BUSINESS PERSPECTIVES BUSINESS PERSPECTIVES Module 1Introduction to Business

What is Business?What is Business?Needs to wantsNeeds are limited whereas wants are

unlimited Needs differ from one person to another

person; from one society to another society; from one country to another country.

Activities of human-beings in daily life◦Economic & Non-economic

Thus, business is defined as◦highly organized system of production,

distribution and exchange of goods and services to meet the needs and wants of the consumers with the objective of earning profits and creating wealth.

Activities of Human-Activities of Human-beings beings

What a Business Does?What a Business Does?

Analogy of the Tree: Will it Analogy of the Tree: Will it explain a business?explain a business? Root: Idea, Finance, people, structure, management Branches

◦ Marketing◦ Production◦ Personnel◦ Finance

Trunk Environment:

◦ Economic factors◦ Technological factors◦ Socio-cultural factors◦ Political-legal factors◦ Demographic factors◦ Natural & geographical factors◦ International factors◦ Pressure groups (Competitors, suppliers, public)

Characteristics of Characteristics of Business Business Dealing in goods & ServicesProduction & exchange for a PriceProfit MotiveElement of risk

◦ Changes in consumer taste & preference.◦ Increase in competition in market.◦ Changes in government policies & legal

system.◦ Obsolescence of technology.◦ Changes in economic condition of the

population.◦ Wrong management decisions.

Recurrence/regularity in dealings

Classification of Business Classification of Business

Type of Industries: Type of Industries: Explanation Explanation Primary industries include:Extractive industries:

◦Concerned with discovery and utilization of natural resources.

◦ includes activities like farming, hunting, fishing, mining, exploring oil and natural gases.

Genetic industries: ◦engaged in reproducing and multiplying

certain species of plants and animals. Eg cattle breeding farms, nurseries, poultry

farms, etc.

Type of Industries: Type of Industries: Explanation Explanation Construction industries: The peculiar

nature of these industries is that their products are not marketed but rather erected, built or fabricated at a fixed site.

Manufacturing industries: ◦ engaged in the conversion or the

transformation of raw material or semi finished products into finished products. Analytical industry: eg. Oil refinery Synthetic industry: eg. Soap, cement, paints,

drugs, fertilizers Processing industry: eg. Printing, refrigeration Assembly line industry: eg. Airplane, Continuous industry: eg. Cotton textile industry,

paper and pulp industry, glass industry.

Type of Industries: Type of Industries: Explanation Explanation Commerce: While industry is concerned with the

production of goods and services for the satisfaction of human wants, commerce is an exchange process which ensures free and smooth flow of goods and services from producers to the consumers.◦ Trade & Auxiliaries

Types of trade: Trade can be divided on the basis of operations as internal trade and external trade.◦ Internal Trade:

Wholesale Trade Retail Trade

◦ International Trade: Export Import

Type of Industries: Type of Industries: Explanation Explanation Auxiliaries to Trade

◦Banking ◦Transportation ◦Insurance ◦Packing & Packaging

Packing implies wrapping, compressing, filling or crating of goods so as to protect them from damage and to make their handling convenient.

◦Advertising

Goals of Business Goals of Business Profit MaximizationMarket LeadershipMaximization of SalesSurvival & GrowthOperating in a wider range of Markets

Freedom of expression 

Roles and Importance Roles and Importance

Roles and Importance Roles and Importance To the Owners

◦ Intelligent investment which would involve greatest returns with minimum risks.

◦ Continuous capital formation and growth for assured returns over period of time.

◦ Future prospects of a better avenueTo the Owners

◦ Intelligent investment which would involve greatest returns with minimum risks.

◦ Continuous capital formation and growth for assured returns over period of time.

◦ Future prospects of a better avenue

Roles and Importance Roles and Importance To the Business Associates

◦ Transparency ◦ Timely Payment

To the Society ◦ Conservation of energy ◦ Reducing Pollution ◦ Alleviation of Social Problems

To the Nation ◦ Supplying goods and services as per national priorities.◦ Developing self reliance and avoiding dependency on

imports.◦ Boosting foreign exchange reserves by exporting surplus

goods and services.◦ Participating in removing inequalities of opportunities and

economically backward areas of country.◦ Infusing R & D progress of nation.

 

Business Environment Business Environment