factors – Variations at the level of technology may create problems for business organizations planning to establish in foreign nations. 5 Economic factors – Associated with differences in political ideologies are economic factors, which affect business organizations in foreign nations. These include the degree of allowable market forces, national policies on foreign investments, exchange rate regime and trade regulations in form of tariffs, quotas, subsidies and embargos.