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F.B.O-I
B.B.A-1
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Growth: Now the last step of undefined ornatural objective is how to achieve growth anddevelopment. No business remains stagnant after
entering in to the market. So next objective is tofind the opportunities for the growth anddevelopment. To accept the opportunities andmarch towards the growth of the business. Thus
the behavior of every business is natural likehuman being first to seek for survival and aftersurviving to achieve growth along with stability.
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ECONOMIC OBJECTIVES
Profit: Business activities are done mainly forearning profit. A privately owned businessearns profit to maximize wealth or for the
growth According to Peter F. Drucker the problem of
any business is not the maximization of profitbut to earn or achieve profits to that extentthat it covers the risk of economic activityundertaken by the firm and finally avoid loss.
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Create Customers: Business activities mainlyconsist of transfer, sale or exchange of goods andservices to satisfy the needs of customers. Thus it
means that for the business to sustain it is verynecessary that these goods and services shouldbe bought by the people which is offered by thebusiness.
Thus creation of customers is one of theeconomic objectives for the existence of thebusiness.
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Customers Satisfaction: Only creation of thegroup or body of customers is not enough. Oncethe body customers are created it is veryessential to hold them towards our goods and
services. The satisfaction obtained from the goods and
services in terms of quantity, quality and priceshould be given at most important for holding the
customers towards our products. Along with itthe after sales service e.g. free repairing, freeservices, replacement up to certain period etc
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Maximum Utilization of Resources: Every business hasscarce resource, so it becomes important for everybusiness to check the use of resources and try to makebest and maximum utilization of it.
Resources should not remain unutilized and at thesame time there should not be shortage or scarcity ofrequired resource.
Thus by taking these measures the cost of product can
be maintained to the minimum possible level and alsothe resources available will be utilized at their best.
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Maximization of Wealth: As every person
faces the financial crisis and also face the
contingences at any stage of life. Business also
faces financial crisis and also has to face the
contingences during its life cycle. So one of
the objectives is to keep business
economically sound by retaining the part ofprofit in to the business.
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SOCIAL OBJECTIVES
Supply of desired goods: If the business fails
to maintain a continuous and sufficient supply
of unadulterated goods and articles of
standard quantity, it will be failing in fulfilling
its social objectives and is likely to incur the
rage of the society.
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Avoiding anti social practice: In the modern
concept of the business it is necessary that
business should work with the objective of
minimum profit or reasonable profit. It is
necessary that it does not charge the higher
profit from the customers and aim at
profiteering activity.
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Employment generation: Being the part of the
society its the business that has to create the
employment opportunities. Sometimes it
seems quite conflicting with another objective
of business i.e. to curb the cost or reduce the
cost.
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HUMAN OBJECTIVES
Justice to Employees: The first and basic
requirement for getting the best output from
the people is to give justice to them at all the
different levels especially in the form of fair
wages and other incentives. This part has to
be taken care because it directly affects the
efficiency and also the productivity of thebusiness.
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Human Resource Development: The core
objective of business is to innovate and create
customers and these objectives can be
fulfilled only when the employees are given
appropriate opportunities for the
development of their skills and abilities. The
working atmosphere should be provided suchthat they grow and develop as mature and
productive resource for the business.
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Job Satisfaction: Employees are always in
search of job satisfactory environment.
Business has to take care that it provides
interesting and challenging job to theemployees that will create interest of
employees towards their work, which will
finally create the pleasant workingatmosphere and satisfaction towards the work
undertaken by them.
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Participation in Management: The business
enterprise will get the best consideration form
their employees when they are given the
chance to participate in some of themanagement decisions. It doesnt mean that
participation in all the managerial decisions
but in some of the decisions where it feelsappropriate.
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Industry
Industry includes all types of human efforts
leading to generation of products to satisfy
human wants -L. Dicksee
Industry transforms the raw-materials
obtained from nature in to such form which
may satisfy human needs -R.L Stanton
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FEATURES OR CHARACTERISTICS OF
INDUSTRY
Featuresof
industry
Utility:
Employment
Opportunities:
Mass
Production:
Human and
Mechanical
Labour:
Economic
Activity:
Natural
Resources:
Conversion:
Economic
Development
Production ofVarious
Commodities:
Development
of Trade and
Commerce:
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Conversion: Industries basically convert the naturaland other resources which directly cannot satisfyhuman wants into products and goods which satisfythe human wants. Thus conversion of materials into
goods and services for the human satisfaction is thebasic feature of the industry.
Natural Resources: Natural resources are gift of god tomankind. But some of the natural resources can be
directly utilized by human beings e.g. air, but there aremany natural resources which human beings cannotuse directly e.g. crude oil, minerals, etc.
Features of an industry
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Economic Activity: The activity which is carried outwith the intention of earning profit is economicactivity. Thus industries also have the same intentionor concept behind carrying production and
manufacturing activities. Human and Mechanical Labour: Industries makes the
utilization of human and mechanical labour forproduction. For e.g. carpenter makes furniture,handicrafts, etc. Thus utilization of human labour for
production along with mechanical labour is one of thedistinct features of industry. For e.g. use of machines,cars, lifts etc.
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Mass Production: As the demand for the goodsand services are increasing it has become verynecessary that production process should begiven impetus. Industries help in bulk or mass
production which will help to meet the increasingdemand.
Employment Opportunities: Industry being oneof the important parts of the economy helps to
stabilize it by creating and providing employmentopportunities. and also too many other numberof people.
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Utility: Industry increases the utility of variousresources by changing their forms, e.g. furniturefrom woods, shoes from leather etc. Thus
industry increases the utility of various materials.Thus industries increase the form, time, andplace utility of the goods and services.
Development of Trade and Commerce: Industrial
development results into the development oftrade and commerce. Development of industry israpid development of trade and commerce
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Production of Various Commodities: Production ofvariety of commodities has been possible with the helpof industry, and they can be used by the consumers.These industries undertake research activities with the
help of it they innovate and improve the existingproducts
Economic Development: Industries give a boost to theeconomy. With establishment of new industries, there
is an increase in production, trade and commerce,development. There is reduction in unemployment sothere is an increase in national income.
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Commerce
Commerce
Trade Ancillary services
Internal Trade External Trade
Retail trade
Wholesaletrade
Export
ImportRe-export
Transportation
Warehousing
Insurance
Financing
Banking
Advertising
Agent
communication
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Definition of commerce
Commerce includes all those activities which
are connected with exchange of goods and
services -Palekar
Trade and its ancillary services mean
commerce. -Prof. Savarkar
Commerce means the process of distribution
of goods and services. -Prof. G.K. Buknole
COMMERCE = TRADE+ANCILLARY SERVICES
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Features of Commerce
Exchange: Trade is a precondition of commerce.Commerce starts with exchange of goods and services.This exchange should be continuous and regular.
Economic Activity: Commerce is an economic activity.
Commercial activities are carried out with idea ofgaining financial returns or profit,
Continuity of Services: Development of commercedepends upon trade, the various auxiliary services liketransportation, insurance, banking, means of
communication brokerage (agency) etc. Economicactivities will develop these services & remain regularand continuous.
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Increase in Utility: Industry increases the formutility of a product while commerce increases theplace and time utility of the product. Commercialactivities are required to reduce the obstacles
between producer and the consumers. Consumer-oriented: Various commercial senders
are carried out with the aim of satisfying theconsumers and the numerous needs of the
consumers. Thus trade and auxiliary servicesshould be according to the expectation of theconsumer's wishes
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Importance of Commerce
Exchange: Exchange becomes easy and speedy due tocommerce. Product of one country ofthe world can "reachthe other countries of the world through commercialactivities, commerce provides a boost to the economicdevelopment with the help of auxiliary services like
banking, insurance, warehousing, means ofcommunication, etc.
Ancillary Services: These Ancillary services make theexchange easy, fast and continuous. The economicdevelopment of a nation is made possible by the various
ancillary services of commerce. Development of Bankingand means of transportation in a country are the measuresof the country's development. In absence of ancillaryservices, the exchange would be less speedy and difficult.
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Time Utility: Warehousing facilities increase the
time utility of various products. Commercial
brokers solve the difficulties of traders.
Economic Development: All the nations of theworld are ready to, attain economic
development. Commerce helps the nations in
attaining economic progress. Importance ofcommerce is increasing day by day throughout
the world.
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Availability: The certainty of availability of the
various commodities depends upon the
auxiliary services. Human needs constantly
multiply. We satisfy our needs by exchange ofmoney, but little do we realize that how many
efforts were made to provide as the various
commodities.
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Trade
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Economic system
The term Economic System refers to an
organization consisting of certain institutions,
which are developed with a view to utilize
productive resources for the purpose ofsatisfying human wants.
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The economic system of any nation is essentially,man-made and influenced by the philosophy,ideals, desires and attitudes of its people and themethods they want to pursue to fulfill theirchosen ideals and goals.
The economic system helps human wants, suchas earning, spending and saving.
The economy of a country in terms ofconsumption, production and should be strong.
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Types of economic system
Capitalist Economic System of U.S.A & Japan,
Communist Economic System of China,
Yugoslavia, Poland and Cuba
Mixed Economic System of Britain, India,
France, Sweden and Holland.
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CAPITALIST ECONOMY (introduction)
Capitalism is an economic system in which individuals arerelatively free to determine how goods and services shallbe produced and allocated.
In this system capital is owned and invested by individualsand private-owned institutions to earn profit.
The most fundamental feature of capitalism is the right ofthe individuals to own tangible and intangible privateproperty. This right is expected to provide the incentive toinitiate and continue the economic activity. The system ismarked by little or no interference by the Government inbusiness run by private individuals or institutions.
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Definitions
Capitalism is that system of economic organization in
which free enterprise, competition and private
ownership of property generally prevails.Prof. R.T. Bye
Capitalism is a system of economic organization
featured by the private ownership and the use forprivate profit of the man-made and nature-made
capital. - William Loucks and Hoot
Capitalism is a system in which property is privately
owned and economic decisions are privately made. Ferguson & Kreps
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Features of capitalism
The Right of Private Property
Productive factors such as land, factories, machinery,mines, etc are under private ownership. The owners ofthese factors are free to use them in the manner they
like. However, the govt. may put some restrictions forthe benefit of the society.
Price Mechanism
It is regulating mechanism in capitalist society. Herethe forces of demand and supply in capitalist societybring equilibrium between different economicactivities.
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Freedom of Enterprise
Everybody can be engaged in any economic activity, he likes. He is free toset up any firm to produce goods. Thus there is full freedom as to choiceof work, occupation and enterprise. Everybody is free to take economicdecisions.
Freedom of consumers
People are free to spend their income as the like. Producers produce onlythose goods which consumers wish to buy so, consumers can have awide range of choice. We can say that economy is dictated by the wish andpreference of the consumer. He is free to choose his goods and services.
Profit Motive
People are forced or induced to work and produce for getting more andmore profits. It is the basic motivating force in a capitalist economy.
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Competition
Competition among sellers to sell their goods and amongbuyers to obtain goods to satisfy their wants.
Advertisements, discount, price cutting, etc. Thuscompetition is another main feature in product market orfactor market. They face it to excel.
Inequalities of Incomes
This economy creates the inequalities in the society as it
contains two major classes of laborer and capitalist. Widegap of income between the rich and the poor is createdand thus results in conflicts. Unequal distribution ofproperty is also observed in this economy.
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Merits
Economic Freedom: There is no interference in economic matters.Every individual is free to take the decisions regarding the economicactivities undertaken by them thus there is freedom in theeconomic field keeping in view the self interest of individuals.
Efficient Use of Resources: In a competitive market only thoseproducers can survive who can produce maximum with minimumcost and uses resources efficiently and economically. Thus thewastage of resources will be reduced and all this will give rise tobetter and efficient and maximum utilization of resources.
Flexibility and automatic equilibrium: This system can be changed
according to the needs and circumstances of the economy. It hasinbuilt flexibility. An automatic equilibrium is brought about by theoperation of price mechanism and market forces.
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Encourages development: It increases savings,investment and capital formation in the economy,encourages entrepreneurship and individualinitiative and provides ample opportunities for
technical progress. Diversification and increase in production: Every
producer tries to earn as much as possible byincreasing his output. To earn maximum profit,
every producer tries to attract consumers bybringing newer commodities in the market.
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Demerits of capitalism
Erosion of human values: in a capitalisticeconomy wealth enjoys the prestige in thesociety. Hence, to acquire more wealth, peoplegenerally disregard the human and moral values.
Economic and social inequalities: In capitalisticsystem owners of the means of productions canearn more as compared to those who do notpossess much means of productions. This brings
wide inequalities in the distribution of incomeand wealth. Law of inheritance makesinequalities permanent.
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Too much wastage : There is a large scalewastage of resources due to unnecessarycompetition. A commodity is produced by anumber of producers and every one tries to sellas much as possible to earn the maximumcreating the problem of over-production.
Problem of unemployment: This system creates
problem of unemployment also. Since laborersare not paid fully their purchasing powerbecomes low.
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SOCIALIST ECONOMY
Socialism is the philosophy of the Government
and economic system based on the belief in
the worth of each individual. The basic
philosophy of socialism is the provision ofcertain goods and services to all individuals in
the nation.
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Socialist economic system
A socialist economy is one in which materialinstruments of production are owned by a publicauthority and operated for the direct service of
those whom the authority represents.Prof.Pigou
The only essential feature of socialism is thatinstruments of production are not owned byindividuals and that they should not be organized
for the purpose of obtaining private profit. -Mr.& Mrs. Webb
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Feature of socialism
Collective ownership Collective ownership of all means of production except small farms, workshops
and trading firms which may remain in private hands. Profit motive and selfinterest are not driving force. Use of resources for socio-economic objectives
Central authority
-Central authority to set and accomplish socio-economic goals- so called CentralPlanned Economy. Major economic decision such as what to produce, when toproduce, how to produce etc. are taken by the central authority
Limited range of choice
-Consumers may not enjoy wide range of choice due to selective production.However, with that range an individual is free to choose what he likes most.
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Equality of income-No competitive market- no interference of private capital
-Govt. will be aware of distribution of income- so, will planas per requirement- Balanced growth
Limited economic freedom
-Public ownership and central economic planning
- Freedom of consumption is limited - Freedom ofoccupation is also limited
-Consumers may not enjoy a variety of choice due toselective production
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Absence of profit motive
-Resources are owned by the state and areutilized for the benefit of the society as a whole
Relatively equal distribution of income
Perfect equality of income is not possible.Private property & profit motive is absent. So, thevery important source of inequality is removed.
Wage differences are reduced. Equal opportunitiesof education, training and skill formation are madeavailable to individual
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Merits
Reduction in economic and social inequalities:All people get income for their labour as salary orwages. Wage structure is designed so that thereare no wide inequalities in it.
Rapid economic development: It is said throughplanning system socialistic economy providesbetter opportunity for rapid development.
Proper allocation of resources: The resources in
different lines of production are allocated by thecentral authority keeping in view public interestsare the best possible use of all.
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End of exploitation: Since socialistic economy
does not have social difference so there is no
exploitation. Everybody gets his due share in
the national product.
End of unemployment: Generally socialist
economy provides the job to each and every
members of the society.
D i f S i li
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Demerits of Socialism
Centralization of economic and political powersin state: In socialistic economy state becomespowerful. It commands not only potential powerbut also the economic power.
Lack of incentives and initiatives: One of themost important drawback of the socialisticsystem is the lack of incentives and initiatives in
the country. Since, there is no right to haveproperty, people are not motivated for work andsavings.
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Reduction of efficiency and production: In
this system all economic affairs are managed
by government servants . These salaried
persons are more interested in their salariesthan the productivity.
MIXED ECONOMY
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MIXED ECONOMY
Mixed economy is the outcome of thecompromise between two oppositeideologies- Capitalism & Socialism i.e.
Individualism & Collectivism It tries to achieve the advantages of both the
systems and to remove the defects of both thesystems.
It allows both private sectors and publicsectors.
FEATURES
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FEATURES
Co-Existence of Both- Private and Public Enterprise
A) Private Sector:
Production and distribution are managed and controlled by private individuals andgroups.
Base is self- interest and profit motive
System of private property exists
Govt. control is direct or indirect by policy instruments
B) Public Sector:
Industries are not primarily profit oriented- but set up by the state for the welfareof the society/community.
Heavy and basic industries- Ex: Iron-steel, production of defense equipments
(atomic energy), transport and communication
C) Combined Sector:
Both the govt. and private enterprise join hands to produce a commodity.
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Planned Economy:
Govt. has a clear and definite economic plan
to bring co-operation and co-ordination
between the two sectors.
Public sector- direct planning; Private sector-
regulations and guidance through indirect
measures like economic policy, EXIM policy,
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Price system:
Public sector- economic decision relating toinvestment, production, employment, etc. aretaken by planning commission.
Private sector- by entrepreneurs with theobjective of profit but price system is not allowedto function freely.
The govt. regulates price system to protect social
interest. Ex: In India, price of cement, iron-steel,scooters, papers, agricultural products, sugar,wheat, kerosene-are controlled.
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Balanced regional development:
Public sector enterprises may be located in
the backward regions so as to ensure its
development.
Merits of Mixed Economy
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Merits of Mixed Economy
It is a system in which both the system work together.
A rapid economic growth takes placed in this system ofeconomy.
Both private sector and public sector work for thewelfare of people.
In such a system both the sectors have a goodcompetition in the process of increasing production.
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Demerits of Mixed Economy
It is always short-lived because the process of socializationis limited.
There is lack of freedom to private sector. Government triesto put control over the functioning of free enterprise bymeans of license and other checks.
The compromise of the system theoretically seems correctbut in practice it does not prove to be a healthy one.
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Profession
Profession is the systematized body of knowledge,which is studied in specialized institutions andpracticed in the real situation of life.- L stanton
Profession is an occupation for which specializedknowledge, skills and training are required and the useof these skills is not meant for self-satisfaction butthese are used for larger interest of the society and the
success of these skills is measured not in terms ofmoney alone.
-L.M.Prasad
Characteristics of Profession
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Characteristics of Profession
Service to Society:
Identified Area:
Association:
Own applied knowledge:
Social Accountability:
Special Training:
Public Trust:
Life time Commitment:
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EMPLOYMENT
When the person works under an agreement
or rules or contract of service and performs
the work allotted to him by the employer
(who gives job or service) and will be paid forit at regular interval is called employment.
Characteristics of Employment
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Characteristics of Employment
Work:
Qualification:
Investment:
Risk Factor:
Return:
Responsibility:
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VOCATION
Thus since than vocation means the use of
inbuilt talent and skill used by the individuals
for earning their livelihood is the last
extension to the meaning of vocation.