1. Business: Meaning Simple meaning of business is state of
being busy in any work Illustrated Oxford Dictionary states the
following Meanings: 1.One,s regular occupation, profession 2. A
task or duty 3. A reason for coming, example: what is your
business? 4. A matter 5. Buying & selling 6. A commercial
firm.
2. Business in Business Terminology Business is any effort for
the purpose of earning money,, Business involves the acts like
production, buying & selling(trade),distributing the
products(commerce) which are exercised for business motive Business
is an activity of people directed towards satisfying human wants at
a profit ,, The goal of a business is to be profitable! Profit =
Revenues - Expenses Profits go to the business owners and are a
major incentive and reward for success.
3. Business in Business . Skinner and Ivancevich : Business is
the exchange of goods, services, or money for mutual benefit or
profit. Keith Davis: Business may be defined as any form of
commercial activity to satisfy the economic wants of people at a
profit. Professor Owen : Business is any enterprise engaged in
production and distribution of goods for sale in a market or
rendering services for a price.
4. Branches of Business Business Commerce Trade Home Trade
1.Wholesale 2.Retail Foreign Trade 1.Import 2.Export 3.Re-export
Auxiliary Acts 1.Tranport 2.Banking 3.Insurance 4.Warehousi ng
Industry 1.Constructio n 2.Manufactur ing 3.Extruction 4.Genetic
Direct Service 1. Doctor 2.Engineer 3.Consultant 4.Lawyer
5.Teacher
5. Branches of Business-Commerce
6. Branches of Business-Industry
7. Branches of Business-Industry
8. Branches of Business- Direct Service
9. Illegal Efforts are not Business !
10. Private Enterprise: The American Business System A Business
or businesses not under government control. An Economic system in
which citizens are allowed to own capital and property and to run
their own business with a minimum of state interference-OBD-403
Similar Term: Free Enterprise. Features: 1.Rights to private
property 2.Right of freedom of choice. 3.Right to profit 4. Rights
to compete
11. Factors of Production The Resources used to provide goods
and services are the factors of production 1.Land 2.Labour
3.Capital 4.Entrepreneurship
12. Factors of Production Land Labour Entrepreneurship
Production Process Finished Goods Capital
13. How Private Enterprise Functions ? The Factors of
production are owned by individuals in households. House
Hold:Household is any person or group of people living under the
same roof and functioning as an economic unit Key Works:
Involvement of people in business for profit.(combination of
resources) Creation of jobs and income for households. Purchase of
goods and services by households, which in turn support business
and make it profit.
14. How Private Enterprise Functions Income Factors of
production Finished Goods and Services Business Households Consumer
market demand
15. Income received for the factors of production: Factors of
production Income received Land Rent Labour Wages/Salaries Capital
Interest Entrepreneurship Profit
16. Economic System An economic system is the method society
uses to allocate its
resources(land,labour,capital,entrepreneurship) to satisfy its
needs. What distinguishes one economic system from another is the
control of the factors of production and the interaction of
business,government and consumers.
18. Capitalism Capitalism : Is an economic system where the
factors of production are in private hands. Key terms: Pure
capitalism/market economy: One in which economic decisions are made
freely according to the market forces of supply and demandAdam
smith Laissez-faire policy: No Interfere of Government.
19. Capitalism The economic questions are- What is to be
produced? How much will be produced? Who will produce it? How much
will it cost? Who will get it? In pure capitalistic economy and
individuals use resources as they choose.
20. Mixed economy: Mixed economy: Evolved by USA, Which is an
Economic system based on a market Economy with limited government
involvement. Here the government has two economic tools: The power
of Tax The power to spend
21. Communism: Communism: In this economic system the
government controls the factors of production, land , labor and
capital are under the control of government and Entrepreneurship is
supplied by the government. Supply And Demand, Competition Have No
Influence.
22. Socialism: Socialism: Economic system in which much
ownership is private, by the government controls the operations and
direction of basic industries. This control and direction are based
on the belief that there are contain products and services that
everyone should have.
23. A suitable combination of capitalism and Socialism Islamic
Economic System: Islamic economics refers to the economic system
that conforms to Islamic scripture and traditions. The central
features of an Islamic economy are summarized as the following: (1)
"Behavioral norms and moral foundations" derived from the Quran and
Sunna, (2) Zakat ,tax as the basis of Islamic fiscal policy, and
(3) Prohibition of interest. Islamic movements and authors
generally describe an Islamic economic system as neither socialist
nor capitalist, but as a "third way," an ideal mean with none of
the drawbacks of the other two system
24. Comparing Economic System: Comparing Economic System: Pure
Communism China Republic Soviet Union Sweden France United Kingdom
Canada United States Pure Capitalism
25. Unincorporated Business: Business other than company There
are three basic forms of business Sole proprietorship Partnership
Corporation Sole proprietorship: Business owner by individual,
oldest and most common form of business. sole proprietorship
accounted for almost 80 percent of all businesses in united states
However, They have less than 10 percent to total sales. They have
Only 18 percent of the profits when compared with partnership and
corporations.
26. A Sole-proprietorship is a form of organization in which an
individual produces independently with his own capital,skill and
intelligence and is entitled to receive all the profits and assumes
all the risks of ownershipM C SHUKLA Sole-proprietorship-76%
corporate-16% partnership-8%
27. Advantages of sole-proprietorship a) Ease of formation b)
Retains all profit c) Freedom of decision making d) Personal
satisfaction e) Ease of dissolution f) Tax advantage g) Sound
management h) Self reliance i) Change in business area j) Minimum
expense k) No government control
28. Disadvantages of sole-proprietorship : 1.Unlimited
liability 2.Limited fund for expansion 3.Lack of business and
management skill 4.Difficulty in attracting consumers and employees
5. Limited life 6.Lack of separate entity 7.Lack of status 8.Whims
of the owners 9.Limitation of personal capacity 10.Problem of risk
distribution.
29. Causes of popularity of sole-proprietorship business in
Bangladesh 1) Investment of small capital 2) Easy formation 3)
Agriculture based economy 4) Limited infrastructure 5) Effects of
river 6) Supply of essential goods 7) Way of livelihood 8) Lack of
industrial loan.
30. Partnership : An association of two or more people formed
for the purpose of carrying on a business Partnership is the mutual
relationship established among the agreed persons for the purpose
of distributing profit reached at by the business operated by the
partners or any single partner on behalf of all
partners--------partnership act-1932. Members Types Minimum Maximum
Banking business 2 10 Other than banking 2 20
31. Formation of partnership business oFormed as per
partnership act-1932 Steps: 1.Gathering of members 2.Determination
of the nature of the business 3.Performance of contract
4.Registration(not mandatory) Partnership Deed: contract among the
partners
32. Advantages of Partnership Business: 1.Ease of formation
2.Pooling of knowledge and skill 3.More funds available 4.Ability
to attract and retain employees 5.Tax advantage-only on personal
income 6.Sharing of risk 7.Collective efforts 8.Goodwill 9.Free
from regulation 10.Easy dissolution
33. Disadvantages of Partnership Business: 1.Unlimited
liability 2.Limited life 3.Potential conflict between partners
4.Ownerships are not transferable 5.Want of good faith 6.Lack of
initiative 7.Lack of separate entity 8.Uncertainty of duration
9.Delay in decision making 10.Problem of maintaining secrecy.
34. Types of partnership business: Partnership General
Partnership Partnership at Will Particular Partnership Part. For
Particular Term Part. For Particular Purpose Limited
Partnership
35. Types of partnership business Explation : General
partnership:A business formed by two or more persons who are agreed
upon profit distribution and bearing unlimited liability
Partnership at will: Partnership at will is one for which no fixed
term has been agreed. Any partner can end partnership at any time
provided that notice is given of the intention to do so to all the
other partners Particular partnership :A partnership formed for
specific term or purpose. Partnership for particular term :It is
formed for particular term. Partnership for particular purpose : It
is formed for particular purpose. Limited partnership: A
partnership consisting general and limited partners. Limited
partner is a partner whom liability is limited only to the extent
of his investment.
36. Persons not capable of being partners : Minor (below the
age 18 years) Person of unsound mind. Insolvent person Government
employee Alien enemy Foreign ambassador President
37. Joint Venture : Joint : A place at which two things or
parts of a structure are joined. Venture : An under taking of a
risk. Joint venture Is nothing but a commercial undertaking entered
into by two or more parties specially for short term Example
:Hero-Honda Key terms: Silent partner: A partner who assumes no
active role in managing the firm , but who may be known to the
general public as a partner. Secret partner: A partner who may be
an active manager but does not want his identity revealed to the
general public. Sleeping partner : A partner who is both silent and
secret . This person is only interested in investing funds in the
company. Nominal partner : A person who is neither a part-owner of
the partnership or an active participant in the firms affairs.
38. Bajaj motor Cycle (Indian )
39. Hero-Honda (India- Japan Joint Venture )
40. The Modern Corporation/Company: A Corporation is a legal
form of business organization created by government and considered
an entity and apart from its owner. Company formed under the
Companys Act. Corporation/Company/Joint Stock Company: Company
means a company formed and registered under this Act or any
existing company Act. 1994- 2(1) Existing Company means Company
formed as per Company Act 1913.
41. Types of Company Organization Company Chartered Company
Statutory Company Registered Company Limited Company Limited By
Share Private Limited Public Limited Limited By Guarantee Unlimited
Liability Company Other Company 1.Existing Company 3.Non- trading
Company 5.Alien Company 7.Government Company 2.Foreign Company
4.Domestic Company 6.Open Company
42. Types of Company Organization: Chartered company : Company
formed, before the introduction of company act,as per the order of
emperor of great Britain. Example: East-India Company , Chartered
Bank Of England. Statutory company: Company formed by the
presidential order or law executed in the parliament.
Example:Bangladesh Bank, Bangladesh Biman , BTV. Registered company
: Company formed as per the company act- 1994 Registered companies
can be - a. Limited Company :liability of share holders are limited
by the nominal value of shares. Company limited by guarantee :
share holders promise to take extra liability in addition to the
share value at the time of dissolution. Company limited by share :
liability of the share holders are limited up to share value.
43. Types of Company Organization Private limited company
Members Minimum 2, Maximum 50 Shares Not transferable Prospectus
Can not be issued Public limited company : Members Minimum 7,
Maximum limited by shares Shares Transferable Debenture Can Be Sold
Prospectus Can Be Issued
44. Types of Company Organization Unlimited company :Members of
the company have unlimited personal liability. Other company : 1
.Existing company :Any company formed before the introduction of
company act- 1994 and which is subject to the act existing earlier.
Example : AB Bank 2. Foreign company :Any company registered as per
company act-1994, which was initially formed in abroad by any other
law. Example : Warid limited.
45. Types of Company Organization 3. Non-trading company :Any
organization that utilize its profit in social welfare in lieu of
distributing it among the shareholders. 4.Domestic corporation :A
company will be termed as domestic company/corporation at the state
where it was chartered. 5.Alien corporation :A Firm incorporated in
a country other than the one, in which it operates. 6.Open
corporation :A corporation whose stock can be purchased by any one
who can afford the price. 7.Close corporation :A corporation whose
stock can not be purchased by general people,it is usually owned by
a few individuals.
46. Formation of joint stock company As per company act-1994
Taking initiative : Minimum members will take initiative. They are
called promoters . In case private limited company at least two
members and in case of public limited company at least seven
members will take initiative. Promoters will - a. Determine the
nature of company. b. Selection of name. c. Formulation of
plan.
47. Formation of joint stock company Preparation Of Documents :
Two important documents are- a. Memorandum of association (Name ,
address , objects, Capital , liability ) like charter b. Articles
of association for internal management ) Application for
registration : Promoters collect specified forms and documents from
the registrar office. The forms will be returned with following
documents. a. One copy of memorandum of association signed by
promoters
48. Formation of joint stock company b. One copy of Articles of
association signed by promoters c. Name , Address , Occupation of
promoters w ho agree to be the directors. d. An Agreement of
directors. e. An Agreement of directors stating their consent to
purchasing supposed shares. f. A Declaration stating the share
capital g. A Declaration ensuring the conformity with the law.
49. Formation of joint stock company Collection of certificate
of incorporation : If the company registrar is satisfied, he will
clued the company name in registration book and will give the
certificate of incorporation. Collection of commencement
certificate : For getting the certificate of commencement following
documents are to be submitted before the registrar- a. Prospectus
b. declaration of minimum subscription b. Declaration of purchasing
qualifying number of shares in cash b. Declaration by secretary or
directors.
50. Advantages of corporate business 1.Supply of huge capital
2.Limited liability 3.Distribution of risk 4.Efficient management
5.Benefit of large scale-business 6. Transferability of shares
7.Public confidence 8.Facility of small investment.
51. Disadvantages of corporate business 1.Complexity in
formation 2. Absence of direct relation relationship with the
customers 3.Lack of personal investment 4.Nepotism and corruption
5.Problem of maintaining secrecy 6.Excess application of law
7.Complexity in decision making 8.Tax burden (double taxation
)
52. Business combination Business combination : The combining
of two or more companies by means of acquisition or merger. Objects
: 1.Greater Profitability 2.Efficiency 3.Achieving
Competitiveness.
53. Forms of Combination Business Combination Acquisition
Merger 1.Horizontal Merger 2.Vertical Merger 3.Conglomerate Merger
Amalgamation
54. Forms of combination Explanation : Acquisition : Results
when one firm buys a majority interest in another, but both retain
their identities. Merger : A Merger occurs when two or more
companies become a single enterprise; the controlling corporation
retains its identity and absorbs the others. 1.Horizontal Merger
:Occurs when one firm purchase other firms that produce similar or
competing products. 2.Vertical Merger :Occurs when one firm unites
with others that contribute to its products manufacture or
distribution 3.Conglomerate Merger : Occurs when one firm buys
other firms that make unrelated products.
55. Acquisition
56. Merger
57. Horizontal Merger
58. Back to Past.
59. Vertical Merger
60. Vertical Merger
61. Conglomerate Merger
62. Forms of Combination Amalgamation or consolidation :
Amalgamation or consolidation occurs when one firm combines with
others to form an entirely new company ; former identity is
relinquished Example: Company A + Company B+ Company C = Company
D