Unit 1

by nishi thakur
The concept of business
Concept is the idea or image or understanding
about a thing, activity, or a person that emerges in
the mind of a person. According to the
Webster’s new collegiate dictionary. “A concept is
an abstract idea generalized from particular
instances.”
By far the following concepts of business have emerged:
1)profit- oriented concept of business. in the early age of
the business, business was conceived to be a wealth
producing or profit making economic activity.
2)Customer- oriented concept of business: customer-
oriented concept came into existence around the 1950s
and gained momentum during the 1960s and 1970s.
Business organization began to think about customer
service and satisfaction.
3)Societal or modern eclectic
concept of business:

During the 1980s, societal concept of business

began to criticize the customer-oriented concept
of business began to emerge. People began to
criticize customer-oriented concept of business.
It was alleged that the customer-oriented concept
laid aphasics, only on profit through satisfaction
of the customer but neglected the social
responsibility of business.
Meaning and definition of
business
Business refers to all economic activities which are carried on to
provide goods and services to the customers with a view to
improve the well-being of society and as a result to earn the profit.
1. Wealth producing economic activity.
2. Profit making activity
3. Exchange of utilities for price.
4. Want satisfying activity.
5. Social and economic institution.
6. Complex field of commerce and industry
7. Contribution of economic value.
8. Getting and using resource to generate profit
Feature or characteristics of
business
1. Capital: finance is must for running a business.
2. Creation of utilities: business creates utilities which satisfy
wants.
3. Entrepreneurship: entrepreneurship is the essence of
business.
4. Risk and uncertainty: business is a game of risk. In involves
the possibility of loss.
5. Dealing in goods and services: every business comes into
existence to provide goods or services to society.
6. Economic activity: business is an economic activity in the
séance that it involves the use of resources which are scare
relative to ends.
7. Human element: business is a human institution.
8. legality: business should be lawful.
9. innovation: it is the foremost characteristics of today’s
business.
10. Profit motive: every business is carried on to earn money
and to acquire wealth.
11. Regularity in dealing : dealing in goods and services
constitute business only when they are carried on regularly.
12. Sale transfer or exchange: business is an exchange of
goods and services for a price.
Modern characteristics of business
 The customer is the business: the modern business is customer-
oriented.
 Modern business can not be profit oriented: a business cannot be
defined or explained in terms of profit.
 Modern business can not be profit oriented: a business cannot be
defined or explained in term of profit. This applies to modern
business.
Both arts and science: traditional business was on guesswork,
hunches and institution.
Keen competition: keen competition is another feature of modern
business. Competition is increasing day-by-day.
 Social concern: the social aspects of business have also come to the
force in the recent past.
 Dynamic nature: today’s business enterprise are dynamic and thrive
on change.
 Knowledge resource: in modern times, the one and only distinct
resource of any business’s knowledge. What does make a business
distinct and what is its peculiar resource is its ability to use knowledge.
Objective of business
1. Economic objective: economic objective 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 includes creation of
customers, regular innovations and best possible use of
available resources.
(a) Profit earning: profit is the lifeblood of business, without
which no business can survive in a competitive market.
(b) b) Creation of customers: a business unit cannot survive
unless there are customers to buy the products and
service.
(c) Regular innovations: innovation means charges, which
bring about improvement in products, process of production
and distribution of goods.
(d) Best possible use of resources: as we all know , to run
any business we must have sufficient capital funds.
2. Social objective: social objective are those objectives of
business, which are desired to be achieved for the benefit of
the society.
1. Production and supply of qualitative goods and service:
since the business utilizes the various resources of the
society, the society expects to get quality goods and
services from the business.
2. Adoption of fair trade practices: in every society, activities
such as hoarding, black-marketing and over- charging and
over-charging are considered undesirable.
3. Contribution to the general welfare of the society: business
unit should work for the general welfare and upliftment of the
society.
3. Human objectives: human objective 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.
(I) Economic well- being of the employees: in business
employees must be provided with fair remuneration and
incentive for performance benefits of provident fund,
pension and other amenities like medical facilities, housing
facilities etc.
(II) Development of human resource: employees as human
being always what to grow. Their growth requires proper
training as well as development.
(III) well-being of society and economically backward people:
business units being inseparable parts of society should help
backward classes and also people those are physically and
mentally challenged.
4. National objectives: being an important part of the country,
every business must have the objective of fulfilling national goal
and aspiration.
I. Creation of employment.
II. Promotion of social justice.
III. Production according to national priority:
IV. Contribution to the revenue of the country.
V. Self sufficient and export promotion.
5. Global objectives:
VI. Raise general standard of living.
VII. Reduce disparities among nations.
VIII. Make available globally competitive.
Classification of business
activities
Classification of business activities
INDUSTRY
Industry is concerned about the production or manufacturing
of goods for final consumption or use by the ultimate
consumers, it is called the consumer goods industry.
There are five main kinds/categories of industries which are as
follow:
(1) Primary industry: primary industry is the industry that is
engaged in production of primary goods such as food
grains, cotton, vegetable, fruits etc.
(2) genetic industry: genetic industry is one which is engaged
in breeding and reproduction of plants, animals and other
creatures on commercial basis.
(3) Extractive industry: extractive industry is one which is
engaged in extraction of materials from land, sea or air.
Extraction of minerals e.g., iron ore, zinc, gold, gas, stones,
fishing and extracting materials from sea etc.
(4) Construction industry: construction industry is one which is
engaged in construction of road, building, bridges, fly-over,
airports, industrial estates, railway lines and yards, dams, canals
etc.
(5) Manufacturing industry: manufacturing industry is one which
is engaged in the production of goods by converting raw-
material into products for the use or consumption by ultimate
consumers or other producers.
(I) Analytical industry: analytical industry is
engaged in analyzing some basic material in
order to separate different products associated
or mixed in it.
(II) Synthetic industry: synthetic industry is engaged
in synthesizing or mixing two or more material
with a view to manufacture a new product.
(III) Processing industry: processing industry is
engaged in processing of raw material or
producer goods through a series of
manufacturing processes in order to produce
some new product.
(IV) Assembly Industry: assembly industry is
engaged in assembling various related parts or
components in order to make a useful product.
II Commerce
The term commerce includes so many activities that help deliver
the right goods to the right persons at the right place at the
right time and at the right price.
According to Stephenson “ Commerce is the sum total of those
processes which are engaged in removal of the hinderances
of persons , place and time in the exchange of commodities.
(1) Trade: trade refers to the lawful buying and selling or
exchange of the goods for a price. Trade can be classified
into two categories:
(a) Internal trade: it refers to the exchange of goods and
services for a price within the boundaries of a country.
The internal trade can be sub classified into two categories:
Wholesale trade: where goods are purchase and sold in bulk, it
is known as wholesale.
retail trade: where goods are sold to consumers or ultimate
customers in very small quantities, it is known as the retail
trade.
(II) External or foreign trade: where goods are bought and sold
across the national boundaries i.e., between two or more
countries, it is known as external trade.
The external trade can be sub-classified into three categories:
Import trade: when a trader buys goods in a foreign market
and brings them into his home country, it is said to be import
trade.
Export trade: when a trader sells his goods to a foreign buyer
to be taken out to his country, it is said be the export trade.
Extrepot trade: when a trader imports goods from other
countries with a view to export them to another country
or countries, it is known as extrepot.
(2) Auxiliaries to trade or aids to trade: the term
commerce includes auxiliaries to trade or service
auxiliary to trade. These activities or services facilitate
trade. These services include transportation,
warehousing, insurance, banking, advertising etc.
(3) Direct services or service industry: in the recent decades,
the growth of service sector has been tremendous. Certain
occupational services that were used to be provided by
individuals by adopting as an occupation are now being
provided by business institutions. these services are now being
provided by haircutting salons, health clubs and beauty parlors,
restaurants, hotels, resorts and catering firms, nursing homes,
hospital, medical institution etc.
Some economic activities look similar to business but they are
in fact different from business. Some such activities are
discussed in the ensuring paragraphs.
1. profession: business is different from a profession.
Business involves risk, capital, entrepreneurship,
production and exchange of goods or services for profit.
the main characteristics of a profession are as follows:
(I)Risk is negligible in profession
(II) The members of a profession primarily aim at providing
competent and specialized service to their clients and
monetary gain is secondary to them.
(III) Entry into a profession is always regulated by its
association or institute.
(IV) Every profession requires minimum formal education and
tanning.
(V) The profession requires minimum the relationship of trust
and confidence with their client.
(VI) every profession is founded upon a code of ethics.
(VII) there must be a formal organization/association of
professionals for the effective working and regulation of
the profession.
(VIII) every profession requires a body of specialised
knowledge.
2. occupation: business is also different from an
occupation. Occupation or vocation is an activity in
which an individual engages himself regularly and
earn his livelihood by using his skill.
The main characteristics of an occupation are as
follows:
(I) There is a little risk in an occupation.
(II) Occupation creates contractual obligation of the
individual engaged in occupation with the person
for whom he dose the work.
(III) It dose not require any formal education,
specialized skills and tanning.
3. Employment/ service: employment is also different from business.
Where a person is employed under a contract by another person
or an organization for a specified remuneration, he is said to be
under the employment for service of that another person.
An introduction to
business organisation
 What is organisation
"Organisation" refers to the structured arrangement of people,
resources, and activities aimed at achieving specific goals. It
involves the coordination and management of various elements to
ensure efficiency and effectiveness.
In a broader sense, it can apply to businesses, non-profits,
government entities, or even informal groups. Key aspects of an
organisation include:
 Structure: How roles and responsibilities are distributed.
 Processes: The systems and workflows that guide activities.
 Culture: The shared values and norms that influence behaviour.
 Goals: The objectives the organisation aims to achieve.
Effective organisation helps to streamline operations, enhance
communication, and foster collaboration among members.
 Features of organisation
Here are some key features of an organisation:
 Structure: Defines roles, responsibilities, and the hierarchy of
authority. This can be flat, hierarchical, matrix-based, etc.
 Goals and Objectives: Clear aims that guide the organisation's
activities and provide a sense of direction.
 Coordination: Ensures that different parts of the organisation
work together effectively towards common goals.
 Division of Labor: Tasks are divided among individuals or teams
to increase efficiency and specialization.
 Communication: Established channels for sharing information
and facilitating collaboration.
 Culture: The shared values, beliefs, and behaviors that shape
the work environment and influence how members interact.
 Resources: The management of financial, human, and physical
resources to achieve goals.
 Adaptability: The ability to respond to changes in the external
environment or internal dynamics.
 Leadership: Guidance provided by individuals who influence
and motivate others towards achieving organisational goals.
 Control Systems: Mechanisms to monitor progress and ensure
alignment with goals, often involving feedback and performance
evaluation.
Principle of organization
 Division of Work: Specializing tasks to improve efficiency and
expertise.
 Authority and Responsibility: Clear lines of authority and
accountability.
 Discipline: Adherence to rules and agreements within the
organization.
 Unity of Command: Each employee should report to only one
supervisor to avoid confusion.
 Unity of Direction: A single plan should guide similar activities
toward common objectives.
 Subordination of Individual Interests: The organization's
interests take precedence over individual interests.
 Remuneration: Fair compensation motivates employees and
enhances productivity.
 Centralization: The degree to which decision-making is
concentrated at a single point.
 Scalar Chain: A clear hierarchy of authority, from top management
to lower levels.
 Order: Proper arrangement of resources and personnel to
maximize efficiency.
 Equity: Fair treatment of employees fosters loyalty and a positive
work environment.
 Stability of Tenure: Job security leads to better performance and
loyalty.
 Initiative: Encouraging employees to take initiative can lead to
innovation and growth.
 Esprit de Corps: Promoting team spirit fosters cooperation and
unity within the organization.
 What is business organisation
 A business organisation refers to a structured entity created to carry
out commercial activities, aiming to generate profit through the
provision of goods or services. Key characteristics of a business
organisation include:
 Purpose: The primary goal is to generate profit and create value for
stakeholders.
 Structure: It has a defined hierarchy, roles, and responsibilities, often
structured in various ways (e.g., sole proprietorship, partnership,
corporation, LLC).
 Resources: Utilizes financial, human, and physical resources to
operate and grow.
 Processes: Implements specific procedures for production, sales,
marketing, and customer service to achieve efficiency.
 Market Orientation: A focus on understanding and meeting customer
 Risk Management: Identifies, assesses, and mitigates risks
associated with business activities.
 Legal Framework: Operates within a legal structure that governs
its activities, including compliance with regulations and laws.
 Innovation: Adapts to changes in the market and technology to
remain competitive.
 Performance Measurement: Evaluates success through metrics
like profit margins, market share, and customer satisfaction.
 Overall, a business organisation combines various elements to
create a systematic approach to achieving its commercial
objectives.
Objectives of business organization
1. Unity of direction: there must be one head and one plan for a
group of activities directed towards the same objective.
2. Functional definition: the duties and authority-relationship of
different individuals must be clearly defined so that there is no
confusion or overlapping.
3. Scalar principle: authority and responsibility should be in a
clear unbroken line from the highest executive to the lowest
executive.
4. Continuity: change is the law of nature. The organization
should be so structured as to have continuity of operations.
5. Co-ordination: there should be an orderly arrangement of
group effort and unity of action in the pursuit of a common
purpose.
6. Unity of command: each person should receiving orders from
only one superior and be accountable to him
7. Delegation : authority delegated to an individual manager
should be adequate to enable him to accomplish results
expected of him .
Steps in business organisation

1. Division of work.
2. Classification of activities.
3. appointing suitable person.
4. Delegation of authority.
5. co-ordianation of various activities.
Importance of business organization
1. Decision making.
2. Fixed responsibility.
3. Reduce wastages
4. Reduces the cost.
5. Technical development.
6. Distribution.
7. Production of goods.
8. Financial management.
9. Time management
Thank you