Unit-1_Business Organization and Ethics(first year)

Page 1

Business Definition

  • Business: Total activities related to the production, purchase, and sale of goods/services for profit.

    • Organizations or entities engaged in commercial, industrial, or professional pursuits.

    • Can be for-profit or nonprofit entities addressing societal needs.

  • Professors Pride, Hughes, and Kapoor View: Business emphasizes organized efforts to meet market demands and generate profit.

Essentials of Business

  • Vision: A compelling long-term goal that inspires and directs the company’s efforts.

  • Mission: Defines the company’s purpose, whom it serves, and its value delivery approach.

  • Business Plan: A strategic guide for structuring, managing, and growing the enterprise; aids in funding and partnerships.

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Market Research

  • Definition: Evaluating new service/product potential through consumer research.

    • Identifies target markets and gathers consumer feedback.

Financial Management

  • Definition: Strategic planning, organizing, directing, and controlling financial factors in a business.

Marketing and Sales

  • Definition: Activities and processes of creating, communicating, and delivering value offerings.

Operations Management

  • Definition: Administration of practices to enhance efficiency in producing goods/services.

Human Resources

  • Definition: Refers to the workforce and management of employee life cycles.

Customer Service

  • Definition: Assistance provided to customers pre-and post-purchase to ensure satisfaction.

Legal Compliance

  • Definition: Adhering to laws concerning corporate relations, labor legislation, and state authority representations.

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Nature of Business as Economic Activity

  • Objective: Conducted primarily for profit; involves production and selling processes.

  • Continuity: Regular transactions define business; isolated exchanges do not.

  • Profit motive: Essential for sustainability and long-term functioning.

  • Risk and Uncertainty: Inherent in business due to unpredictable market conditions.

  • Legal Compliance: Must operate within legal frameworks to be classified as business.

  • Consumer Satisfaction: Aligns products/services with customer needs to encourage purchases.

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Scope of Business

  • Trade: Exchange of goods/services directly impacting consumption.

  • Commerce: Encompasses trade and related activities aiding exchange processes.

Industry Definition

  • Industry: Focuses on extraction, production, or processing of products for direct consumer use or further production.

  • Types of Goods:

    • Consumers Goods (e.g., clothes)

    • Producers/Capital Goods

    • Intermediate Goods (e.g., plastic)

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Types of Industry

  • Extractive Industries: e.g., Mining, agriculture.

  • Genetic Industries: e.g., Cattle breeding, plant nurseries.

  • Constructive Industries: Engaged in construction projects.

  • Manufacturing Industries: Convert raw materials into finished products.

  • Service Industries: Provide intangible offerings (e.g., professional services).

Commerce

  • Trade Types:

    • Internal Trade: Domestic buying/selling. Includes:

      • Wholesale Trade: Large quantity purchasing.

      • Retail Trade: Selling to final consumers.

    • External Trade: International transactions involving exports/imports.

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Aid to Trade

  • Transport: Facilitates movement of goods.

  • Insurance: Protects against risks associated with goods.

  • Warehousing: Storage aids in time management of goods availability.

  • Banking: Essential for financing trade activities.

  • Advertisement: Critical for promoting products and boosting sales.

Business Organization Definition

  • Definition: Organizing production factors to channel into productive efforts and achieve common objectives.

  • Management Function: Combines various activities to meet goals efficiently.

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Organizational Structure

  • Definition by Louis Allen: Process of identifying and grouping work with assigned responsibilities for effective teamwork.

  • Wheeler's View: Internal organization structure facilitating functional duties to achieve goals.

  • Koontz & O’Donnell: Establishment of authority relationships for coordination at different levels.

  • Sheldon’s Definition: Combining individual duties with necessary facilities for efficient operation.

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Characteristics of Business Organisation

  1. Economic Activity: Affects production/distribution positively influences the economy.

  2. Buying and Selling: Core of business involves raw material procurement and distribution of finished goods.

  3. Continuous Process: Requires ongoing transactional engagement to be viable.

  4. Profit Motive: Central to business; fundamental for growth and operations.

  5. Risk and Uncertainties: Inherent risks in business decisions.

  6. Creative and Dynamic: Adapting to market trends and consumer needs.

  7. Customer Satisfaction: Focus on meeting consumer expectations drives success.

  8. Social Activity: Business operates within societal context, fulfilling social obligations.

  9. Government Control: Adheres to legal regulations ensuring socio-economic welfare.

  10. Optimal Resource Utilization: Aims at efficient resource management.

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Objectives of Business Organisation

Economic Objectives

  • Profit Earning: Fundamental for business existence and sustenance.

    • Creation of Customers: Essential for profitability; requires quality offerings.

    • Regular Innovations: Necessary for cost reduction and sales increase.

    • Best Use of Resources: Optimizing capital, labor, and materials.

Social Objectives

  • Quality Goods and Services: Meeting societal expectations for product standards.

  • Fair-Trade Practices: Preventing unethical practices such as hoarding.

  • General Welfare Contribution: Engaging in social uplift programs.

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Human Objectives

  • Economic Well-being: Fair compensation and benefits for employees.

  • Social and Psychological Satisfaction: Ensures job satisfaction and morale.

  • Development of Human Resources: Ongoing training and skills enhancement.

  • Support for Underprivileged: Assisting the economically and socially backward communities.

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National Objectives

  • Creating Employment: Fostering job opportunities.

  • Promoting Social Justice: Equal opportunity for all in business dealings.

  • Production According to National Priorities: Aligning production with governmental policies.

  • Revenue Contribution: Honest tax compliance supporting national growth.

  • Self-Sufficiency & Export Promotion: Enhancing domestic production and encouraging exports.

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Global Objectives

  • Improving Standard of Living: Through availability of competitive global products.

  • Reducing Disparities: Supporting growth in disadvantaged regions.

  • Globally Competitive Goods and Services: Emphasizes quality and market expansion.

Evolution of Business

  1. Barter System: Early form of exchange; dependence on mutual needs.

  2. Village Economy: Emergence of self-sufficient communities.

  3. Introduction of Money: Adoption of mediums for trade facilitating commerce.

  4. Town Economy: Development of specialized trading hubs.

  5. Industrial Revolution: Major transformation in production techniques and scales.

  6. Revolution in Transport and Communication: Enhanced trade dynamics and interconnectedness.

  7. Advancements in Modern Business: Innovations in production, international trade, and competitive strategies.

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Modern Businesses Traits

  1. Delivering economic, social, and environmental value.

  2. Purpose-driven operations engaging stakeholders.

  3. Employee-centric cultures fostering passion and autonomy.

  4. Naturally transparent operations.

  5. Ecosystem-centric strategies for value generation.

  6. Profits through innovation and efficiency.

  7. Focus on relational customer engagement.

  8. Balancing social and commercial objectives.

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Differences Between Business and Profession

  1. Educational Qualifications: Profession demands specific qualifications.

  2. Expert Knowledge: Professionals require expert proficiency; business can vary.

  3. Personal Attention: Professionals must personally deliver services.

  4. Reward Systems: Profits from business vs. fees from professions.

  5. Code of Conduct: Established ethics in professions vs. limited in business.

  6. Governing Body: Professionals are regulated by professional associations.

  7. Motive: Business focuses on profit, while profession centers on service.

  8. Advertising: Business promotion allowed; profession has restrictions.