1. What is sole proprietorship?

Explain features advantages and disadvantages

· A Sole proprietorship is a business, owned, controlled and managed by a single individual. A Sole
Proprietor reaps the financial rewards and is responsible for all risks and liabilities while
conducting the business. It is suitable for individually managed occupations like salons or small
retail shops.

· Features of Sole Proprietorship

· Legal Formalities – No legal formalities are required to either commence or to shut down a sole
proprietorship. But the owner must have a special license or certificate to run the business for
specific occupations. For example, a sole proprietor planning to start a pharmacy must have a
pharmacist’s degree.

· Unlimited Liability – The sole proprietor is liable for the success or failure of their financial
transactions. In case the proprietor takes a loan and fails to repay it, the creditors can attach the
business owner’s property to recover the loans.

· Risk and reward – A sole proprietor has complete ownership over the profits or losses from their
firm’s operations.

· Advantages –

· Swift decisions – A sole proprietor has complete responsibility in terms of making business
decisions. It results in faster decision-making for the business as there is no need to consult
multiple parties for every minor issue.

· Confidentiality – A sole proprietor can keep all business-related information to themselves as the
business’s only decision-maker. The law does not bind them to make the accounts of a sole
proprietorship public.

· Profit-sharing – A sole proprietor has complete ownership of profits arising from business
operations. They are not obligated to share profits with anyone else.

· Disadvantages –

· Lack of Resources – It is challenging to raise vast amounts of capital in a sole proprietorship

compared to a partnership or company. This form of business runs mainly on personal savings
and borrowings made by its owner. Lack of adequate finances can become an obstacle in
growing the business.

· Dependence on owner – The owner and their business are a singular entity in a sole
proprietorship. While this has several advantages, the continuity of this form of business
depends solely on the owner’s well being. In case of death, insolvency, imprisonment, etc., it can
shut down if there is no successor or heir to continue the business.
· Unlimited Liability – If the proprietor cannot pay debts arising out of business from its assets,
his/her personal property is also at stake. This results in sole traders taking zero or very minimal
risks to ensure the survival of the business.

2. Differentiate between public company and private company

· A privately-owned business can sell its own, secretly or privately held shares to a couple of
willing financial backers. A public organisation can offer its own enlisted shares to the overall
population or the general public.

· Until the privately owned businesses reach $10 million and a greater number of than 500
investors or shareholders, they don’t need to follow any guidelines given by the Government. A
public organisation needs to comply with a ton of guidelines and detailing principles according to
the Government.

· The essential benefit of a privately traded or exchanged organisation is that it doesn’t have to
pay all due respects to any investors, and there’s no requirement for divulgences also. The
essential benefit of a public corporation is that it can take advantage of the market by selling
more shares.

· Privately owned traded organisations can likewise be huge organisations. The possibility that a
privately held organisation is a more modest or small company is absolutely false. Public
corporations are enormous organisations.

· For privately-held organisations, the wellspring of assets is not many private financial backers or
investors. For the public corporation, the source of assets or funds is by selling its bonds and
shares.

3. Define company and diffrent kinds of company?

· A company is a legal entity established by a group of individuals to employ in and regulate a

business firm. A company may be coordinated in different ways for financial liability and tax
purposes, relying upon the corporate law of its administration. The line of a business concern in
an enterprise is in, will normally ascertain which business substructure it picks, for instance, a
partnership, a corporation or a proprietorship. In such a case, a company may be contemplated
as a business kind.

· On the basis of liability of its members, the companies can be categorised into 2 categories

· Companies Limited by Shares: In this scenario, the liability of its members is restricted to the
level of the nominal value of shares occupied by them. If a shareholder has paid the complete
amount of the shares, there is no liability on his side, whatever may be the debts of the
 enterprise. He need not pay a single rupee from his private property.

· Unlimited Companies: When there is no constraint on the liability of its shareholders, such a
company is known as an unlimited company. When the company’s property is insufficient to pay
off its arrears (debts), the private property of its shareholders can be used. To put it in other
words, the creditors can ask for their dues from its shareholders. Such enterprises are not to be
found in India though approved by Section 2 (20) of the Companies Act.

· On the basis of the number of shareholders, enterprises can be classified into 3 kinds of
companies :

· Public Company: A public company is an enterprise which :

· Is not a private company

· Is a company which is not an ancillary of any of the private company

· Private Company: A private company is an enterprise, which by its articles :

· Limits the authority to transfer its shares

· It must have at least 2 people, apart from the case of one person company.

· Restricts the number of its shareholders to 200 (excluding its employees)

· One Person Company or OPC: According to Sec.2 (62) of the Companies Act, 2013, ‘company
which has only 1 person as a shareholder’. Rule number 3 of the Companies (Incorporation)
Rules, 2014 says that :

· Only a natural person who is an Indian citizen and an Indian resident can form 1 person
company.

· It cannot execute non-banking financial investment pursuits.

· It is paid-up share capital which is not more than ₹ 50 Lakhs.

· Its aggregate annual turnover of 3 years does not cross ₹ 2 Crores.

4. Meaning of partnership with its merits and demerits

· Partnership is a voluntary association of two or more people who contributes skill and time for
carrying on a lawful business for their benefits. It is the second stage in the evaluation of
commercial organization. It comes into existence under the partnership act 1932. The liability of
the partner is joint several and unlimited.

merits
 · 1. Easy formation: -The formation of a Partnership is quite easy, less expensive and does not
involve any legal formalities. An oral or written agreement is sufficient to start partnership.

· Large capital: -Partnership is an association of several persons. Large amount of capital can be
raised through large number of partners; as compared to sole trader the partners can collect or
generate huge funds from their savings and borrowings from their friends, relatives and also by
the way of loans from banks.

· Limited Government control: -Partnership is based on mutual trust, confidence and co-
operation, registration is not compulsory. There fore interference from government in
partnership business is limited.

demerits

· Unlimited Liability: -The liability of the partners is joint, several and unlimited. It means partners
will be held responsible to pay off debts and obligations of the firm even out of their private
estate.

· Limited Membership: -There is a limit to the number of partners in a partnership firm. A

maximum of 10members can run a banking business and a maximum of 20 members are
permitted in case of an ordinary partnership.

· Problem of Continued Existence: -There is a problem of continued existence. Initially partners

are united and the relations are friendly but with the passage of time, conflicts,
misunderstanding, are commonly affected which lead to dissolution of partnership firm.

5. Briefly discuss micro and macro environment

· Micro-environment has a direct impact on routine business activities and associated with
business at a small-scale. It consists of different forces that are specific to a particular business
and are capable to influence daily operations and performance of the business for a shorter
period. These forces or factors include suppliers, shareholders, customers, employees,
competitors, media, etc.

· A macro environment refers to the set of conditions that exist in the economy as a whole, rather
than in a particular sector or region. In general, the macro environment includes trends in the
gross domestic product (GDP), inflation, employment, spending, and monetary and fiscal policy.
The macro-environment is closely linked to the general business cycle as opposed to the
performance of an individual business sector.

· The micro environment refers to the factors within a company that impact its ability to do
business. Micro environmental factors are specific to a company and can influence the operation
of a company and management's ability to meet the goals of the business. Examples of these
 factors include the company's suppliers, resellers, customers, and competition.

· The micro environment is specific to a business or the immediate location or sector in which it
operates. In contrast, the macro environment refers to broader factors that can affect a business.
Examples of these factors include demographic, ecological, political, economic, socio-cultural,
and technological factors.

6. Define business and explain the scope and objectives of business.

· Business is an economic activity that involves the exchange, purchase, sale or production of
goods and services with a motive to earn profits and satisfy the needs of customers. Businesses
can be both profit or non-profit organizations that function to gain profits or achieve a social
cause respectively.

· Business – Nature and Scope

· Business is a vast and interesting subject. If one goes deeper into it, he faces more absorbing and
uphill tasks. It encounters with the use of latest scientific and technical know-how, challenges
and difficulties it faces from production to the smooth supply of the products to the target
audience, problems confronting in raising money and by which method to raise money and the
most challenging job of bringing employee together and to spur their motivation level up to a
point so that they strive pleasantly to achieve the organizational goals.

· A business also encounters the most amazing and challenging job of grappling with so many laws
and regulations lay down by the government. The consumers, employees and various other
interests groups also influence the business.

· In keeping with its above mentioned factors it is always difficult to limit the discussion on the
subject like scope of business.

· They can be classified into four categories, namely:

(1) Economic objectives;

(2) Social objectives,

ADVERTISEMENTS:

(3) Human objectives, and

(4) National objectives

These objectives are interrelated in nature.

· Economic Objectives:

· The economic objectives of a business are discussed below:

· (i) Earning of Profits – Profits are needed to provide adequate reward to the entrepreneur and to
provide funds for future growth. Entrepreneurship is one of the important factors of production.
Just as other factors get their rewards, the entrepreneur must get reward for his efforts and
taking of risk. Moreover, every businessman will like to see that the business he is managing
should grow. This is possible only if the business earns sufficient profits for investing them into
the business for expansion.

· (it) Satisfaction of Customers – The survival of the business depends upon the satisfaction of
customers. Thus, the business must aim at winning and satisfying the customers. Peter F.
Drucker has rightly said, “There is only one valid definition of business purpose, i.e., to create a
customer.” Customers are created through advertisement and sales promotion and delivering
them ‘want satisfaction’.

· ADVERTISEMENTS:

· (iii) Innovation – Innovation means developing new technology, new products and their multiple
uses. Business cannot succeed without designing new products and finding their new uses.

· (iv) Effective Utilisation of Resources – Business requires the use of men, machines and materials
which are considered scarce resources. Every business is expected to make the best possible use
 of these resources. This objective can be achieved by employing efficient personnel, making full
utilisation of machines and reducing wastage of raw materials.

· (2) Social Objectives:

· Social objectives of a business denote its obligations towards various stakeholders including
customers, employees, community and the government.

· The important social objectives include the following:

· (i) Supply of Quality Goods at Fair Prices – The business must supply quality products as desired
by the customers. The products should be durable, genuine (not duplicate) and safe. The prices
charged for the goods should also be reasonable.

· (ii) Adoption of Fair Trade Practices – The business should follow fair business practices at all
times. It should avoid anti-social practices like hoarding, black-marketing, over-charging the
buyers, etc. It should also not indulge in unfair trade practices like spurious products or
misleading advertisements.

· (iii) Generation of Employment Opportunities – Every business should grow and expand its
operations to create new jobs for the society. Further, a business should employ suitable people
without any discrimination based on caste, creed, sex or religion.

· (iv) Employees’ Welfare – It is an important responsibility of the business to promote the welfare
of its employees. Besides providing fair wages, the business should also provide good working
conditions, canteen facility, housing, transport and medical facilities, etc., to the employees.

· (v) Community Service – Modern business organisations engage in community service to fulfil
their social responsibility and thereby enhance their public image. Community service may be
carried out by running dispensaries and schools, encouraging social activities and setting up
training centres for the unemployed youths in the backward areas.

· (vi) Protection of Environment – Every business house should ensure safety of the local
 surroundings and the protection of neighbourhood environment. It should take adequate
measures to check air, water or noise pollution.

· (3) Human Objectives:

· A business is directly linked with two important groups, namely, – (a) customers, and (b)
employees. Both these groups must have a feeling of having been treated as human beings by
the business enterprise. As human beings, customers expect courteous service and fair dealings
from the business.

· The employees look forward to the business enterprise for the following objectives:

· (i) The employees are treated as partners in the business and not as inferior lot; they should get
fair wages and healthy working conditions;

· (ii) They are able to acquire and develop new skills in the process of employment; and

· (iii) They derive job satisfaction.

· (4) National Objectives:

· These objectives are concerned with the goals of the nation.

· Every business enterprise must contribute to the national goals such as:

· (i) Achievement of self-sufficiency in production of goods and services,

· (ii) Import substitution and export promotion,

· (iii) Development of small scale and ancillary industries,

·
 · (iv) Development of backward regions,

· (v) Economic development of the nation.

7. explain bsuiness and discuss teh objectives of business organisation

· The term business organization describes how businesses are structured and how their structure
helps them meet their goals

· Business organization, an entity formed for the purpose of carrying on commercial

enterprise.Such an organization is predicated on systems of law governing contract and
exchange,property rights, and incorporation

· Objectives of Business Organization

A. Economic Objectives

Economic objectives of business refer to the objective of earning profit and also other

objectives that are necessary to be pursued to achieve the profit objective, which include,

creation of customers, regular innovations and best possible use of available resources.

(i) Profit Earning

Profit is the lifeblood of business, without which no business can survive in a competitive

market. In fact, profit making is the primary objective for which a business unit is brought into

existence. Profits must be earned to ensure the survival of business, its growth and expansion

over time.

Profits help businessmen not only to earn their living but also to expand their business activities

by reinvesting a part of the profits. In order to achieve this primary objective, certain other

objectives are also necessary to be pursued by business, which are as follows

(a) Creation of customers

A business unit cannot survive unless there are customers to buy the products and services.

Again, a businessman can earn profits only when he/she provides quality goods and services

3
at a reasonable price. For this it needs to attract more customers for its existing as well as new

products. This is achieved with the help of various marketing activities.

(b) Regular innovations

Innovation means changes, which bring about improvement in products, process of production

and distribution of goods. Business units, through innovation, are able to reduce cost by

adopting better methods of production and also increase their sales by attracting more

customers because of improved products.

Reduction in cost and increase in sales gives more profit to the businessmen. Use of power

looms in place of handlooms, use of tractors in place of hand implements in farms etc. are all

the results of innovation.

(c) Best possible use of resources

As we all know, to run any business we must have sufficient capital or funds. The amount of

capital may be used to buy machinery, raw materials, employ men and have cash to meet dayto-day
expenses. Thus, business activities require various resources like men, materials, money

and machines.

The availability of these resources is usually limited. Thus, every business should try to make

the best possible use of these resources. Employing efficient workers. Making full use of

machines and minimizing wastage of raw materials, can achieve this objective.

B. Social Objectives

Social objective are those objectives of business, which are desired to be achieved for the

benefit of the society. Since business operates in a society by utilizing its scarce resources, the

society expects something in return for its welfare. No activity of the business should be aimed

at giving any kind of trouble to the society.

If business activitieslead to socially harmful effects, there is bound to be public reaction against

the business sooner or later. Social objectives of business include production and supply of

quality goods and services, adoption of fair trade practices and contribution to the general
welfare of society and provision of welfare amenities.

(i) Production and Supply of Quality Goods and Services

Since the business utilizes the various resources of the society, the society expects to get quality

goods and services from the business he objective of business should be to produce better

quality goods and supply them at the right time and at a right price It is not desirable on the

part of the businessman to supply adulterated or inferior goods which cause injuries to the

customers.

They should charge the price according to the quality of e goods and services provided to the

society. Again, the customers also expect timely supply of all their requirements. So it is

important for every business to supply those goods and services on a regular basis.

(ii) Adoption of Fair-Trade Practices

In every society, activities such as hoarding, black- marketing and over-charging are

considered undesirable. Besides, misleading advertisements often give a false impression about

the quality of products. Such advertisements deceive the customers and the businessmen use

them for the sake of making large profits.

This is an unfair trade practice. The business unit must not create artificial scarcity of essential

goods or raise prices for the sake of earning more profits. All these activities earn a bad name

and sometimes make the businessmen liable for penalty and even imprisonment under the law.

Therefore, the objective of business should be to adopt fair trade practices for the welfare of

the consumers as well as the society.

(iii) Contribution to the General Welfare of the Society

Business units should work for the general welfare and upliftment of the society. This is

possible through running of schools and colleges better education opening of vocational

training centres to train the people to earn their livelihood, establishing hospitals for medical
facilities and providing recreational facilitiesfor the general public like parks,sports complexes

etc.

С. Human Objectives

Human objectives refer to the objectives aimed at the well-being as well as fulfillment of

expectations of employees as also of people who are disabled, handicapped and deprived of

proper education and training. The human objectives of business may thus include economic

well-being of the employees, social and psychological satisfaction of employees and

development of human resources.

(i) Economic Well-being of the Employees

In business employees must be provided with tan remuneration and incentive for performance

benefits of provident fund, pension and other amenitieslike medical facilities, housing facilities

etc. By this they feel more satisfied at work and contribute more for the business.

(ii) Social and Psychological Satisfaction of Employees

It is the duty of business units to provide social and psychological satisfaction to their

employees. This is possible by making the job interesting and challenging, putting the right

person in the right job and reducing the monotony of work Opportunities for promotion and

advancement in career should also be provided to the employees.

Further, grievances of employees should be given prompt attention and their suggestions

should be considered seriously when decisions are made. Ifemployees are happy and satisfied

they can put then best efforts in work.

(iii) Development of Human Resources

Employees as human beings always want to grow. Their growth requires proper training as

well as development. Business can prosper if the people employed can improve their skills and

develop their abilities and competencies in course of time. Thus, it is important that business

should arrange training and development programs for its employees.

(iv) Well-being of Socially and Economically Backward People

Business units being inseparable parts of society should help backward classes and also people

those are physically and mentally challenged. This can be done in many ways. For instance,

vocational training program may be arranged to improve the earning capacity of backward

people in the community. While recruiting its staff, business should give preference to

physically and mentally challenged persons. Business units can also help and encourage

meritorious students by awarding scholarships for higher studies.

D. National Objectives

Being an important part of the country, every business must have the objective of fulfilling

national goals and aspirations. The goal of the country may be to provide employment

opportunity to its citizen, earn revenue for its exchequer, become self-sufficient in production

of goods and services, promote social justice, etc. Business activities should be conducted

keeping these goals of the country in mind, which may be called national objectives of business.

The following are the national objectives of business.

(i)Creation of Employment

One of the important national objectives of business is to create opportunities for gainful

employment of people. This can be achieved by establishing new business units, expanding

markets, widening distribution channels, etc.

(ii) Promotion of Social Justice

As a responsible citizen, a businessman is expected to provide equal opportunities to all persons

with whom he/she deals. He/ She is also expected to provide equal opportunities to all the

employees to work and progress. Towards this objectives special attention must be paid to

weaker and backward sections of the society.

(iii) Production According to National Priority

Business units should produce and supply goods in accordance with the priorities laid down in

the plans and policies of the government. One of the national objectives of business in our

country should be to increase the production and supply of essential goods at reasonable prices.

(iv) Contribute to the Revenue of the Country

The business owners should pay their taxes and dues honestly and regularly. This will increase

the revenue of the government, which can be used for the development of the nation.

(v) Self-sufficiency and Export Promotion

To help the country to become self-reliant, business units have the added responsibility of

restricting import of goods. Besides, every business units should aim at increasing exports and

adding to the foreign exchange reserves of the country.

E. Global Objectives

Previously India had very restricted business relationship with other nations. There was avery

rigid policy for import and export of goods and services. But, now-a-days due to liberal

economic and export-import policy, restrictions on foreign investments have been largely

abolished and duties on imported goods have been substantially reduced.

This change has brought about increase in competition in the market. Today because of

globalisation the entire world has become a big market. Goods produced in one country are

readily available in other countries. So, to face the competition in the global market every

business has certain objectives in mind, which may be called the global objectives. Let us learn

about them.

(i) Raise General Standard of Living

Growth of business activities across national borders makes quality goods available at

reasonable prices all over the world. The people of one country get to use similar types of goods

that people in other countries are using. This improves the standard of living of people.
(ii) Reduce Disparities among Nations

Business should help to reduce disparities among the rich and poor nations of the world by

expanding its operation. By way of capital investment in developing as well as underdeveloped

countries it can foster their industrial and economic growth.

(iii) Make Available Globally Competitive Goods and Services

Business should produce goods and services which are globally competitive and have huge

demand in foreign markets. This will improve the image of the exporting country and also earn

more foreign exchange for the country.

8. Explain various methods involved in environmental forecasting

· In today’s business world rapid changes are too frequent. It would be crucial for managers to
invent new ways of surviving in the ever-changing business environment. They would have to
build up the capacity of a firm to face the changes and adapting themselves to changes.

· To prepare for such ongoing eventualities, managers will have to prepare themselves for really
understanding the remote and the immediate environments of business and mechanisms of
changes that affect their industry or firm. The changes have not only affect smaller companies
but also the giants of various industries. It creates an awareness of environmental forecasting.

· All forecasting techniques can be classified as either qualitative or quantitative. Quantitative

techniques are based primarily on the analysis of data and the use of statistical techniques.

· Quantitative Forecasting Techniques:

· Time-Series Analysis:

· This technique forecasts future demand based on what has happened in the past. The basic idea
of time-series analysis is to fit .a trend ‘line to past data and then to extrapolate this trend line
into the future.

· Sophisticated mathematical procedures are used to derive this trend line and to identify and
seasonal or cyclical fluctuations. Usually, a computer program is used to do the calculations
required by a time-series analysis.
·

· One advantage of this technique is that it is based on something other than opinion. This
method works best when a significant amount of historical data is available and when the
environmental forces are relatively stable. The disadvantage is that the future may not be like
the past.

· Regression Modeling:

· Regression modeling is a mathematical forecasting technique in which an equation with one or

more input variables is derived to predict another variable. The variable being predicted is called
the dependent variable. The input variables used to predict the dependent variable are called
independent variables.

· The general idea of regression modeling is not determining how changes in the independent
variables affect the dependent variable. Once the mathematical relationship between the
independent variables and the dependent variable has been I determined, future values for the
dependent Variable can be forecast based on known or predicted values of the independent
variables.

· The mathematical calculations required to derive the equation are extremely complex and
almost always require the use of a computer. Regression modeling is relatively complex and
expensive.

· Econometric Modeling:

· Econometric modeling is one of the most sophisticated .methods of forecasting. In general,

econometric models attempt to mathematically model an entire economy. Most econometric
models are based on numerous regression equations that attempt to describe the relationships
between the different sectors of the economy.

· Very few organizations are capable of developing their own econometric models. Those
organizations that do use econometric models usually hire the services of consulting groups or
company that specializes in econometric modeling. This method is very expensive and complex
and is, therefore, primarily used only by very large organizations.
· Here are a few examples of qualitative forecasting methods:

· Delphi method

· The Delphi method involves questioning a panel of experts individually to collect their opinions.
Interviewing or gathering information from the experts one at a time rather than in a group can
help to prevent bias and ensure that any consensus about business predictions stems from the
expert opinions on their own. Other employees then analyze the experts' responses and return
them with additional questions until settling on a prediction that makes sense for the company.

· Jury of executive opinion

· This approach relies on judgments from experts in sales, finance, purchasing, administration or
production teams. Forecasting by executive opinion can ensure that a team completes a forecast
quickly and considers multiple perspectives from different departments to best inform their
forecast. Some companies might use executive opinion forecasting along with a quantitative
method.

· Market research

· Market research evaluates the success of a company's services or products by introducing them
to potential customers and recording details about how they react. Companies can conduct
market research with the help of their own employees or by hiring outside agencies that
specialize in market research activities. Some ways to conduct market research include focus
groups, consumer surveys or blind product testing, where a customer tries a product without
having heard of it before. Based on the reaction of participants, companies can decide which
products or services to continue producing and which might need revision in the production
stage.

· Consumer surveys

· Consumer surveys ask customers of a business about their experience as a consumer. Companies
might send consumer surveys to customers through mail-in questionnaires or forms sent
through email. Other options for conducting consumer surveys include cold-calling customers on
the phone and inviting customers in to the office for personal interviews. After collecting
information from consumer surveys, employees can use the details they learn to help inform
their predictions about a company's future based on the experience of their existing customers.
·

· Sales force polling

· Sales force polling involves speaking with sales staff who work closely with customers and might
have thorough information about their satisfaction and experiences with the company. One
advantage of sales force polling is that it uses information from employees who are most
frequently involved in the actual business operations, which can ensure that the details are
correct and relevant. Sales force polling is also simple to conduct since it only requires meeting
with salespeople and focusing on the information they provide.