Download - Business as Institution
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Business asBusiness as InstitutionInstitution
ByBy
Dr.Madhvendra MisraDr.Madhvendra Misra
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What is Business?What is Business?
The Concept of BusinessThe Concept of Business
General MeaningGeneral Meaning
Legal InterpretationLegal Interpretation
Corporation & BusinessCorporation & Business
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The Concept of BusinessThe Concept of Business
TheThe basicbasic ideaidea of of businessbusiness isis toto bebeengagedengaged oror busy'busy'.. ItIt representsrepresents aa situationsituation
ofof constantconstant associationassociation toto aa ideaidea mentallymentally
&& seriousserious physicalphysical efforteffort toto realizerealize thethe
samesame..
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General MeaningGeneral Meaning
Historically,Historically, thethe termterm businessbusiness referredreferred toto activitiesactivities oror interestsinterests.. ByBy
extensionextension thethe wordword becamebecame (as(as recentlyrecently asas thethe 1818thth century)century) synonymoussynonymouswithwith ""anan individualindividual commercialcommercial enterpriseenterprise"".. ItIt hashas alsoalso takentaken onon thethe moremoregeneralgeneral meaningmeaning ofof"a"a nexusnexus ofof commercialcommercial activities"activities"..
BusinessesBusinesses areare establishedestablished toto performperform economiceconomic activitiesactivities.. WithWith rarerareexceptionsexceptions (such(such asas cooperatives,cooperatives, corporatecorporate bodies,bodies, nonnon--profitprofitorganizationsorganizations andand institutionsinstitutions ofof government),government), theythey areare forfor--profitprofit venturesventures..Th
atTh
at is,is, oneone of of thet
he mainmain objectivesobjectives ofof t
het
he ownersowners andand operatorsoperators ofof t
het
hebusinessbusiness isis toto receivereceive aa financialfinancial returnreturn forfor theirtheir time,time, efforteffort andand capitalcapital..
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Legal Interpretation of BusinessLegal Interpretation of Business
AA corporationcorporation is a legal entity (distinct from ais a legal entity (distinct from anatural person) which often has similar rights innatural person) which often has similar rights inlaw to those of a person.law to those of a person.
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Legal Interpretation contLegal Interpretation cont
CorporateCorporate personhoodpersonhood isis aa termterm toto describedescribe lawlawthatthat allowsallows corporationscorporations toto havehave ""inalienableinalienable rightsrights""(sometimes(sometimes calledcalled constitutionalconstitutional rights)rights) justjust likelike(human)(human) personspersons..
TheThe choicechoice of of thethe wordword "person""person" inin "personhood""personhood"arisesarises fromfrom thethe wayway thethe 1414thth AmendmentAmendment toto thetheUnitedUnited StatesStates ConstitutionConstitution waswas wordedworded andand fromfromearlierearlier legallegal usageusage ofof thethe wordword personperson..
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Corporation & BusinessCorporation & Business
Benefits of forming a corporationBenefits of forming a corporation
Origin of corporationOrigin of corporation
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Corporation & Business cont...Corporation & Business cont...
Benefits of forming a corporationBenefits of forming a corporation
The most salient features of incorporation include:The most salient features of incorporation include:
((11)) LimitedLimited LiabilityLiability.. UnlikeUnlike inin aa partnership,partnership, stockholdersstockholders ofof aacorporationcorporation holdhold nono liabilityliability forfor thethe corporation'scorporation's debtsdebts andandobligationsobligations.. AsAs aa resultresult theirtheir potentialpotential losseslosses areare limitedlimited toto thetheamountamount whichwhich theythey paidpaid forfor thethe stockstock.. NotNot onlyonly doesdoes thisthis allowallow
businessesbusinesses toto engageengage inin riskyrisky enterprises,enterprises, butbut limitedlimited liabilityliabilityalsoalso formsforms thethe basisbasis forfor tradingtrading inin corporatecorporate stockstock.. WithoutWithout thethelimitationlimitation onon thethe amountamount thatthat anan investorinvestor cancan lose,lose, thethe timetime andandefforteffort requiredrequired toto determinedetermine whetherwhether thethe stockstock couldcould wipewipe thetheinvestorinvestor outout wouldwould renderrender thethe stockstock marketmarket veryvery illiquidilliquid (as(as oneonecancan observeobserve inin thethe veryvery illiquidilliquid marketmarket forfor partnershippartnership interests)interests)..
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Corporation & Business cont...Corporation & Business cont...
((22)) PerpetualPerpetual LifetimeLifetime.. TheThe assetsassets andand structurestructure ofofthethe corporationcorporation existexist beyondbeyond thethe lifetimelifetime ofof anyany ofof itsitsshareholders,shareholders, officersofficers oror directorsdirectors.. ThisThis allowsallows forfor
capitalcapital toto bebe stable,stable, andand thusthus investedinvested inin largerlarger andandlongerlonger--termterm projects,projects, thanthan ifif thethe corporatecorporate assetsassetswerewere subjectsub ject toto dissolutiondissolution andand distributiondistribution.. ThisThisfeaturefeature alsoalso hadhad greatgreat importanceimportance inin thetheMedievalMedieval period,period, whenwhen landland donateddonated toto thethe ChurchChurch (a(a
corporation)corporation) wouldwould notnot generategenerate thethe feudalfeudal feesfees thatthataa lordlord couldcould claimclaim uponupon aa landholder'slandholder's deathdeath..
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Corporation & Business cont...Corporation & Business cont...
Origin of corporationOrigin of corporation
EarlyEarly corporationscorporations ofof thethe commercialcommercialsort,sort, suchsuch asas thethe DutchDutch EastEast IndiaIndiaCompanyCompany formedformed underunder frameworksframeworks(set(set upup byby governmentsgovernments ofof states)states) toto
undertakeundertake taskstasks whichwhich appearedappeared tootooriskyrisky oror tootoo expensiveexpensive forfor individualsindividuals ororthethe governmentsgovernments toto embarkembark uponupon..
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Corporation & Business cont...Corporation & Business cont...
KennethKenneth Pomeranz,Pomeranz, anan economiceconomic historian,historian,
arguesargues thatthat thethe needneed toto performperform pseudopseudo--
governmentalgovernmental operationsoperations suchsuch asas thethe wagingwaging ofof
warwar accountsaccounts forfor thethe developmentdevelopment ofof thisthis
economiceconomic structurestructure inin EuropeEurope butbut notnot inin
ChinaChina oror inin thethe MiddleMiddle EastEast..
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QuotationsQuotations
"Business"Business isis inin itselfitself anan evilevil.."" -- SaintSaint AugustineAugustine
"Whoever"Whoever couldcould makemake twotwo earsears ofof corncorn oror twotwo
bladesblades ofof grassgrass toto growgrow uponupon aa spotspot ofof groundground
wherewhere onlyonly oneone grewgrew beforebefore wouldwould deservedeserve
betterbetter ofof mankindmankind andand dodo moremore essentialessential serviceservice
toto hishis countrycountry thanthan thethe wholewhole racerace ofof politicianspoliticians
putput togethertogether.."" --JonathanJonathan SwiftSwift
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Evolution of ManagementEvolution of Management
Anthropological DevelopmentAnt
hropological Development
Agricultural Growth& DevelopmentAgricultural Growth& Development
Industrial RevolutionIndustrial Revolution
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Anthropological DevelopmentAnthropological Development
Anthropology is the study ofAnthropology is the study ofhuman development.human development.
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Anthropological DevelopmentAnthropological Development
contcont
The approach tries to explore howThe approach tries to explore how
exactly the growth& developmentexactly the growth& developmentofhuman kind is associated withofhuman kind is associated with
evolution of Business &evolution of Business &
ManagementManagement..
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Anthropological DevelopmentAnthropological Development
contcont
Nomadic Life of early humansNomadic Life of early humans
Human SettlementHuman Settlement
Group & Family FormationGroup & Family Formation
From Hunting to AgricultureFrom Hunting to Agriculture
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Anthropological Development contAnthropological Development cont
From Hunting to AgricultureFrom Hunting to Agriculture
Choice of OccupationChoice of Occupation
According to requirements of the systemAccording to requirements of the system
Specialization at functional levelSpecialization at functional level
Assorted with need of utilitiesAssorted with need of utilities
Supported by a mechanism of Demand & SupplySupported by a mechanism of Demand & Supply
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Early Industrialization contEarly Industrialization cont
Surplus Labor in the Agricultural SectorSurplus Labor in the Agricultural Sector
Selects an OccupationSelects an Occupation (Profession)(Profession)
Develops Primitive EnterpriseDevelops Primitive Enterprise
OneP
ersonP
erforming All FunctionsOneP
ersonP
erforming All Functions(Cottage Industry)(Cottage Industry)
Supported By Increase In DemandSupported By Increase In Demand
(Due to Rise in Population & Consumption )(Due to Rise in Population & Consumption )
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Early Industrialization contEarly Industrialization cont
Supported By Increase In DemandSupported By Increase In Demand(Due to Rise in Population & Consumption )(Due to Rise in Population & Consumption )
Increase in SizeIncrease in Size
High Deployment ofPeople & Other RecoursesHigh Deployment ofPeople & Other Recourses
Division ofLabor orWorkDivision ofLabor orWork
Gives RiseGives Rise
Complex Organizational DesignComplex Organizational Design
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Consequential EffectConsequential Effect
To adequately arrange & adjust forTo adequately arrange & adjust for
Supplies to match growing demand, andSupplies to match growing demand, and
pace up supervision for variety of processpace up supervision for variety of process
& people, for the first time triggered of& people, for the first time triggered of
managerial expertise in business.managerial expertise in business.
Such expertise in business where knownSuch expertise in business where known
asas WISDOMWISDOM..
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The Industrial Revolutions InfluenceThe Industrial Revolutions Influence
On Management PracticesOn Management Practices
IndustrialIndustrial revolutionrevolution
MachineMachine powerpower beganbegan toto substitutesubstitute forforhumanhuman powerpower
LeadLead toto massmass productionproduction ofof economicaleconomical goodsgoods
ImprovedImproved andand lessless costlycostly transportationtransportation systemssystemsbecamebecame availableavailable
CreatedCreated largerlarger marketsmarkets forfor goodsgoods..
LargerLarger organizationsorganizations developeddeveloped toto serveserve largerlarger
marketsmarketsCreatedCreated thethe needneed for for formalizedformalized managementmanagement
practicespractices..