Unit-I

Introduction of
Business
organization
 UNIT : I

INTRODUCTION OF BUSINESS
ORGANIZATION

• Business : Concept, nature and scope, Characteristics of

Business, business as a system, business objectives, business
and economic system
• Requisites for success in Modern Business
• Evolution of business, Industrial Revolution
 UNIT : I

INTRODUCTION OF BUSINESS
ORGANIZATION

• Distinction between Industry, commerce and trade

• Launching a business enterprise: problems, Project report
or feasibility report
• Organization: Concept and principles of organization
 BUSINESS

• Any profit-seeking
organization that
provides goods
and services
designed to satisfy
the customers’
needs
 BUSINESS :
DEFINITION

 “Any organisation that fulfils itself through making a product or

service is business.”
- P.F. Drucker
 “It is an institution organized and operated to provide goods and
services to society under the incentive of private gain”
- B.O. Wheeler
 Characteristics of Business

Recurrence of
transaction
Dealing in
goods and Profit Motive
services

Sale,Transfer
or exchange
Element of
for the Business risk
satisfaction of
human needs
Interrelationship of Business , Profession and Employment
 Industry
Division of
Business
Commerce
 INDUSTRY

The term industry Tertiary

refers to that part of

business activity which Secondary

concerns itself with the

raising, production, Primary

processing or
fabrication of products.
 Primary Industry

- Those involved in the first stage of development of products

- har vest natural resources that are later used to manufacture products
- mining , fishing , agriculture, forestry, and oil and gas extraction are all
primary industries
- large amounts of money is needed for research, equipment and machinery
- automation reduces the need for labour

Extractive
Industries Genetic
Industries
 Secondary Industry

- Manufacture raw materials into finished products

-gold and silver ores are refined and made into jewelry
-crude oil is refined into machine oil, gasoline, and plastics
-wheat is milled into flour and baked into breads and cookies
-technology innovations has led to automation with computer assisted
design
- production is increasing using fewer workers
 CONSTRUCTION MANUFACTURING
INDUSTRIES INDUSTRIES

SECONDARY
INDUSTRIES
 Commerce  Banking

It is an organised system  Transport and Communication

for the exchange of  Warehousing
goods between the
 Insurance
numbers of the industrial
world.
 Finance

 Advertsing
 Trade
It refers to the sale, transfer or exchange of goods.

Types of
Trade

Internal
International Trade
Trade

Wholesale Retail Import Export Entrepot

 Business as a system

System may be
described as a whole
entity consisting of
parts , each of which
may be called a sub-
system.
 Business
system

Industry Commerce

Business Firms

Production Finance HR Marketing

Goods and Services

Society and
Environmental Factors
 Management of Business

Who provide Sales and

Management Customers
revenue

Which
provides fund
Utilises For for

Profit for
Goods owners /
Men,Money, To provide and Repeating
Material
Services Operating
Cycle
 Objectives of Business

Organic
objective

National Economic
Objective Objective

Objectives

Human Social
Objective Objective
  A business enterprise consists of people organised to
conduct business activity to meet and satisfy the needs
of society. It is essentially an organic entity which has its
Organic own infancy, childhood, adulthood, and maturity.
Objective
 The first concern of a business enterprise is to ensure its
own survival for the continuance of business activity.
 Human
Objectives JOB
S ATI S FA C T I ON

PA R T I C I PAT I O N

DEVELOPMENT
OF HUMAN
RESOURCES

FA I R D E A L TO
E M P L OY E E S
National
Objectives Development
Production National
Self- Development
Ensuring Social according
justice of small Sufficiency of skilled
to national
entrepreneurs and Export personnel
priorities
Developme
nt
Economic
objective
Best use of scarce
resources
Innovation

Creation
of
customers

Earning of
profit
 Supply of desired Avoidance of anti
quality of social and unfair
products trade practices

Social
Generation of Welfare of
objective employment employees

Avoidance of
slums and
pollution
 1.Determination of Objectives
Requisite 2. Planning and setting up of a
for proper organization
success in 3. Adequate Finance
4. Proper Location, Layout and Size
Modern
5. Facilities for research
Business 6. Efficient and dynamic leadership
QUALITIES OF GOOD BUSINESSMAN

Idealism

Personal
Foresight
qualities

Qualities of
Good
Aptitude Businessma
for n Initiator
research

Firmness
Business
and
Morality
Courage
 Evolution of business

• DEVELOPMENT OF COMMERCE
• Household economy • EVOLUTION OF INDUSTRY
• Primitive barter economy • Handicraft system
• The rise of trade • Guilds
• Town economy • The domestic system
• International trade
 Results of Industrial
Revolution

• Economic consequences
a) Mass Production
b) Growth of capitalism
c) Specialisation
d) Improvement in Standard of Living
e) Trade cycle
• Social and Political Consequences
 Distinction between Industry, Commerce and Trade
Basis Industry Trade Commerce

It involves manufacturing It involves transfer or

It involves distribution of
activities such as extraction, exchange of products
Meaning products produced by
construction and production of distributed by commerce.
industries.
goods.
Requires less amount of
Requires less capital than
Capital Requires huge amount of capital than industry but
industry and commerce.
Requirement capital to establish industry. larger amount than trade to
operate its activities.
Less riskier than industry
Riskier than commerce and Relatively less riskier than
Level Of Risk but involves high risk than
trade. industry and commerce.
trade.
Both side (demand and Demand side of the
Side Supply side of the product.
supply) of the product. product.
It creates processing It creates time utility and
Creation Of Utility It creates form utility.
utility. place utility.
It is operated from
Place Of It is operated in workshop or It is operated in the
production center to
Operation factory. market.
LAUNCHING A BUSINESS ENTERPRISE

Problems for establishment of new

business

1. Problems relating to the planning and

organization of the new enterprise
2. Problems arising out of the procedure
lay down by the government
 Steps for launching of a new enterprise

Product Analysis Building the Launching the

and Market survey organization enterprise
structure

Determining the Financial Tax planning

size of the firm Planning
and plant

Selection &
Location organization of
Physical facilities
 Project Report or Feasibility Report

-A Project Report or Feasibility Report is a written account of various

activities to be undertaken by a firm and their technical, commercial and
social viabilities.
- It states as to what business is intended to be undertaken by the
entrepreneur and whether it would be physically possible, financially
viable, commercially profitable and socially desirable to do such a
business.
 1. Examination of Government Policy
2. Broad specification of output and Input
3. Listing and description on alternative locations
4. Preliminary estimation

INFORMATION 5. Preliminary estimation of Profitability

6. Marketing analysis
INCLUDED IN
7. Specification of product pattern and product price
PROJECT
8. Specification on Raw Material
REPORT 9. Estimation of material
10. Listing of major equipment
11. Listing of auxiliary equipment
 12.Specification on source of supply of equipment
13. Place of factory
14. Listing of building, structure and yard
15. Specification of supply source and cost
INFORMATION 16. Preparation of layout and design
INCLUDED IN 17. Specification on labour requirement
PROJECT 18. Estimation of working capital
REPORT 19. Phasing of activities
20. Analysis of profitability
21. Determination of environmental issues
22. Analysis of past performance
23. State of preparedness to implement the project
Business Organization
 BUSINESS ORGANIZATION
 Characteristic of Business Organisation

• Business organization is an  Adequacy of capital

economic arrangement of  Flexibility of operation
person where all efforts are  Business secrecy
directed to achieve a  Ownership management and control
common economic goal.  Minimum government regulations
 Limit of liability
 Ease in formation
 Tax consideration
 Bargaining power
  Aiming towards consumers satisfaction
 Shouldering responsibility
Objectives  Creation of employment opportunity
 Welfare to employment
of
 Optimum utilization of country’s natural
Business resources

Organization  Maximum return on investment

 Social welfare
 National objective
 Maintaining business ethics
 Maintaining law and order.
  Distribution
 Feedback
 Finance management
Importance  Fixing of responsibilities
ofImportanceof  Minimum cost
business
Business  Minimum wastage
organization  Product growth
Organization  Quick decision
 Recognition problems
 Reduces the cost
 Skilled salesmen
 Transportation
Modern Old
Business Modern concept
of business
business
 Old Concept Modern Concept
• Business may be defined as human
Business means the whole of
activity directed towards producing or
complex of commerce and
acquiring wealth through buying or
selling goods. industry-the basic industries and
the network of ancillary
• Business may be defined as an activity
in which different persons exchange
industries , banking, insurance

something value, whether goods or ,transport and so on.

services for mutual gains or profits.

  Foreign direct investment  Containerized cargo
 Customization  Cloud comp
Trends in  Social media  Business combination
modern  E-business
business  Green marketing
 Business process  Corporate
outsourcing
social responsibility
 Trade in agricultural and
manufacturing goods
 PRINCIPLES OF BUSINESS ORGANIZATION

• Unity of objective • Unity of demand

• Efficiency • Unity of direction

• Span of Management • Authority and Responsibility

• Division of work • Balance

• Functional Definition • Flexibility

• Scalar principle • Continuity

• Exceptional principle • Facilitation and Leadership

THANK
YOU!