Business – Meaning, Nature, Scope
Objectives of Business
Essentials of a successful business
Business Environment
Internal Factors
External Factors
Emerging opportunities in business
E-Commerce
Introduction to Business Organization
Forms of Business Organization
National Business
International Business
Pre Engineered Building Manufacturers Hyderabad.pptx
Business organisation and management UNIT1.ppt
1. WHAT IS A BUSINESS?
The term business refers to an organization or
enterprising entity engaged in commercial, industrial, or
professional activities. Businesses can be for-profit
entities or they can be non-profit organizations that
operate to fulfill a charitable mission or further a social
cause. Businesses range in scale from sole
proprietorships to international corporations and can
range in size from small to large.
2. TYPES OF BUSINESSES
Many businesses organize themselves around
some sort of hierarchy or bureaucracy, where
positions in a company have established roles and
responsibilities. The most common structures
include:
Sole proprietorships
Partnerships
Corporations
Limited liability companies (LLCs)
3. Sole proprietorships: As the name suggests, a sole
proprietorship is owned and operated by a single
natural person. There is no legal separation
between the business and the owner, which means
the tax and legal liabilities of the business fall on
the owner.
Partnerships: A partnership is a business relationship
between two or more people who join forces to conduct
business. Each partner contributes resources and money
to the business and shares in the profits and losses of the
business. The shared profits and losses are recorded on
each partner's tax return.
4. Corporations: A corporation is a business in which a
group of people acts together as a single entity. Owners
are commonly referred to as shareholders who exchange
consideration for the corporation's common stock.
Incorporating a business releases owners of the financial
liability of business obligations. A corporation comes
with unfavorable taxation rules for the owners of the
business.
Limited liability companies (LLCs): This is a relatively
new business structure and was first available in
Wyoming in 1977 and other states in the 1990s.
A limited liability company combines the pass-through
taxation benefits of a partnership with the limited
liability benefits of a corporation.
5. NATURE OF BUSINESS
Business is derived from ‘busy-ness,’ i.e. keeping
oneself occupied with one or the other work, but it
is much more than just being busy.
To have a better understanding of what a business
is, we must go through the following points:
6. Regular Process: It is an activity which is performed
repeatedly to generate profit.
Economic Activity: The whole sole purpose is
maximising wealth.
Creates Utility: The goods or service must be such that
it creates form utility – conversion of products in a
consumable form, time utility – making the goods and
services available when needed; and place utility –
availability of goods or services wherever required, for
the consumers.
Capital Requirement: Any venture requires fund
depending on the size and its type.
Deals in Goods and Services: It is related to
manufacturing and offering goods for sale or catering
services.
7. Risk: All businesses have a risk factor or uncertainties of
failure and loss.
Profit Earning Motive: The initial motive of a
businessman is making a profit out of his venture.
Satisfaction of Consumer’s Need: It is concerned with
the fulfilment of the customer’s demands and needs.
Involves Buyer and Seller: There are majorly two
parties involved, the customer and the merchandise.
Social Obligations: It has some social responsibilities,
like creating job opportunities, dealing with licensed
products, etc.
8. TYPES OF BUSINESS
The previous instance has made it clear that
business involves goods or services or both. A
person has first to select the kind of business line
he wants to operate.
Thus, a business can be broadly classified as into
the following types:
9. Service: An activity performed to earn money
through customer satisfaction is known as a
service. It involves professional skills and expertise.
E.g. A professional teacher earns money by taking
tuition class
Merchandising: Merchandising means
procurement of goods from manufacturers or
wholesalers, at a low price and selling it at a higher
price to make a profit. It is also known as a retail
business.
E.g. A florist selling flowers
10. Manufacturing: Making profit through production or
creation of goods from raw material in such a way
that it derives some utility to the consumer is known
as a manufacturing business.
E.g. Processing of sugarcane in a sugar mill to get
fine sugar
Hybrid: A business which involves all the three
activities, i.e. manufacturing of goods,
merchandising of products and delivering service
falls under the hybrid category.
E.g. A furniture seller, who manufactures furniture,
buys old furniture and sells it at a higher price after
repairing and also provides services for polishing
old furniture.
13. Following business components play an important role in
the scope of business:
Industry
The word “Industry” refers to the business activities
which are linked with the extraction and production or
manufacturing of products. The product formed by an
industry is either used by the vital consumers or again by
the industry. If the product is used by the consumer it is
called consumers’ goods such as clothes.
If the product is used again by the industry it is called the
producer’s goods or capital goods. In a case when a
product produced by the industry is further processed
into finished products for other purposes they are called
intermediate goods. e.g. plastic.
14. The industry is further divided into types on the basis of
business activity:
Extractive Industries
The industries which extract, raise and
manufacture raw materials from above or under the
Earth’s surface are known as Extractive Industries
and they include mining, fisheries, forestry and
agriculture, etc.
Genetic Industries
The industries which are involved in
reproducing and multiplying certain species of
animals and plants and sell them in the market to
earn a profit are named as Genetic Industries.
These industries include cattle breeding farms,
poultry farms and plant market, etc.
15. Constructive Industries
The industries which are involved in the
construction of building, canals, bridges, dams and
roads, etc. are called Constructive Industries.
Service Industries
The industries which are involved in manufacturing
the intangible goods which cannot be seen but felt such
as services of professionals like doctors, lawyers are
examples of Service Industries.
16. Commerce
The second component of the scope of
business is Commerce. It involves the buying and
selling of goods and all the activities which are
associated with the transfer of goods from the
production source to the ultimate consumers or
destination. The ranges of activities related to
Commerce take place through:
Trade
The process of buying and selling goods is
called Trade. It is the process of exchanging goods
and services amongst the buyers and sellers and
both of them earn profits. Trade can be classified
into two types; internal and external.
17. Internal Trade: The process of buying and selling
goods within a country is called internal trade. The
internal trade can be either wholesale trade or retail
trade.
Wholesale Trade: In wholesale trade, the goods are
purchased in bulk from the producers and sell them to
the retailers. These retailers then sell these goods to the
final consumers.
Retail Trade: In the retail trade, the retailer sells goods
and services to the final consumers.
External Trade: The process of buying and selling
goods between the two countries is called external
trade. The external trade has two types; import
trade and export trade.
18. The elements which help in the purchasing of
goods and services are called aid to trade. There
are certain constituents that are essential for the
progress of the trade and are as follows:
Transport
By using different ways of transport, the goods
are transported from industry to the consumers. It
includes railways, ships, airlines, etc.
Insurance
Insurance is very important to aid to trade.
Insurance reduces the risk of damage to goods due
to fire, flood or earthquake, etc. by paying a good
amount in this regard.
19. Warehousing
Warehouses are used to keep the goods and
are released and are delivered to the market when
demanded. Thus, warehousing plays an important
part to overcome the barrier of time and helps the
goods reach the consumers in a short span of time.
Banking
Commercial banks play an important role in
financing trade activities. They provide funds to the
traders for stock holding and transporting the
goods. They also support the producers in
purchasing and receiving at both national and
international levels. The banks also offer credit
facility in the form of cash credit, overdrafts and
loans to the traders.
20. Advertisements
Advertisements play an important part in
selling the good to the consumers. The
advertisement is either shown on television or
printed in newspaper or magazines etc. and help
the consumers to choose their desired product.
Thus, advertisements are very important for the
seller as well.
21. OBJECTIVES OF BUSINESS
Objectives are something which a business
organization wants to achieve or
accomplish over a specified period of
time. These may be to earn profit for its
growth and development, to provide
quality goods to its customers, to protect
the environment etc. These are the
objectives of business.
22. CLASSIFICATION OF OBJECTIVES OF BUSINESS
It is generally believed that a business has a single
objective, that is, to make profit. But it cannot be the
only objective of business. While pursuing the
objective of earning profit, business units do keep the
interest of their owners in view. However, any
business unit cannot ignore the interests of its
employees, customers, the community, as well as the
interests of society as a whole. For instance, no
business can prosper in the long run unless fair wages
are paid to the employees and customer satisfaction is
given due importance.
23. Again a business unit can prosper only if it
enjoys the support and goodwill of people in
general. Business objectives also need to be
aimed at contributing to national goals and
aspirations as well as towards international well-
being. Thus, the objectives of business may be
classified as –
a. Economic Objectives
b. Social Objectives
c. Human Objectives
d. National Objectives
e. Global Objectives
24. ECONOMIC OBJECTIVES
Economic objectives of business refer to the
objective of earning profit and also other objectives
that are necessary to be pursued to achieve the
profit objective, which include, creation of
customers, regular innovations and best possible
use of available resources.
25. Profit earning
Profit is the lifeblood of business, without which no
business can survive in a competitive market. Infact
profit making is the primary objective for which a
business unit is brought into existence. Profits must be
earned to ensure the survival of business, its growth and
expansion over time. Profits help businessmen not only
to earn their living but also to expand their business
activities by reinvesting a part of the profits. In order to
achieve this primary objective, certain other objectives
are also necessary to be pursued by business, which are
as follows:
Creation of customers
Regular innovations
Best possible use of resources
26. Social Objectives
Social objectives are those objectives of business, which
are desired to be achieved for the benefit of the society.
Since business operates in a society by utilizing its scarce
resources, the society expects something in return for its
welfare. No activity of the business should be aimed at
giving any kind of trouble to the society. If business
activities lead to socially harmful effects, there is bound
to be public reaction against the business sooner or later.
Social objectives of business include production and
supply of quality goods and services, adoption of fair
trade practices and contribution to the general welfare of
society and provision of welfare amenities.
Adoption of fair trade practices
Production and supply of quality goods and services
Contribution to the general welfare of the society
27. HUMAN OBJECTIVES
Human objectives refer to the objectives aimed at the
well-being as well as fulfillment of expectations of
employees as also of people who are disabled,
handicapped and deprived of proper education and
training. The human objectives of business may thus
include economic well-being of the employees, social
and psychological satisfaction of employees and
development of human resources.
Economic well being of the employees
Social and psychological satisfaction of employees
Development of human resources
Well being of socially and economically backward
people
28. NATIONAL OBJECTIVES
Being an important part of the country, every business must
have the objective of fulfilling national goals and aspirations.
The goal of the country may be to provide employment
opportunity to its citizen, earn revenue for its exchequer,
become self-sufficient in production of goods and services,
promote social justice, etc. Business activities should be
conducted keeping these goals of the country in mind, which
may be called national objectives of business. The following
are the national objectives of business.
Creation of employment
Promotion of social justice
Production according to national priority
Contribute to the revenue of the country
Self-sufficiency and Export Promotion
29. GLOBAL OBJECTIVES
Earlier India had a very restricted business relationship with
other nations. There was a very rigid policy for import and
export of goods and services. But, now-a-days due to liberal
economic and export–import policy, restrictions on foreign
investments have been largely abolished and duties on
imported goods have been substantially reduced. This change
has brought about increased competition in the market. Today
because of globalization the entire world has become a big
market. Goods produced in one country are readily available
So, to face the competition in the global market every
business has certain objectives in mind, which may be called
the global objectives.
Raise general standard of living
Reduce disparities among nations
Make available globally competitive goods and services
30. ESSENTIALS OF A SUCCESSFUL BUSINESS
The present day business system is very
complex and elaborate. The businessman has to
take certain line of action to make his business a
success. They are:
1. Objectives
For the success of any business organization,
determination of its objective is very essential. It
should be clearly described and also be realistic. It
may be primary or/and secondary. Each activity of
the organization should be directed towards the
achievement of its objectives.
31. 2. Planning
Planning refers to the rational and orderly
thinking about the ways and means for the
achievement of the firm’s objectives. It analyses the
problem and find out the solutions with reference to
the objectives of the firm. It enables the firm to run
smoothly and thereby reduces the risk of loss.
Thus, it is considered as the essence of business.
3. Research
Research is necessary for the organization in
order to improve the methods and techniques of
production, quality of the products and also to
introduce new products. It enables the
businessman to meet the changing needs of
customers, demand and also competition among
the producers.
32. 4. Location and Size
Favorable location and suitable size have a
great bearing on the success of any business
concern. The businessman in selecting a suitable
location and also in determining its size must
exercise proper care.
5. Sound Organization
it is very essential for the success of any
business. It is a medium for exercising effective
control and management of any business. A good
organizational chart is necessary for staffing the
organization with sufficient number of personnel
with different talents and skills, dividing work among
people etc.
33. 6. Adequate Finance
Finance is the lifeblood of the organization.
Inadequate finance may lead to losses in the firm.
Hence, arrangements should be made to meet the
short-term and long-term requirements of the
organization. Flow of funds and employment of
funds should be planned well in advance.
7. Effective Management
In order to achieve its objectives, effective and
efficient management is essential. No firm can
achieve success unless it has an efficient
management. It is possible only when the
managers are competent in performing their duty.
34. 8. Effective Distribution System
The goods produced have value only when
they are made available to the consumers. The
object of producing goods itself is to distribute it for
value. Therefore, in every business organization it
is essential to have effective distribution system.
9. Maintenance of Better Employee relationship
Cordial employee-employer relationship is very
essential for the successful operation of the
business concern. Employees are to be rewarded,
well treated and also provided with all amenities to
ensure job satisfaction. This will definitely boost up
employee morale and ensure their cooperation.
35. BUSINESS ENVIRONMENT
Conditions or situations that affect business
activities may be regarded as the environment of
business. In other words, business environment
refers to the surroundings and circumstances,
which influence business operations. This
environment consists of forces and factors internal
or external to a business firm. The skill and ability of
employees, their attitude to work, relations between
managers and subordinates etc. may be regarded
as internal environment of business. These are
important factors, which may affect business
operations. But these are within the control of the
businessman.
36. By taking suitable steps the conditions can
be improved. On the other hand, external
environment refers to all those aspect of the
surrounding of business, which are not within
the control of the managers and may affect
business activities to a great extent. You may
have noticed that sometimes there is less demand
of goods produced by a particular firm. It may be
due to better quality substitutes which customers
find more useful. Again, if the government
policy changes so as to allow foreign goods to be
imported at lower rates of customs duty, similar
good produced in India may not sell, as the
prices of imported goods may be lower.
37. These conditions are generally not within the
control of the businessmen. Let us discuss about
the external factors which influence or affect
business activities and operations and are not
controllable by businessmen. We may classify
these factors as
Economic factors,
Social factors,
Political factors and
Technological factors.
38. CONCEPT OF BUSINESS ENVIRONMENT
Managers must have a deep understanding
and appreciation of the environment in which they
and their organisations function. The environment
of business is the ‘aggregate of conditions, events
and influences that surround and affect it’
Since the organisation is part of a broader
social system, it has to work within the framework
provided by the society and its innumerable
constituents.
39. For the sake of simplicity the environmental
forces could be classified into two categories:
1. Internal environment and
2. External environment.
1. Internal Environment:
The internal environment consists of conditions
and forces within an organisation that affect the
organisation’s management. Aspects of the internal
environment include the organisation’s mission,
corporate culture, owners and the board of
directors, employees, other units of the organisation
and unions.
40. 2. External Environment:
The external environment consists of those
factors that affect a firm from outside its
organisational boundaries. Of course, the boundary
that separates the organisation from its external
environment is always not clear and precise. For
example, shareholders are part of the organisation,
but in another sense, they are part of its
environment.
44. E- COMMERCE - MEANING
E-commerce (electronic commerce) is the buying
and selling of goods and services, or the
transmitting of funds or data, over an electronic
network, primarily the internet. These business
transactions occur either as business-to-business
(B2B), business-to-consumer (B2C), consumer-to-
consumer or consumer-to-business. The terms e-
commerce and e-business are often used
interchangeably. The term e-tail is also sometimes
used in reference to the transactional
processes that make up online retail shopping.
In the last decade, widespread use of e-commerce
platforms such as Amazon and eBay has
contributed to substantial growth in online retail. In
2007, e-commerce accounted for 5.1% of total retail
sales; in 2019, e-commerce made up 16.0%.
45. HOW DOES E-COMMERCE WORK?
E-commerce is powered by the internet, where
customers can access an online store to browse
through, and place orders for products or services
via their own devices.
As the order is placed, the customer's
web browser will communicate back and forth with
the server hosting the online store website. Data
pertaining to the order will then be relayed to a
central computer known as the order manager --
then forwarded to databases that manage inventory
levels, a merchant system that manages payment
information (using applications such as PayPal),
and a bank computer -- before circling back to the
order manager.
46. This is to make sure that store inventory and
customer funds are sufficient for the order to be
processed. After the order is validated, the order
manager will notify the store's web server, which
will then display a message notifying the customer
that their order has been successfully processed.
The order manager will then send order data to the
warehouse or fulfillment department, in order for the
product or service to be successfully dispatched to
the customer. At this point tangible and/or digital
products may be shipped to a customer, or access
to a service may be granted.
47. Platforms that host e-commerce transactions
may include online marketplaces that sellers simply
sign up for, such as Amazon.com; software as a
service (SaaS) tools that allow customers to 'rent'
online store infrastructures; or open source tools for
companies to use in-house development to
manage.
48. TYPES OF E-COMMERCE
Business-to-business (B2B) e-commerce refers
to the electronic exchange of products, services or
information between businesses rather than
between businesses and consumers. Examples
include online directories and product and supply
exchange websites that allow businesses to search
for products, services and information and to initiate
transactions through e-procurement interfaces.
In 2017, Forrester Research predicted that the B2B
e-commerce market will top $1.1 trillion in the U.S.
by 2021, accounting for 13% of all B2B sales in the
nation.
49. Business-to-consumer (B2C) is the retail part of
e-commerce on the internet. It is when businesses
sell products, services or information directly to
consumers. The term was popular during the dot-
com boom of the late 1990s, when online retailers
and sellers of goods were a novelty.
Today, there are innumerable virtual stores and
malls on the internet selling all types of consumer
goods. The most recognized example of these sites
is Amazon, which dominates the B2C market.
50. Consumer-to-consumer (C2C) is a type of e-
commerce in which consumers trade products,
services and information with each other online.
These transactions are generally conducted
through a third party that provides an online
platform on which the transactions are carried out.
Online auctions and classified advertisements are
two examples of C2C platforms, with eBay and
Craigslist being two of the most popular of these
platforms. Because eBay is a business, this form of
e-commerce could also be called C2B2C --
consumer-to-business-to-consumer.
51. Consumer-to-business (C2B) is a type of e-
commerce in which consumers make their products
and services available online for companies to bid
on and purchase. This is the opposite of the
traditional commerce model of B2C.
A popular example of a C2B platform is a market
that sells royalty-free photographs, images, media
and design elements, such as iStock. Another
example would be a job board.
52. Business-to-administration (B2A) refers to
transactions conducted online between companies
and public administration or government bodies.
Many branches of government are dependent on e-
services or products in one way or another,
especially when it comes to legal documents,
registers, social security, fiscals and employment.
Businesses can supply these electronically. B2A
services have grown considerably in recent years
as investments have been made in e-government
capabilities.
53. Consumer-to-administration (C2A) refers to
transactions conducted online between individual
consumers and public administration or government
bodies. The government rarely buys products or
services from citizens, but individuals frequently
use electronic means in the following areas:
Education. Disseminating information, distance
learning/online lectures, etc.
Social security. Distributing information, making
payments, etc.
Taxes. filing tax returns, making payments, etc.
Health. Making appointments, providing information
about illnesses, making health services payments,
etc.