business organisation: basics

Business Business OrganisationOrganisation

Business Business OrganisationOrganisation

Rahul Pratap Singh KauravRahul Pratap Singh Kaurav

What is business ?

How we identify it is a business?

Do we need a permanent place to start the business ?

What is the ultimate aim behind business?

Find some business organization around your

Locality?

PIM, Gwalior

Business?• Business is an Economic

activity which involves regular production and or exchange of goods and services with the main purpose of earning profits through the satisfaction of human wants.

PIM, Gwalior

Familiar the meaning OF Business?

1.business involves production and exchange of goods.

2.It’s main aim is to earn profit.3.It must satisfy human wants.“ These activities are organised and

performed under the framework of an institution known as business organisation /firm/enterprise.”

PIM, Gwalior

“According to B.O Wheeler, Business is an institution organised and operated to provide goods and services to society under the incentive of private gain.”

PIM, Gwalior

Business ?• Business pervades all human

activities directed towards earning profits or economic gains.

Industry, Trade, Banking,

Transport, Insurance, Warehousing, advertising etc. are integral part of modern business.

PIM, Gwalior

TYPES OF ECONOMIC ACTIVITY

ECONOMIC ACTIVITIES

BUSINESS PROFESSION EMPLOYMENT

TRADEINDUSTRYBANKING

TRANSPORTATIONINSURANCE

WAREHOUSINGADVERTISING ETC.

MEDICALLEGAL

CHARTERED ACCOUNTANT.

MANAGERFOREMAN

CLERKSALESPERSONWORKER,ETC...

PIM, Gwalior

Definition of Business• Business refers to all those

activities which are concerned with the

production and /or purchase and sale of goods or services with the purpose of selling them at a profit.

PIM, Gwalior

Characteristics of business

• Economic Activity• Production or procurement (acquisition of goods for the

purpose of sale)• Dealing in goods and services; (goods are consumer

goods and capital goods)• Satisfaction of consumer wants• Regular dealings (continuous supply of goods and

services) • Profit motive• Uncertainty.• Risk element• Creation of utility

PIM, Gwalior

Objectives Of Business

• Business objectives as the purpose or the reason for the existence of the business in the society.

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Business activitiesBusiness activities broadly divided

in to three;They are, a) Economic objectives, b) Social objectives c) Human objectives

PIM, Gwalior

TYPES OF BUSINESS ACTIVITY

ECONOMICOBJECTIVES

HUMAN OBJECTIVES

SOCIALOBJECTIVES

1)EARNING OF PROFIT2)CREATION OF CUSTOMERS

3)INNOVATION4)EFFECTIVE UTILISATION

OF RESOURCE

1)GOOD SERVICE AND FAIR DEALINGS

2)TREATING EMPLOYEES AS PARTNERS

3) DEVELOPMENT OF EMPLOYEES SKILLS

4) JOB SATISFACTION OF EMPLOYEES

1)BETTER QUALITY PRODUCTS2)FAIR TRADE PRACTICES

3)GENERATION OF EMPLOYMENTEMPLOYEES WELFARE

4)COMMUNITY SERVICE5)PROTECTION OF EMPLOYMENT

PIM, Gwalior

NECESSITY OF PROFITABILITYOBJECTIVE

• ACCORDING TO PETER. F. DRUCKER

“A BUSINESS MUST ACHIEVE SUFFICIENT PROFITS TO COVER THE RISKS OF ECONOMIC ACTIVITY AND THUS TO AVOID

LOSS”

PIM, Gwalior

A BUSINESS MUST EARN ADEQUATE PROFITS BECAUSE OF THE

FOLLOWING REASONS;

• MEANS OF LIVELY HOOD• RETURN TO INVESTORS• REWARD FOR RISKS• SOURCE OF FINANCE FOR GROWTH AND

EXPANSION• INDICATOR OF EFFICIENT WORKING• GOODWILL OR REPUTATION

PIM, Gwalior

Can profit be the sole objective of a Business

• A lay man may say that business is carried on for profit only. But a good business man cannot afford to keep profits as his sole objective.

• “earning of profits cannot be the objective of a business any more than eating is the objective of living”

The argument against the profit maximisation are;

• Profit maximization ignores the interests of labour,customers,and the society.

• Unfair means such as hoarding, black marketing or adulteration may be followed to maximize profits.

• Long term interest of the business may be ignored to maximize profits in the short run.

• In the present day environment, a business can't be effective with the sole objective of profit maximisation.It must also set objectives in areas like customer satisfaction, employee welfare, community development, environment protection etc..

Multiplicity objectives of a Business

• According to peter f Drucker remarked “To manage a business is to balance a variety of needs and goals. And this requires multiple objectives”

• He suggests 8 areas where objectives must be set.

Multiplicity objectives of a Business

• 1 market standing (eg; Bata)• 2 Innovation (eg; Hero Honda)• 3 productivity( It is the ratio b/w output and inputs in

production process. it is considered as the efficiency of the enterprises.)

• 4 Human organization-workers attitude and performance

• 5 Physical and financial resources• 6 managarial performance• 7 social rresponsibility• 8 profitability-reasonable rate.

Characteristics or Nature of Business

• Deals in goods and services• Sale or exchange of goods and

services• Requires investment• Aims at earning profit• Involves risk and uncertainty of

income.

Classification of Business Activities

• Industrial Activities:• Industrial activities refer to

activities related to production or extraction of goods through utilisation of various resources. E.g. Growing crops and plants, extracting oil, natural gas and minerals from the surface of the earth, are examples of Industrial activities.

Classification of Business Activities

• Commercial Activities:• Commercial activities includes all

those business activities which are undertaken for sale or exchange of goods and services and facilitates their availability for consumption and use.

Objectives of Business

Importance of Business• Business improves the standard of living

of the people by providing better quality and large variety of goods and services at the right time and at the right place.

• It provides opportunities to work and earn a livelihood. Thus, it generates employment in the country, which in turn reduces poverty.

• It utilises the scarce resources of the nation and facilitates mass production of goods and services.

Importance of Business• It gives better return to the investors on

their capital investment and also provides opportunities to grow and expand the business.

• It also facilitates exchange of culture among the people of different nations and thus, maintains international harmony and peace.

Business System• A system is an assemblage or

combination of things or parts forming a unitary whole.

» Clean and King

Business as a system

Features of Business System

• Goal Oriented• Input-Output• Transforming Process• Open and Adaptive• Feedback• Sub-system• Synergy• Control Mechanism• Environment within the boundary

Defining Business Environment

• Business environment refers to different forces or surroundings that affect business operations.

• Such forces include customers, competitors, suppliers, distributors, industry trends, substitutes, regulations, government activities, the economy, demographics, and social and cultural factors. Others are innovations and technological developments.Rahul Pratap Singh Kaurav,

Asst. Professor, PIM, Gwalior46

Constituency of Business Environment

Rahul Pratap Singh Kaurav, Asst. Professor, PIM, Gwalior

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