SESSION -I UNIT-1 NATURE AND SCOPE OF BUSINESS UNIT-2 FORMS OF BUSINESS ORGANISATION-II ECO-01 BUSINESS ORGANIZATION BLOCK-I BASIC CONCEPTS & FORMS OF BUSINESS ORGANIZATION UNIT-1 NATURE AND SCOPE OF BUSINESS HUMAN ACTIVITIES Non-Economic Activities Economic-Activities Business
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UNIT-1 NATURE AND SCOPE OF BUSINESS
UNIT-2 FORMS OF BUSINESS ORGANISATION-II
A business (also called a firm or an enterprise) is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit to increase the wealth of owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk.
An industry (from Latinindustrius, "diligent, industrious") is the manufacturing of a good or service within a category. Although industry is a broad term for any kind of economic production, in economics and urban planning industry is a synonym for the secondary sector, which is a type of economic activity involved in the manufacturing of raw materials into goods and products.
Iron & Steel
Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer. It comprises the trading of something of economic value such as goods, services, information or money between two or more entities. Commerce functions as the central mechanism which drives capitalism and certain other economic systems (but compare command economy, for example). Commercialization or commercialization consists of the process of transforming something into a product, service or activity which one may then use in commerce.
An organization is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment.
UNIT-3 FORMS OF BUSINESS ORGANIZATION-II
UNIT-4 BUSINESS PROMOTION
Business Organization is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment.
When you plan to set up a new business, you have to decide which form of organization is more suitable for the proposed business.For this we have to critically analyze the suitability of various forms of organizations in the light of the nature of the proposed business.
1.CRITERIA AT THE TIME OF STARTING A BUSINESS-
Need for larger financial resources
Need for internal reorganization and control
Need for specialized services
Increase in governmental controls and regulations
Increase in tax liability
Increase in the problem of control and coordination
ENTREPRENEUR: An entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome. The term is a loanword from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome.
An entrepreneur is a independent business individual who efficiently and effectively combines the four factors of production.
Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities.
CHARACTERISTICS of an Entrepreneur:
Desire to achieve goals
Foresight & dynamic outlook
TYPES OF PROMOTERS:
UNIT-5 METHODS OF RAISING FINANCE
UNIT-6 LONG-TERM FINANCING & UNDERWRITING
FINANCING OF BUSINESS
Types of Financial needs:
Fixed Capital and Working Capital
Long term capital and short term capital
Proportion in which different sources of long-term finance are used to meet the total funds requirements, like shares, debentures, loans, retained profits etc.
Factors Determining the Capital Structure:
LONG TERM FINANCE: Finance required for a period of five years or more. Fixed assets are long-lived assets and, therefore, investment can be made only with long-term finance I.e. funds which will not have to be returned within five years.
Agreement whereby the underwriter agrees to take up the shares or debentures issued by a company to the extent they are not subscribed by the public on payment of a commission Known as ‘Underwriting Commission’.
Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products (equity capital, insurance, mortgage or credit).
UNIT-7 STOCK EXCHANGES
UNIT-9 ADVERTISING MEDIA
FINANCING OF BUSINESS
Stock exchange, securities exchange or (in Europe) bourse is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds.
Safety of investment and equity in dealings
Accurate and continuous report regarding sales
Full information regarding listed companies
Helpful in re-investment decisions
Safeguard to investors
Rigging the market
LISTING:- It implies that the securities have met the satisfaction of stock exchange authorities, in respect of certain prescribed standards of legality, security and work-man ship.
Advantages of Listing:
It provides a continuous market for securities.
It enhances the prestige of the company.
It provides an indirect check against manipulation of prices by the management.
Advertising is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service.
Important four expressions of advertising:
Publicity is the deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people (for example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or entertainment.
Important four expressions of advertising:
Presented by non-personal media
Company has to pay money to the media for space & time
It is intended to give favorable impression about the company or its product
Presented by non-personal medium
No identifiable sponsor
Does not make any payment to media
It may have favorable or unfavorable influence on the public about the company or its productDifference b/w Advertising & Publicity
Arguments against Advertising:
Arguments in Support of Advertising:
Features relating to the message:
Features relating to Consumer Reach:
MEDIA:- medium is the vehicle or carrier of advertising message to the target customers or prospects. The basic purpose of using media is to bring products and services to the notice of potential customers.
It is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service.
Factors influence the choice of media:
UNIT-10 HOME TRADE AND CHANNELS OF DISTRIBUTION
UNIT-11 WHOLESALERS AND RETAILERS
UNIT-12 PROCEDURE FOR IMPORT AND EXPORT TRADE
Distribution (or place) is one of the four elements of marketing mix. An organization or set of organizations (go-betweens) involved in the process of making a product or service available for use or consumption by a consumer or business user.
The Channel of Distribution is a network of institutions that perform a variety of interrelated and coordinated functions in the movement of goods from producers to consumers. Frequently there may be a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.
“Wholesale" is the resale (sale without transformation) of new and used goods to retailers, to industrial, commercial, institutional or professional users, or to other wholesalers, or involves acting as an agent or broker in buying merchandise for, or selling merchandise to, such persons or companies. Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots.While wholesalers of most products usually operate from independent premises, wholesale marketing for foodstuffs can take place at specific wholesale markets where all traders are congregated.
A retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy.
Retail traders who carry on business moving about from place to place to sell their goods are known as Itinerant Retailers.
Types of Itinerant retailers:
Fixed shop retailers carry on their business in certain premises. They locate their stores at fixed places where customers can easily reach and make their purchases.
Types of fixed shop retailers:
FOREIGN TRADE: Exchange of goods and services between people across national boundaries is called ‘Foreign Trade’ or ‘International Trade’. Foreign trade can be bilateral or multilateral.
TYPES OF FOREIGN TRADE:
a. Import Trade
b. Export Trade
c. Entrepot Trade
Receives and scrutinizes the order from importer
Obtains export license
Fulfils exchange regulations
Books shipping space
Gets excise clearance and pre-shipment inspection
Packing and marking
Appoints clearing and forwarding agents
Insurance of goods and ECGC cover
Places the goods on board the ship
Obtains bill of lading
Collects necessary documents
Claims the incentivesExport Trade Procedure
UNIT- 14 BUSINESS RISK AND INSURANCE
A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold.
‘Risk’ mean the uncertainty of occurrence of economic loss. ‘Business Risk’ is defined as the uncertainty of occurrence of economic loss in the event of any business activity.
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.
INSURABLE RISKS: Pure risks which can be transferable to the insurer.
NON-INSURABLE RISKS: Risks which cannot be transferred and therefore not insurable.
An insurance contract determines the legal framework under which the features of an insurance policy are enforced. Insurance contracts are designed to meet very specific needs and thus have many features not found in many other types of contracts. Many features are similar across a wide variety of different types of insurance policies.
Basic principles which are applicable to various kinds of Insurance contracts are:
UNIT-15 TRANSPORT AND WAREHOUSING
UNIT-16 GOVERNMENT IN BUSINESS
UNIT-17 FORMS OF ORGANIZATION IN PUBLIC ENTERPRISES
GOVERNMENT AND BUSINESS
TRANSPORT: Transport or transportation is the movement of people and goods from one location to another. Transport is performed by various modes, such as air, rail, road and water.
The field can be divided into infrastructure, vehicles, and operations. Infrastructure consists of the fixed installations necessary for transport, and may be roads, railways, airways, waterways, canals and pipelines or terminals such as airports, railway stations, bus stations and seaports. Vehicles traveling on the network include automobiles, bicycles, buses, trains, people and aircraft. Operations deal with the way the vehicles are operated, and the procedures set for this purpose including the financing, legalities and policies. In the transport industry, operations, and ownership of infrastructure, are both public and private, depending on the country and mode.
Containerization (or containerization) is a system of intermodal freight transportcargotransport using standard ISO containers (known as shipping containers, ITUs (Intermodal Transport Units or isotainers) that can be loaded and sealed intact onto container ships, railroad cars, planes, and trucks.
CLEARING AGENT:- One who is engaged by importers for getting delivery of imported goods after complying with the necessary formalities prescribed by the customs and port authorities.
FORWARDING AGENT:- One engaged, on behalf of the exporter, to comply with the customs and other formalities in connection with export of goods.
A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They come equipped with loading docks to load and unload trucks; or sometimes are loaded directly from railways, airports, or seaports. They also often have cranes and forklifts for moving goods, which are usually placed on ISO standard pallets loaded into pallet racks.
Reasons which led to the government regulation & control of private business are:
CONTRIBUTION OF PUBLIC ENTERPRISES
PROBLEMS OF PUBLIC ENTERPRISESTOPICS FOR DISCUSSION
A form of organization where a public enterprise is organized, financed, and controlled in the same way as the government department.
An autonomous corporate body created by a special Act of Parliament or state legislature with defined functions and powers.
A company registered under the Indian Companies Act in which not less than 51% of the paid-up share capital is held by the central government or any state government or partly by the central government and partly by the one or more state governments.
MIXED OWNERSHIP COMPANY- A governmental company in which both the government and private enterprises are shareholders.
UNIT-18 PUBLIC UTILITIES
ASSIGNMENTS & PROBLEMS DISCUSSION
GOVERNMENT AND BUSINESS