UNIT ONE:

THEORETICAL FOUNDATIONS OF BUSINESS

1.2.1 Historical Development of Business

Introduction

The history of business is always an interesting topic at pre-university and university level – well

The study of business, or our general understanding of business and its role in society, is
sometimes confused and mistakenly made directly synonymous with more specific job
professions within finance, consulting or any other field you may be familiar with.

We should consider ‘business’ in its broader sense and appreciate this breadth and its comprising
industries.

From thereon, it is much easier to go into depth about what constitutes business, how it works,
why it works, and where it is heading.

Of course, specific business industries rightfully deserve their detailed analyses, but we often
underestimate more prominent characteristics and trends that transcend industries as well as
geographical locations.

So let’s have a look at business from a past, present and future perspective.

Business, in simple terms, is when a person or organization profits by providing goods and/or
services in exchange for money – engaged in commercial, industrial or professional activities.

Since the above definition is so broad, it is clear to see that it encompasses many different forms
and types of business.

It is also important to note that business structures vary, with the four primary ones being sole
proprietorships, partnerships, corporations and limited liability companies. These distinctions are
crucial for defining business goals and performance and for legal and tax purposes.

1.2 Common Business Structures

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A sole proprietorship is a business owned and operated by a single person, so there is no legal
separation between the business and the individual. This also means that the business owner is
liable to him- or herself for profits and losses.

A partnership is similar to a sole proprietorship, but this includes operations amongst two or
more owners. Generally, the benefit is that the business can share more resources and liabilities
are spread across more owners.

A corporation is when a group of people act together as a single entity. Most commonly, owners
of a corporation are shareholders of that company. Incorporating a business in this way means
that owners are not personally liable for financial or business obligations, but corporations still
tend to have unfavorable taxation rules.

As such, corporations may choose to become limited liability companies (LLC): a private
company whose owners are legally responsible for its debts only to the extent of the amount of
capital they invested. While all of this may seem like crossing the border into dry legal jargon, it
is essential to make distinctions between businesses as it helps to understand what business
constitutes.

1.3 The History

Business as we know it can be traced back 3,000 years to India and China, where companies –
with structures resembling sole proprietorships, partnerships and corporations. At this time, they
began entering into contracts and owning property, essentially setting up the basic frameworks of
business that we use today.

From 1500 AD, we see the first few government-backed companies, like the Dutch East India
Company and British East India Company, taking on global business challenges and exchanging
goods far away from home.

After the Industrial Revolution in 1790, business changed every 50 years or so, shaped by new
inventions, trade and changing consumer habits.

1.4 Businesses and Global Trade

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When infrastructure in many parts of the world began to evolve and improve, it lowered
transportation costs. The business world saw an exponential increase in global trade. Today, it is
unimaginable that a business would have to be constrained solely within the borders of a single
country.

Eventually, business management took off as a career for people to pursue and throughout the
1900s, the business potentials began to appear endless.

That being said, business has not always been smooth sailing throughout history. The Great
Depression in the 1930s and the financial crisis of the 1970s by OPEC and 2008 European crisis
are just some examples of global economic setbacks that slowed down the progress of business.

Even so, these setbacks shaped the way people thought about business, its risks, but also it’s
potential. Businesses have played a vital role in human history and society, and it is undeniably
going to continue to do so in the future. The question remains, however, what can we expect in
the future?

1.5 The Future

ACTIVITY ONE

What major factors do you think will shape business of tomorrow?

Discuss for 5 minutes with your partner and reflection on the idea from all group

We all would argue that two primary factors will shape business in the future, and they have
started to do so already. What we can expect, therefore, is that they will continue to play a much
more significant role worldwide.

Firstly, we need to consider the impact of digital transformation. This sounds like a rather big
word, and maybe it might appear to lack any real meaning, but it is perhaps the best way to
capture the role of technology in business and society.

Digital transformation essentially refers to the novel use of digital technology to solve traditional
business problems. These digital technologies enable new types of innovation and creativity,

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rather than simply supporting traditional methods. Think artificial intelligence, e-commerce,
fintech (Financial Technology), entirely new business models… the list goes on.

You have probably already experienced the digital transformation without even knowing it. For
instance, when you purchase clothes online, your package is delivered within a day or two.

This is groundbreaking stuff, and it is only the beginning. Businesses are constantly researching
and looking into new ways of operating, interacting with customers and driving innovation.

1.6 Corporate Social Responsibility

Another major trend in the business world is the notion of Corporate Social Responsibility (or
CSR). Corporate social responsibility is a self-regulating business model that helps a company be
socially Accountable — to itself, its stakeholders, and the public.

This is a broader response to growing concern and knowledge about the role of businesses in
society. They are sometimes very big actors and ought to be held accountable for their actions
whether good or bad.

CSR can mean anything from the impact that a business has economically, socially, politically or
environmentally. In other words, it is when a business operates to enhance society and the
environment instead of having adverse effects on them.

There is an increasing number of regulations regarding CSR, but the companies themselves have
brought forward some CSR policies.

Examples of CSR may include a clothing company committing to not use child labour in any
part of its supply chain or any company vowing to source its raw materials only from ethical
sources. Take Starbucks, for example. This coffee giant has consistently demonstrated a keen
commitment to corporate social responsibility, community and well-being. It has ensured that
99% of its coffee beans are ethically sourced. It is a vital player in environmental consciousness,
particularly in its building of stores. It has encouraged its employees to partake in community
service.

CSR is a growing trend, and companies nowadays will have a hard time avoiding it due to
increased consumer awareness and demand for societal and environmental accountability.
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There are so many possible business trends that may surface within the next 5, 10 and 100 years
some may even be impossible to conceive of now. But that is the beautiful nature of business
innovation and creativity.

HOME TAKING ASSIGNMENT

Take any business you admire and present in the class

1.7 Business process and scientific method

A business process is a set of activities that are performed by an organization to achieve a

specific goal or outcome. A scientific method is a systematic way of investigating, testing and
explaining phenomena in the natural or social world. Both business process and scientific
method share some common features, such as:

 They are based on a clear and specific problem or question that needs to be solved or
answered.
 They involve collecting and analyzing data or information to support decision making or
knowledge creation.
 They follow a logical sequence of steps or stages that can be repeated or modified as
needed.
 They aim to improve efficiency, effectiveness, quality or innovation.

However, there are also some differences between business process and scientific method, such
as:

 Business process is more focused on delivering value to customers or stakeholders, while

scientific method is more concerned with advancing scientific knowledge or
understanding.
 Business process is more influenced by external factors, such as market demand,
customer feedback, competition or regulation, while scientific method is more guided by
internal factors, such as curiosity, hypothesis, theory or evidence.
 Business process is more flexible and adaptable to changing situations, while scientific
method is more rigorous and consistent in following established rules or standards.

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1.8 Features of Business as Field of Study

Business as a field of study is a broad and diverse discipline that covers various aspects of how
organizations operate and interact with their environment. Some of the features of business as a
field of study are:

It is interdisciplinary: Business studies draw on knowledge and methods from various

disciplines, such as economics, sociology, psychology, law, accounting, finance, marketing,
management, and more. This allows business students to gain a comprehensive and holistic
understanding of the complex and dynamic world of business.

It is applied: Business studies aim to provide students with practical skills and tools that they
can use to solve real-world problems and challenges in the business context. Business students
learn how to analyze data, make decisions, communicate effectively, work in teams, and manage
projects, among other skills.

It is relevant: Business studies reflect the current trends and issues that affect the business
world, such as globalization, digitalization, innovation, sustainability, ethics, and social
responsibility. Business students learn how to adapt to the changing environment and anticipate
the future needs and opportunities of the market and society.

It is diverse: Business studies offer a wide range of specializations and concentrations that cater
to the interests and goals of different students. Business students can choose to focus on a
specific industry (e.g. hospitality, health care, sports), function (e.g. finance, marketing, human
resources), or topic (e.g. entrepreneurship, leadership, strategy) within the field of business.

1.9 Careers with a business degree

ACTIVITY 3
How you encourage your students to join the field of business in terms of their carrier path?

The combination of academic challenge and practical focus makes the prospect of studying a
business degree highly appealing for those attracted to the competitive, yet collaborative learning
environment offered by many business schools and departments.
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Business graduates go on to work in myriad different sectors, and not all of them are those you
would typically associate with business.

Typical careers with a business degree include roles in accounting and finance departments,
which take in large numbers of business degree graduates. For example, business engineering
graduates from the University of Antwerp have gone on to take up key roles in the shaping of
digital innovation and the managing of business transformation, working as consultants,
managers, analysts and controllers, amongst other roles.

Other sectors with high demand for business graduates include marketing and advertising, as
well as retail, sales, human resources and business consultancy. The diversity and plenitude of
careers with a business degree underlies the subject’s appeal for many students.

If you’re unsure of how to start developing your career after graduation, you may consider
looking into the career development programmes that are offered by universities or business
schools. Or you can join one of the many graduate schemes which many large and international
companies run. These often allow graduates to spend time completing traineeships in different
parts of the business, and often different regions of the world, before opting for a particular
career track to pursue.

You could also use your business degree to pursue roles within SMEs (small- to medium-sized
enterprises), innovative new start-ups, charities, non-profit organizations and NGOs. If you have
a bright idea and the knowledge to back it up, you may even consider launching your own
business.

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