INTRODUCTION TO BUSINESS

ASSIGNMENT

/2013
SUBMITTED BY: THE RISING SUN
1ST SEMESTER, 1ST YEAR
DEPARTMENT OF MANAGEMENT STUDIES

UNIVERSITY OF BARISAL

SUBMITTED TO: EASNIN ARA

LECTURER OF MARKETING

UNIVERSITY OF BARISAL
 BUSINESS
Business come from the latin word “biznis”. Business means being busy at any work.
When a man engaged in buying and selling products in order to earn profit.

Business refers to an economic activity in which people regularly engage in

production and purchase of goods for sale or exchange of goods or supply of services
to satisfy the needs of other people with an ultimate motive to earn profit.

The regular production or purchase and sale goods undertaken with an objective of
earning profit and accquiring wealth through the satisfication of human wants refers
as business. ____Stephen Shons

Business is a combination of industry, trade and commerce and it’s helpful work in
which people exchange their product in order to earn profit in a legal way.

BRANCHES OF BUSINESS
When a man buying or selling products with a view to earn profit, then it is called
business.

Branches or scope of business:

Business has three branches. They are industry , trade and commerce. W can show it
by drawing a diagram.
 Branchesofofbusiness
Branches business

Industry Trade Commerce

Genetic Extractive Manufacturing Construction

Home Trade International/Foreign Trade

Retail Trade Whole sale Trade

Import Export Enterpot

INDUSTRY: Industry means, all factories or companies or process involved in the

manufacturing products.
GENETIC INDUSTRY: The word ‘genetic’ means parentage or hereditary. Genetic
industries are concerned mainly with producing-breeding or multiplying of certain
species of plants or animals with the object of earning profits from their sale. Eg.
Nurseries, forestry, cattle breeding etc.

EXTRACTIVE INDUSTRY: These industries are concerned with the extraction of

materials from the earth, sea and air. It includes raising and collection of the natural
products of the soil for the subsistence of human beings. Eg. Mining, fishing, hunting
etc.

MANUFACTURING INDUSTRY: They are concerned with the converting of the form of
the raw materials and semi-manufactured goods into finished products. The process
of manufacturing things changes the form of the articles extracted from earth, sea
and air and makes it more useful to the consumer by adding new utilities to it. Eg.
Textiles, enginerring, steel etc.

CONSTRUCTION INDUSTRY: Construction industry is also an important industry.

Construction of bridge, building, road, tunnel, over bridge, fly-over etc.

TRADE: Trade in fact is a branch of commerce itself. It is a final statement of a

business activity involving sale purchase of goods.

HOME TRADE: Home trade is also known as internal trade. It is conducted within the
political and geographical boundaries of a country. It can be at local level, regional
level or national level.

RETAIL TRADE: It involves buying in smaller lots from the wholesalers and
selling in very small quantities to the consumers for personal use. The retailer is the
last link in the chain of distribution. He establishes a link between wholesalers and
consumers.

WHOLESALE TRADE: It involves buying in large quantities from producers or

manufactures and selling in lots to retailer for resale to consumers. The wholesaler is
a link between manufacturer and retailer.

EXTERNAL TRADE: External trade also called as foreign trade. It refers to buying and
selling between two or more countries. For instance, if Mr X who is a trader from
Mumbai, sells his goods to Mr Y another trader from NewYork then this is an
example of foreign trade.

EXPORT TRADE: When a trader from home country sells his goods to a trader
located in another country, it is called export trade.

IMPORT TRADE: Whn a trader in home country obtains or purchase goods

from a trader located in another country, it is called import trade.

ENTERPOT TRADE: When goods are imported from one country and then re-
exported after doing some processing, it is called enterpot trade. In brief, it can be
also called as re-export of processed imported goods.

COMMERCE: It includes all the activities that hold significance in bringing goods and
services from the places of their production to the place of their consumtion.

FEATURES OR NATURE OF BUSINESS

In a business, there should have a continuous flow of goods or services. Otherwise ,it
will not be treated as business.

FEATURES OR NATURE OF BUSINESS: Features or nature of the business

may be described as follows:

PROFIT MAKING INSTITUTION: The business activities are run to earn money
or make profit. The chief objective behind the business is profit maximization or
wealth or value maximization.

RISK: Risk is associated with business operation. Every business action is risky.
Without risk business is impossible. We know,”no risk no gain.”

ECONOMIC ACTIVITY: In a business, there must be transaction of money.

Otherwise it will not be treated as business.

CREATION OF UTILITY: Business creates utility. All business activities are

run with an objectives of value addition or utility creation.
 MATERIALS IN A BUSINESS: A businessman uses money, methods,
men, machine and materials in the business operation.

ORGANIZATION: Business is an organization. Business organizes men and

machines to implement production plan.

REGULAR TRANSACTIONS: Business services by regular transactions.

The proof of existence of business in transactions.

USE OF CAPITAL OR FINANCIAL RESOURCES: Business utilizes

capital which is the lifeblood of business. Money makes money; is a proverb that
happens in business.

OBJECTIVES OF BUSINESS
It is generally believed that a business has a single objectives, that is to make profit.
But it can not be the only objectives of business. While pursuing the objective of
earning profit, business units do keep the interest of their owners in view. However,
any business unit can not ignore the interests of it’s employees, customers, the
community, as well as the interests of society as a whole.

OBJECTIVES OF BUSINESS

ECONOMIC SOCIAL HUMAN NATIONAL GLOBAL

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.
 PROFIT EARNING: Profit is the life blood 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.

CREATION OF CUSTOMER: A business unit can not survive unless there are
customers to buy the products and services. Again a business can earn profit only
when he/she provides quality goods and services at a reasonable price.

REGULAR INNOVATION: Innovation means changes, which bring about

improvement in products, process of production and distribution of goods, business
unit 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.

USE OF MODERN TECHNOLOGY: Using modern technology, we can

increase production. Thus we earn profit.

SOCIAL OBJECTIVE: Social objectives are those objectives of business which are
desired to be achieved for the benefit of the society.

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. The objectives of business should be to
produce better quality goods and supply them at the right time and at a right price.

PROTECTION AND DEVELOPMENT OF ENVIRONMENT: Suitable

environment is a precondition to human existence. Business tries to develop
environment by utilizing hazardous materials and by treatment of detrimental
materials in some cases.

EMPLOYMENT GENERATION: Unemployment is a severe problem for the

society. Business provides employment to the labor force and thus help the society.
 CREATION OF NATION’S RESOURCES: Business creates resources for the
nation by value addition or utility creation. Thus national income increases and
standard of living becomes higher.

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.

ECONOMIC WELL BEING OF THE EMPLOYEES: In business employees

must be provided with fair remuneration and incentives for performance, benefit of
provident fund, pension and other amenities like medical facilities, housing facilities
etc.

SOCIAL AND PSYCHOLOGICAL SATISFACTION OF EMPLOYEES: It is the

duty of business units to provide social and psychological satisfaction to their
employees.

DEVELOPMENT OF HUMAN RESOURCES: Employees as human being

always want to grow. Their growth requires proper training as well as development.

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. Business units can help and
encourage meritorious students by awarding scholarships for higher studies.

NATIONAL OBJECTIVES: Being an important part of the country, every business

must have the objective to fulfilling national goals and aspirations.

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.

PROMOTION OF SOCIAL JUSTICE: As a responsible citizen, a business man

is expected to provide equal opportunities to all persons with whom he/ she deals.
 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.

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.

BUSINESS ENVIRONMENT
The word “business” in its economic sense means human activities like production,
extraction or purchase or sales of goods that are performed for earning profit and it
has also many other motive.

On the other hand, the word “environment” refers to the aspects of surroundings.

Therefore, business environment can be defined as a set of conditions- social, legal,

economical, political that could be both controllable and uncontrollable in nature and
affects the functioning of the organization.

COMPONENTS OF BUSINESS
ENVIRONMENT
Business environment has two components. They are-

1. Internal Environment(controllable)

2. External Environment(uncontrollable)

COMPONENTS OF BUSINESS ENVIRONMENT

 INTERNAL ENVIROMENT EXTERNAL ENVIRONMENT

5M MICRO ENV MACRO ENV

1.MAN

2.MATERIAL

3.MACHINE

4.MONET

5.METHOD

INTERNAL ENVIRONMENT: It includes 5 Ms. Man,

machine, material, money and method. Usually within the control of business.
Business can change these factors according to the change in the functioning
of enterprise.

EXTERNAL ENVIRONMENT: This factors which are beyond

the control of business enterprise are included in external environment. Eg.
Govt and legal factors geo-graphical factors, political factors etc. it has two
types-

MICRO/OPERATING ENVIRONMENT: The environment

which is close to business and affects its capacity to work is known as micro
environment. It consists of many elements. Like-

COMPANY: In a company there consists many department. They

are also the components of business environment. Such as- level of
management top, middle and 1st line.
 SUPPLIER: They are person who supply raw material and required
as components of business environment. The company can not depend on one
supplier because at any time he can stop supply, can raise products price.

CUSTOMER: Customers are regarded as the king of the market.

Success of every business depends upon the level of their customer’s
satisfaction. E.g. Whole seller, retailer, industries, institutions, international
market, foreigners etc.

MARKET INTERMEDIARIES: They work as a link between business

and final consumer’s types- marketing service industries, advertising firms,
financing farm, physical distribution farm etc.

COMPETITORS: Every move of the competitors affects the

business. Business has to adjust itself according to the strategies of the
competitors. They should be considered.

PUBLIC: Any group who has actual interest of business enterprise

is termed as public. As- financial public, media, govt, local or general public.

MACRO/ GENERAL ENVIRONMENT: It includes factors that

create opportunities and threats to business units. The elements of macro
environment are given bellow-

ECONOMIC ENVIRONMENT: It is very complex and dynamic in

nature that keeps on changing with the change in politics or political situations.
It has 3 elements.

1. Economic condition of public

2. Economic polices of public
3. Economic system of public

NON-ECONOMIC ENVIRONMENT: Following are include in non-

economic environment.

POLITICAL ENVIRONMENT: It affects different business units

extensively components:
 a) Political belief of govt.
b) Relation with other countries
c) Political strength of the country

d) Defence and monitory process

e) Centre state relationship in the country
f) Thinking opposition parties towards business unit.
SOCIO-CULTURAL ENVIRONMENT:
Influence exercise by social cultural factor not with in the control of business is
known as socio-cultural environment. These factor include attitude of people to
work, family system, caste system, religion, education, marriage etc.

TECHNOLOGICAL ENVIRONMENT:
A systematic application of scientific knowledge to practical task is known as
technological environment. Everyday there has been vast change in products,
services, lifestyle and living conditions. These changes must be analyzed by every
business unit and should adapt these changes.

NATURAL ENVIRONMENT:
It includes natural resources, weather, climatic conditions, port facilities,
topographical factors such as soil, sea, river, rainfall etc.

DEMOGRAPHIC ENVIRONMENT:
It is a study of perspective of population. E.g its size, standard of living growth rate ,
age family size, income level, education level etc.

INTERNATIONAL ENVIRONMENT:
It is particularly for industries directly depending on import or export. The factors
that effect the business are globalization, liberalization, foreign business polices,
cultural exchange.

LOCATION OF BUSINESS
It is the place where it is situated. There are a number of factors that need to be
considered in choosing a location for a business.

i. MARKET: The nearness of the market and the cost of delivering the goods are
likely to be important factors.
ii. RAW MATERIALS: If the raw materials are bulky and expensive to transport it
will clearly be in the entrepreneurs interest to locate hear to them.
iii. TRANSPOETATION COST: The two major influences are the market and raw
material are determined by whether or not the industry is bulk increasing or
decreasing.
iv. LAND: Land costs very considerably nationally and some firm wholesalers
might need a large square land.
v. LABOUR: The availability of labour might well attract firms to an area,
particularly if that labour force has the skills they require.
vi. SAFETY: Some industry have to locate their premises well away from high
density population levels and their choice of location is limited.
vii. WASTE DISPOSAL: Certain industries produce considerable waste and the costs
associated with the disposal of this might affect their location.
viii. GOVERNMENT: Government provides special assistance to areas of high
unemployment.

EFFICIENCY AND EFFECTIVELY

EFFICIENCY: To extent to which time effort or cost is well used for the intended
task or purpose. Or how fast a person can complete his work.

EFFECTIVELY: It is the degree to which objectives are achieved and the extent to
which targeted problem are solved.

5 elements of effectiveness:

a) Efficient
b) Reliable
c) Elegant
d) Appropriate
 e) Integrate

CORPORATE SOCIAL RESPONSIBILITY OF

BUSINESS(CSR)
Ten commandments of corporate social responsibility:

1. Thou shall take corrective action before it is required.

2. Thou shall work with affected constituents to resolve mutual problems.
3. Thou shall work to establish industry wide standards and self regulation.
4. Thou shall publicity admit your mistakes.
5. Thou shall get involved in appropriate social programs.
6. Thou shall help correct environmental problems.
7. Thou shall monitor the changing social environment.
8. Thou shall establish and enforce a corporate code of conduct.
9. Thou shall take needed public stands on social issues.
10.Thou shall strive to make profits on an ongoing basis.