Business Environment

UNIT – 1Contents: Concept, Nature and Scope of

Business Business Organization Industry and Types Economy-Industry-Company

Interface Relevant Environment.

Concept of Business Business may be defined as an economic activity involving

the purchase, production and sale of goods and services with a motive of earning profits by satisfying human needs in society.

Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a profit

1884: Established by Dr S. K. Burman in Calcutta. In 1896, first production unit set up at Garia, Calcutta

Business may be defined as an economic activity involving

the purchase, production and sale of goods and services with a motive of earning

profits by satisfying human needs in society.

An economic activity

Production or procurement of

goods and services

Sale or exchange of goods and services for the satisfaction

of human needs

Dealings in goods and services on a

regular basisProfit earning

Uncertainty of return

Element of risk

Nature of Business

It’s an organized efforts of enterprises to supply consumers with goods & services for a profit

Purpose of business goes beyond earning profit

Business may vary in size

Scope of Business

The Scope of business is indeed vast…..

Characteristics of Business

Characteristics of

Business

Change

Large Size

Diversification

GlobalizationTechnology

Information

Competition

Government Control

BRITANNIA(1892)1892: A biscuit-making operation begins in a small house in Calcutta with an investment of Rs 295

1939-45: Britannia supplies biscuits to soldiers during World War II

1983: Sales cross Rs 100 crore

1993: Nusli Wadia of Bombay Dyeing takes control from Britannia Chairman Rajan Pillai, with the help of French food giant Danone

2009: Wadia buys out Danone and emerges the largest shareholder

Business Objectives

Vision: Vision is a broad & hazy explanation of why the firm exists & where it is trying to march ahead. Vision is beacon of light.

Business Objectives

Mission: It seeks to give a definite meaning to vision. If vision seeks to answer the question “where do we go from here” , mission answers “what business we are in right now?

Objectives

Objectives render mission statements more concrete. It makes mission statements more clear & specific. Represents the operational side of an organization.

Economic objectives

Improving

productivity

Earning

profits

Mar

ket

stan

ding

innovation

Objectives of business

It refers to the position of an

enterprise in relation to its competitors.

Every business must earn a reasonable

profit to survive and grow.

Every business enterprise must aim at greater productivity to ensure continuous survival and growth.

Business requires physical resources and financial resources to produce goods and services.

Physical & financial resources

It means introduction of new ideas or methods for producing goods and services.

Avoidance of anti-social

and unfair trade practices

Supply of desi

red

quality of p

roducts

Com

mun

ity

serv

ice G

eneration of

employm

ent

Welfare of employees

Large business units should undertake

community services like setting up

charitable dispensaries,

schools etc.

Business should produce and sell

products of proper quality to satisfy

custmer expectations

Business should generate employment opportunities to the disadvantaged sections of the society(e.g. physically handicapped people).

Social objectives

A businessman should avoid hoarding, black marketing, over charging, misleading advertisements etc.

Business should provide good working conditions and pay satisfactory wages/salaries to its employees.

Industry and Types

industry

primary

These industries are

connected with:The

extraction and production of

natural

resources

Reproduction and

development of

living organisms .

Secondary industry

These industries are

concerned with :

using the materials

extracted at the primary

stage to produce goods

for final consumption of for further processing by

other industrial

units.

Tertiary industry

These industries provide service

facilities.

Primary industry

Extractive

These industries extract or draw out

various products from natural resources.

Farming

Mining

Fishing

Genetic

Genetic means heredity or parentage.

these industries involve breeding or

reproduction of plants and animals.

Cattle

breeding farm

s

Poultry

farms

pisciculture

Secondary industry

Manufacturing industry

These industries convert raw materials or semi-finished products into

finished products.

Analytical industry:

basic

raw material

is analysed

or separate

d into

a number of

products

.

An oil refinery separates crude oil into kerosene, diesel,

petrol.

Synthetical industry: two

or mor

e materials are combined or mixe

d together to

manufacture

a new product.

Cement, soaps, plastics, paints, fertilizers etc.

Processing industry:

involves successive

stages for

manufacturin

g finished products

.

Sugar, paper

Assemblin

g industry: various components or

parts

are brough

t together to produce a finished product

TV, car, computer, watches etc.

Construction industries

These industries are engaged in construction of buildings, bridges, roads, dams, canals

etc using the products of extractive and manufacturing

industries like bricks, sand, cement, Iron and steel wires

etc.

commerce

trade

Trade refers to buying and selling of goods and services with the objective of earning

profit.

Auxiliaries to trade

Activities which are meant for assisting trade are known as auxiliaries to

trade.

Types of trade

Internal trade: which takes place within a country

Wholesale trade

Wholesale trade refers to buying and selling of goods and services in large quantities for the

purpose of resale or intermediate use.

Retail trade

Retail trade refers to buying of goods and services in relatively small quantities; and

selling them to ultimate consumers.

External trade: which takes place between two or more

countries.

Import trade

If goods are purchased from

another country, it is called import trade.

Export trade

If goods and services are sold to other countries, it

is called export trade.

Entrepot trade

Where goods are imported for export to other countries, it is called entrepot

trade.

Auxiliaries to tradeTransport and communication• Transport(road,rail or

coastal) facilitates movement of –raw materials to the place of production,and –the finished goods from factories to the place of consumption

• Communication facilities like postal services and telephone facilities enable businessmen to exchange information with one another.

Banking and finance• Business needs funds

for acquiring assets, purchasing raw materials and meeting day-to-day expenses.

• Necessary funds can be obtained by businessmen from commercial banks.

• Thus banking helps business activities overcome the problem of finance.

Warehousing• It refers to the

holding and preservation of goods until they are finally consumed.

• It helps business firms to overcome the problem of storage of goods and facilitates the availability of goods when needed.

• Warehousing creates time utility.

Advertising• Advertising brings

goods and services to the knowledge of prospective buyers.

• With the help of such knowledge, consumers can obtain better value for their money

• Thus, advertising helps to promote the sale of products like electronic goods, automobiles, soaps etc by providing information about them.

CHARACTERISTICS OF CONTEMPORAY BUSINESS

Business in transitionBigger role for governmentCompetitionOpportunitiesManagement as a scienceGlobalizationWaning trust

CHALLENGES

AZIM PREMJI ON CHALLENGES

First lesson is that to be successful you have to be challenged by something, & then have the resolve to deal with it

Challenges, determination & passion are what propel a person.

You have to go out seeking challenges because challenges may not come seeking you