UNIT-1 OF BUSINESS ORGANISATION FOR BBA STUDENTS, BMS STUDENTS (bachelor in management studies)

1. BUSINESS
ORGANASITION
BBA- 1ST
SEMESTER
VARDHA MAGO

2. UNIT-1

3. NATURE
1. Economic activity: Business is an economic activity of production and distribution of goods and services. It provides employment opportunities in different
sectors like banking, insurance, transport, industries, trade etc. it is an economic activity corned with creation of utilities for the satisfaction of human wants. It
provides a source of income to the society. Business results into generation of employment opportunities thereby leading to growth of the economy. It brings about
industrial and economic development of the country.
2. Buying and Selling: The basic activity of any business is trading. The business involves buying of raw material, plants and machinery, stationary, property etc. On
the other hand, it sells the finished products to the consumers, wholesaler, retailer etc. Business makes available various goods and services to the different sections
of the society.
3. Continuous process: Business is not a single time activity. It is a continuous process of production and distribution of goods and services. A single transaction of
trade cannot be termed as a business. A business should be conducted regularly in order to grow and gain regular returns.
4. Profit Motive: Profit is an indicator of success and failure of business. It is the difference between income and expenses of the business. The primary goal of a
business is usually to obtain the highest possible level of profit through the production and sale of goods and services. It is a return on investment. Profit acts as a
driving force behind all business activities.
5. Risk and Uncertainties: Risk is defined as the effect of uncertainty arising on the objectives of the business. Risk is associated with every business. Business is
exposed to two types of risk, Insurable and Non-insurable. Insurable risk is predictable.
6. Creative and Dynamic: Modern business is creative and dynamic in nature. Business firm has to come out with creative ideas, approaches and concepts for
production and distribution of goods and services. It means to bring things in fresh, new and inventive way.
7. Customer satisfaction: The phase of business has changed from traditional concept to modern concept. Now a day, business adopts a consumer-oriented approach.
Customer satisfaction is the ultimate aim of all economic activities. Modern business believes in satisfying the customers by providing quality product at a
reasonable price. It emphasize not only on profit but also on customer satisfaction. Consumers are satisfied only when they get real value for their purchase.The
purpose of the business is to create and retain the customers. The ability to identify and satisfy the customers is the prime ingredient for the business success.
8. Social Activity: Business is a socio-economic activity. Both business and society are interdependent. Modern business runs in the area of social responsibility.
9. Government control: Business organisations are subject to government control. They have to follow certain rules and regulations enacted by the government.
Government ensures that the business is conducted for social good by keeping effective supervision and control by enacting and amending laws and rules from time
to time.
10. Optimum utilisation of resources: Business facilitates optimum utilisation of countries material and non-material resources and achieves economic progress. The
scarce resources are brought to its fullest use for concentrating economic wealth and satisfying the needs and wants of the consumers.

4. SCOPE

5. SCOPE
Industry: The word “Industry” refers to that part of business activities which is apprehensive with the
extraction, production or fabrication of products. The products which are raised, produced or processed by
industry may either be used by the ultimate consumer or by another concern for further production. If the
goods produced by an industry are consumed by the final customers, these are named as ‘consumer’s
e.g. clothes. If the goods are used for further production of wealth they are called producer’s or capital
In case the goods produced by an industry are further processed into finished products by another concern
they are called as intermediate goods. i.e Plastic.
Types of Industry:
On the basis activity industry is further classified into various types are as under:-
1. Extractive Industries Extractive industries are those industries which extract, raise or fabricate raw
materials from above or beneath surface of the earth. i.e. Mining, fisheries forestry, agriculture.
2. Genetic Industries Those industries which are engaged in reproducing and multiplying certain species of
animals and plants and selling them in the market for profit are named as genetic industries. i.e. Cattle
breeding farms, poultry farms, plant nurseries.
3. Constructive Industries Constructive industries as the name signifies are engaged in the construction of
building, canals, brides, dams, roads etc.
4. Manufacturing Industries Manufacturing industries are those which are concerned of converting raw
material or semi finished products into finished products. E.g. Shoes Company, Textiles Mills.
5. Service Industries Service industries are usually engaged in the manufacturing of intangible goods which
cannot be seen or touched by naked eye. The service of professionals such as doctors, lawyers is examples
service industries.

6. Commerce: The second element that comes in the scope of business is Commerce. It is a very important component of business and is concerned with
the buying and selling of goods. It includes all the activities which are connected to the transfer of goods from the place of production to the ultimate
consumers. The whole ranges of commerce activities are classified are as under:-
Trade: The process of buying and selling of goods is called Trade. It is the exchange of goods and services among buyers and sellers in which both the
parties are benefited. Trade is classified into two types.
1.Internal Trade: The process of buying and selling of goods within the edge of a country is called internal trade.
Wholesale Trade. The process of purchase of goods in huge quantity from producers and their resale to retailers is known as wholesale trade. The
retailer then further sells these goods to the final consumers.
Retail Trade. The retailer sale the goods and services to the ultimate consumers is known as Retail Trade.
2. External Trade: The purchase and sale of goods between two countries are called external trade. It is also called foreign trade. There are two types
of external Trade. A. Import Trade b. Export Trade.
Aid to Trade: The activities which help in the purchase of goods and services are called aids to trade. The aids which are compulsory for the
development of the trade are as follows:- Transport: The different ways of transport help in carrying goods from the places of production to centers of
utilization e.g. Railways, ships, airlines etc.
Insurance: Insurance is very essential aid to trade. The risk of damage of goods due to fire, flood, earthquake or other causes us covered by insurance.
Warehousing: Warehousing is a kind of storeroom. Nowadays most of the goods are produce in anticipation of demand. They are stored in safe places
and are released as and when demanded in the market. Warehousing thus helps in overcoming the barrier of time and creates time utility.
Banking: The commercial banks play a vital role in financing the different trade activities. They are funding the traders for stock holding and
transportation of goods. They also support the buyers and sellers of goods in receiving and making payments, both at the national and worldwide level.
The credit facility in the form of cash credit, overdrafts and loans is provided to the traders.
Advertisement: Selling of goods is the most difficult problem for the producer. Advertisement regarding the product through newspapers, magazines,
radio and television has greatly helped the consumers in choosing the goods of their taste. So advertisements play a vital role in increasing sale of
goods.

7. BUSINESS SYSTEMThe system helps the business organisations to achieve their goals. A business system is a combination of policies, personnel,
equipment and computer facilities to co-ordinate the activities of a business organisation. It establishes the rules and procedures of
that organisation, which are to be governed. Business system decides how data must be handled and is methodically processed. It also
controls the procedures of the processed data and the results to be displayed. For e.g. a system may automatically order parts for an
inventory, monitor future corporate profits or post credit card sales to the on line customer accounts. The overall nature of the
business system will reflect the efficiency of its designers.
Objectives of Business System:
1. To meet the user and customer needs.
2. To cut down the operating costs and increase savings.
3. To smooth the flow data through various levels of the organisation.
4. To speed up the execution of results with the reliable data available in a system.
5. To handle data efficiently and provide timely information to the management.
6. To establish the most desirable distribution of data, services and equipment’s throughout the organisation.
7. To define a proper method of handling business activities.
8. To eliminate duplicated, conflicting and unnecessary services.
There are five major types of business systems
1. Payroll business system
2. Personnel business system
3. Accounts receivable system
4. Accounts payable system
5. Inventory system.

8. 1. Payroll Business System: A payroll system consists of all forms, procedures, files, equipment’s, personnel, and computer support
necessary to completely process the payment of employees. A payroll system fully handles all tax deductions, personal deductions, and the
update of payroll data related to each employee. It provides for the actual payment of employees, a record of that payment, the modification
of all payroll records, and the preparation of payroll reports. The payroll system must also generate all tax documents to include pay-
cheques, W-2 statements, 941 quarterly reports, and a wide range of state and municipal employment tax filings. Another payroll
responsibility is the accurate reporting of all personal deductions to include bonds, medical and life insurance, profit sharing plans, stock
options, credit union deductions, and the garnishing of an employee’s salary by a creditor.These accumulated totals must be reported
accurately to both the recipient of these movies and the individuals from whose salaries these amounts were deducted. The computer’s
support makes it possible to accurately and promptly process a payroll, providing the input data are properly handled on a timely basis.
2. Personnel Business System: Personnel system describes varied aspects of an organisation’s work force. The outputs generated by
personnel systems are frequently used in compiling central & state labor power reports. Retail organisations are major users of accounts
receivable systems, since these systems detail monies that are owed to an organisation. Conversely, accounts payable systems focus on the
monies that are owed to an organisation. These two systems parallel to each other, requiring the continued maintenance of files, their update
reporting on movies due and owed, providing customer statements and invoices, and recording payments made.
3. Accounts Receivable System: An account receivable systems are monitors the flow of money. An accounts receivable system monitors
the people who owe money to a business. It provides the means to process all data for credit cards and other kinds of charge accounts. The
files contain the individual customer data, including names, addresses, financial charges like, payments received and current charges. The
information is issued as monthly statements of each customer and also provides useful information for management’s use.
4. Accounts Payable System: Accounts payable system monitors the organisation to which money is owed. The file structures and
input/output (I/O) formats are similar as the accounts receivable system. It contains the accounts of vendors to whom money is owed. Input
will have goods and services received by the company while outputs include issue of payments and management reports.
5. Inventory System: Inventory system monitors the status of items held in an inventory. These systems report on the quantities of goods on
hand, as well as when items should be purchased to replenish stock and what critical items are needed. Inventory systems are crucial to
organisations that maintain large and costly inventories.

9. 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,
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. 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
Now, we shall discuss all these objectives in detail.

10. SOCIAL RESPONSIBILITY OF BUSINESS AND
ETHICS
Social responsibility of business
The social responsibility of business means various obligations or responsibilities or
duties that a business-organization has towards the society within which it exists and
operates from. Generally, the social responsibility of business comprises of certain duties
towards entities, which are depicted and listed below.

11. • Shareholders or investors who contribute funds for business.
• Employees and others that make up its personnel.
• Consumers or customers who consumes and/or uses its outputs (products and/or services).
• Government and local administrative bodies that regulate its commercial activities in their jurisdictions.
• Members of a local community who are either directly or indirectly influenced by its activities in their area.
• Surrounding environment of a location from it operates.
• The general public that makes up a big part of society.
The social responsibility of business comprises of the following obligations:
• A business must give a proper dividend to its shareholders or investors.
• It must provide fair wages and salaries with good working conditions.
• It must provide a regular supply of good quality goods and/or services to its consumers/customers at reasonable prices.
• It must abide by all government rules and regulations, supports its business-related policies and should pay fair taxes without keeping any
delays or dues.
• It must also contribute in betterment of a local community by doing generous activities like building schools, colleges, hospitals, etc.
• It must take immense care to see that its activities neither directly nor indirectly create a havoc on the vitality of its surrounding environment.
• It should maintain a stringent policy to curb or control pollution in regard to contamination of air, water, land, sound and radiation leakages.
Here, to do so, it must hire experienced professional individuals who are experts in their respective fields.
• It should also offer social-welfare services to the general public.
The core objectives of social responsibility of business are as follows:
• It is a concept that implies a business must operate (function) with a firm mindset to protect and promote the interest and welfare of society.
• Profit (earned through any means) must not be its only highest objective else contributions made for betterment and progress of a society
must also be given a prime importance.
• It must honestly fulfill its social responsibilities in regard to the welfare of society in which it operates and whose resources & infrastructures it
makes use of to earn huge profits.
• It should never neglect (avoid) its responsibilities towards society in which it flourishes.

12. Shareholders or investors: Social responsibility of business towards its shareholders or
investors is most important of all other obligations.
Personnel: Social responsibility of business towards its personnel is important because they
are the wheels of an organization. Without their support, the commercial institution simply
can't function or operate.
Consumers or customers: Social responsibility of business towards its consumers or customers
matters a lot from sales and profit point of view. Its success is directly dependents on their
of satisfaction. Higher their rate of satisfaction greater are the chances to succeed.
Government: Social responsibility of business towards government's regulatory bodies or
agencies is quite sensitive from the license's point of view. If permission is not granted or
revoked abruptly, it can result in huge losses to an organization. Therefore, compliance in this
regard is necessary.
Local community: Social responsibility of business towards the local community of its
established area is significant. This is essential for smooth functioning of its activities without
any agitations or hindrances.
Environment: Social responsibility of business with respect to its surrounding environment
can't be sidelined at any cost. It must show a keen interest to safeguard and not harm the
vitality of the nature.

17. • Code of conduct : Business ethics is a code of conduct. It tells what to do and what not to do for the
welfare of the society. All businessmen must follow this code of conduct.
• Based on moral and social values : Business ethics is based on moral and social values. It contains moral
and social principles (rules) for doing business. This includes self-control, consumer protection and
welfare, service to society, fair treatment to social groups, not to exploit others, etc.
• Gives protection to social groups : Business ethics give protection to different social groups such as
consumers, employees, small businessmen, government, shareholders, creditors, etc.
• Provides basic framework : Business ethics provide a basic framework for doing business. It gives the
social cultural, economic, legal and other limits of business. Business must be conducted within these
limits.
• Voluntary : Business ethics must be voluntary. The businessmen must accept business ethics on their
own. Business ethics must be like self-discipline. It must not be enforced by law.
• Requires education and guidance : Businessmen must be given proper education and guidance before
introducing business ethics. The businessmen must be motivated to use business ethics. They must be
informed about the advantages of using business ethics. Trade Associations and Chambers of
Commerce must also play an active role in this matter.
• Relative Term : Business ethics is a relative term. That is, it changes from one business to another. It also
changes from one country to another. What is considered as good in one country may be taboo in
another country.
• New concept : Business ethics is a newer concept. It is strictly followed only in developed countries. It is