BUSINESS FINANCE The Nature and Aims of Business

BUSINESS FINANCE The Nature and Aims of Business By: Mrs. Belen Apostol

The Philippine Economy • Business success has always been associated with economic growth. Adequate capital is a prerequisite to the existence of business firms. • Business success is highly dependent on the available capital. • Proper management is a key ingredient in the survival and growth of business. • The major reason for business failure is the businessman’s lack of sufficient skills in managing finance.

The Role of Business • The growth of economy lies in the ability of private individuals to achieve economic objectives • The quest for profit is usually undertaken by engagement in business activities. • Business firms and government are oriented towards the provision of goods and services in the society.

The Role of Business • The standard of living is raised or lowered depending to a large extent on the performance of business firms. • Business is largely responsible for bringing into the market a wide array of products and services which were not previously available.

The Philippine Economy Concerns affecting the Philippine Economic Development • Low Productivity in the workplace • Graft and corruption in the government • The declining value of peso • Unfavorable balance of trade

Business Defined • Business is any lawful economic activity concerned with the production and/ or distribution of goods or services for profit.

Kinds of Business may be classified as to the nature of principal activity performed as follows: 1. Commerce 2. Industry 3. Services

Commerce are business firms engaged in buying and selling of goods and services.

Industry Are those which are mainly concerned with production. Consumer’s goods – are goods produced intended for ultimate consumption Producer’s goods – goods intended for business

Industry may be classified as: Genetic industries – business involved in agriculture, forestry, and fish culture. Extractive industries – business involved in the extraction of goods from natural resources which include mining, lumbering, hunting and fishing.

Industry Manufacturing industries – are those which convert raw materials into finished products. Construction industries – consist of firms engaged in building infrastructures like airports, seaports, dams and highways.

Services A service business is one which sells services to buyers. Service may be classified as: 1. Recreation – movie houses, television and radio stations, theaters 2. Personal – restaurants, barber shops, hotels 3. Finance – banks, insurance, credit union,

OBJECTIVES OF BUSINESS A business firm is established primarily for profit. Short term and long term profits are sacrificed in order to attain goals such as: 1. Political influence 2. Family control of the business 3. Community involvement

OBJECTIVES OF BUSINESS To survive and grow, business firms must attain the following multiple objectives: 1. The provision of products and services to the community; 2. The satisfaction of personal objectives like: a. Profits for owners b. Adequate salaries and compensation for executives and employees c. Psychic income for all, including pride in work, security, recognition, and acceptance

OBJECTIVES OF BUSINESS 3. Protection and enhancement of the human and physical resources of society; and 4. Economy and effectiveness of operation