Legal Definitions - scope of business

The term scope of business refers to the full range of activities and operations that are considered appropriate, customary, and reasonably necessary for a particular company or enterprise to function effectively and achieve its objectives.

This range is typically determined by:

• The fundamental nature and purpose of the business itself.
• What similar businesses in the same industry or geographic area commonly do to succeed.

Essentially, it defines the boundaries of what a business does and what it needs to do to operate successfully.

Examples:

• Example 1: A Local Bakery

  The scope of business for a local bakery would typically include baking bread, pastries, and cakes; selling these items to customers; managing inventory of ingredients; maintaining kitchen cleanliness; and perhaps offering catering services for local events. These activities are all directly related to the core function of a bakery. If the bakery owner decided to start offering car repair services from the back of the shop, that would clearly fall outside the established scope of business for a bakery, as it is neither necessary nor customary for operating a successful baking enterprise.

• Example 2: A Software Development Company

  For a software development company, its scope of business would encompass designing, coding, testing, and deploying software applications; providing technical support to clients; engaging in research and development for new technologies; and marketing its software solutions. These activities are all integral to creating and selling software. If an employee of this company, while on company time, began independently trading stocks for personal profit using company resources, that action would be considered outside the company's scope of business, as it does not contribute to the company's primary objective of software development.

• Example 3: A Residential Landscaping Service

  A residential landscaping service has a scope of business that includes mowing lawns, pruning shrubs, planting flowers, designing garden layouts, installing irrigation systems, and hauling away yard waste. These are all standard and expected services for a landscaping company. If, however, the owner of the landscaping service started offering legal advice to clients about property disputes, this would be well beyond the typical and necessary activities for a landscaping business and thus outside its defined scope of business.