nature of the business

7/29/2019 nature of the business

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TRIVANDRUM

INTERNATIONAL SCHOOLWelcomes you to XIcommerce class

TRIVANDRUM INTERNATIONAL SCHOOL


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Chapter

1


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What is business ?

How we identify it is a business?

Do we need a permanent place to start thebusiness ?

What is the ultimate aim behind business?

Find some business organization around yourLocality?



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Business? Business is an Economic activitywhich involves regular production

and or exchange of goods andservices with the main purpose ofearning profits through thesatisfaction of human wants.



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Familiar the meaning OF

Business?1.business involves production andexchange of goods.

2.Its main aim is to earn profit.3.It must satisfy human wants.

These activities are organised and

performed under the framework ofan institution known as businessorganisation /firm/enterprise.



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According toB.O Wheeler, Business is

an institution organised and operatedto provide goods and services tosociety under the incentive of privategain.



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Business ?

Business pervades all humanactivities directed towards earning

profits or economic gains.

Industry,trade,Banking,Transport

,Insurance,warehousing,advertising etc are integral part of modernbusiness.



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TYPES OF ECONOMIC

ACTIVITYECONOMIC ACTIVITIES

BUSINESS PROFESSIONEMPLOYMENT

TRADEINDUSTRYBANKING

TRANSPORTATIONINSURANCE

WAREHOUSINGADVERTISING ETC.

MEDICALLEGAL

CHARTERED ACCOUNTANT.

MANAGERFOREMAN

CLERKSALESPERSONWORKER,ETC..

.TRIVANDRUM INTERNATIONAL SCHOOL


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Definition of Business Business refers to all those activitieswhich are concerned with the

production and /or purchase and saleof goods or services with the purposeof selling them at a profit.



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Characteristics of business Economic Activity Production or procurement (acquisition of goods for the

purpose of sale)

Dealing in goods and services;( goods are consumer goodsand capital goods) Satisfaction of consumer wants Regular dealings (continuous supply of goods and services) Profit motive Uncertainty.

Risk element Creation of utility



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Objectives Of Business

Business objectives as the purpose orthe reason for the existence of thebusiness in the society.



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Business activitiesBusiness activities broadly divided in tothree;

They are,a) Economic objectives,

b) social objectives

c)Human objectives



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TYPES OF BUSINESS ACTIVITY

ECONOMICOBJECTIVES

HUMANOBJECTIVES

SOCIALOBJECTIVES

1)EARNING OF PROFITCREATION OF CUSTOMERS

3)INNOVATIONEFFECTIVE UTILISATION

OF RESOURCE

1)GOOD SERVICE ANDFAIR DEALINGS2)TREATING EMPLOYEES

AS PARTNERS3) DEVELOPMENT OF EMPLOYEES

SKILLS4) JOB SATISFACTION OF

EMPLOYEES

1)BETTER QUALITY PRODUCTS2)FAIR TRADE PRACTICES

3)GENERATION OF EMPLOYMENTEMPLOYEES WELFARE

4)COMMUNITY SERVICE5)PROTECTION OF EMPLOYMENT



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NECESSITY OF PROFITABILITY

OBJECTIVE ACCORDING TO PETER. F. DRUCKER

A BUSINESS MUST ACHIEVE SUFFICIENTPROFITS TO COVER THE RISKS OF

ECONOMIC ACTIVITY AND THUS TO AVOIDLOSS



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A BUSINESS MUST EARN ADEQUATEPROFITS 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



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Can profit be the sole

objective of a Business A lay man may say that business iscarried on for profit only. But a good

business man cannot afford to keepprofits as his sole objective.

earning of profits cannot be the

objective of a business any more thaneating is the objective of living


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The argument against the

profit maximisation are; Profit maximization ignores the interests oflabour,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 ignoredto maximize profits in the short run.

In the present day environment, a business can'tbe effective with the sole objective of profit

maximisation.It must also set objectives in areaslike customer satisfaction, employee welfare,community development, environment protectionetc..


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Multiplicity objectives of a

Business According to peter f Druckerremarked To manage a business is to

balance a variety of needs and goals.And this requires multipleobjectives

He suggests 8 areas whereobjectives must be set.


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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 theenterprises.)

4 Human organization-workersattitude andperformance

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


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Classification of business

activities Business activities are classified onthe basis of 3 criteria,ie,

1 size

2 ownership

3 functions


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activities On the basis of size business activities areclassified as

1 small scale

2 large scale Small scale the investment does not

exceed Rs 100 lakhs.

Large scale means the investment exceed 1Crore


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activities On the basis of OWNERSHIPbusiness activities are classified as

Public sector under the govt. control pvt sector-under private control

Joint sector both govt. and private


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activitiesPublic enterprises may be organized as Departmental undertaking Government company

Statutory corporation etc

But pvt.enterprises are like;Sole trader,

Joint Hindu family

PartnershipJoint stock company

And co-operative society.


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activities On the basis of functions businessactivities are classified in to two;

Industry and commerce Commercial activities are again

classified as ; trade

and aids to trade


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BUSINESS ACTIVITIES

INDUSTRY COMMERCE

Trade1 EXTRACTIVE

2 GENETIC3 MANUFACTURING4 CONSTRUCTION

Aids to Trade

Home trade;1)Retail trade

2) wholesaletrade

Foreign trade1 import2 export

3 Entrepot

TransportWarehousing

Insurance

Bankingadvertising


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A brief review of the various types of

Business activities

1 Industrial activities or Enterprise;It includes mining ,breeding,costruction of roads

building,etc....(manufacturing,mining,constructions )

.2Commercial activities;commercial activities involve exchange of goods and serviceslike...transport, ware housing,banking,insurance and advertisement.

.3 Trading activities or firms;it refers to purchase and sale of goods to earn profits

by the business men known as traders. They engaged in a)Home trade - includes wholesale and retail

b) foreign trade- import-export and entreport


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A brief review of the various types

of Business activities Service activities or enterprises;

These include those serviceswhich facilitate smooth trade and also serve as

the back born of modern industry.banking,insurance,transportation,warehousing,

insurance, packaging.


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Types of industries Primary industry; it includes extraction,producing and processing of naturalresource (extractive+ Genetic)

Secondary industry are concerned withprocessing materials which have alreadybeen produced at the primary stage.

Manufacturing and construction industry is

under secondary industry.


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Manufacturing industry may

assume the following forms Analytical industry;petrolium refiningis an example of analytical industry.

Synthetic industry; two or morematerials are mixed together in themanufacturing operations to obtain

some new products.like soap,cementetc


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Manufacturing industry may

assume the following forms Processing industry;raw materials are processed through a

series of manufacturing operations making

use of analytical and synthetic method)-textile sugar and steel.Assembly line industry;in assembly industry, the finished products

can be produced only after variouscomponents have been made and thenbrought together for final assembly.automobile watches,telivision are examples


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Construction industry may

assume the following forms They are concerned with making ofroads,bridges,dams and canals.


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Definition of trade Trade is that branch of commercewhich deals with exchange of goods

and services in terms of moneybetween different persons known as

traders


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Types of trade Trade may be classified on the basis of 1)Geographical area covered

2) volume of trade transaction

On geographical basis trade may beclassified in to two like internal trade andexternal trade.

On volume of trade basis trade is dividedin to two

Wholesale & retail trade


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Internal or home trade It refers to purchase and sale of goodswithin the boundaries of a country.

Wholesale trade; purchase and sale ofgoods in bulk quantity and sell to retailersat small quantity.

Retail trade; selling of goods by the

retailer to the customer


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External or foreign trade Import trade Export trade

& Entrepot trade


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AUXILIARIES TO TRADE Transportation and communication Banking

Insurance ware housing

Advertising

And packaging


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Differentiate between industry, trade

and commerceindustry commerce Trade


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Documents

nature of the business