Intr.bus Chap 1

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WELCOME

INTRODUCTION TO BUSINESS

Summer Semester 2009-10


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What is BUSINESS?

A profit-seeking activity that provides

goods and services that satisfy

consumer needs.

It is the commercial activity

undertaken by organizations which

produce and supply goods and

services.

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Why to study BUSINESS?

We are involved in some kind of business

transaction in our day-to-day life. It is

necessary to know what business is.

To know how to run a business so that one can

become a business man.

To know the job opportunities available in

various fields like Accounting, Marketing,

Finance, Economics, and Human Resource

Management.

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What is the role ofBUSINESS?

To Society/People:

provides Jobs

Housing, clothing, food,

transportation, communication, health care

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To Economy/Country: money/tax collected by

the government from business operations is

used for

building roads,

schools, colleges

parks, research centers etc.

This helps to develop the economy reflected in

standards of living and quality of life of people.

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contd.. Roleofbusiness


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Few important terms orconcepts

1. Profit: Money left over after all the

expenses deducted from revenue

generated by selling goods andservices. Price-Cost = Profit.

2. Notforprofitorganizations: Firms

whose primary objective is not profit

Ex: schools, colleges, hospitals, etc.

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Contd..few important terms orconcepts

3. Labor-intensive business: Business in

which labor costs are more than capital

costs. Eg: Shipping Business

4. Capital-intensive business: Business

which requires large investment in capital

assets. Eg: Airlines, telecommunication

companies and automobile manufacturing

companies

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ClassificationofBusinesses

Goods-producing business: producetangible goods by engaging in activities

such as manufacturing, mining and

agriculture. Ex. car, Pen, Paper, Clothes,

fruits, etc.

Service-providing business: produce

intangible products. These include business

that provides services like utilities,

insurance, transportation, health care, etc.8


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Types ofBusinesses

1. Local business: Business carried on a

small scale within the boundaries of the

city or the state. This business does nothave branches anywhere else.

2. National business: Business carried out

at national level within the boundaries ofa country. It does not have any branches

outside the country.

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Contd..Types ofBusinesses

3. International business: Business

carried out outside national boundaries.

4. Multinational Corporation (MNC):

These organizations have their own

headquarters in one country but carries

out production and distribution activities ina number of countries.

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Features ofBusinesses

1.1. NameName -- gives an identity.gives an identity.

2.2. Physical assets.Physical assets.

3.3. An objective to achieve.An objective to achieve.

4.4. People.People.

5.5. Organization structure.Organization structure.

6.6. Communication system.Communication system.

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Resources ofBusinesses

1.1. Natural resourcesNatural resources (land, water,(land, water,

minerals etc.)minerals etc.)

2.2. Human resources/Labour/ PeopleHuman resources/Labour/ People

3.3. CapitalCapital(Money, machines,etc.)(Money, machines,etc.)

4.4. EntrepreneursEntrepreneurs -- OrganizationOrganization

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What is Organization? (Definition)

An organization is a group of people

working together for a common

purpose.

Examples are: Hospitals, schools,

Colleges, libraries, etc.

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Types ofOrganizations

1. Public sector organization: They are

owned and controlled by government.

They provide services to the public.

Profit is not the aim or objective of

these organizations.

2. Private Sector organization: They are

owned and controlled by private persons.

Their aim is t make Profit.

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Characteristics ofOrganization?

1. Objective: All types of organizations exist

to attain certain objectives. Business

organizations have one or more of the

following objectives:

Profit

To gain more market share

To provide service to public (for Public

sector organizations)

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2. Exchange of goods and services: A

business undertaking deals in exchange of

goods and services.

3. Organization structure: Every organization

must have structure which defines the

relationship among the members of the

organization

4. Use of resources: Every business must

carefully use resources.

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Contd.. Characteristics ofBusiness organisations


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ImportanceofBusiness organization

1. Product Growth: Help to increase in thegrowth of goods and services.

2. Efficient Use of resources : Organizationhelps in the efficient use of resources and

thus reduces cost of production of goods.3. Technological Improvements: A good

organization helps for improvement oftechnology.

4. Creative Thinking: Organizations bringmore creativity and innovation throughdifferent products and services.

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Contd..ImportanceofBusiness organization

5. Use of Skilled employees : Organisationshelp to improve the skills of people.

6. Quick Decisions: Organisations make quickdecisions.

7. Fixing of Responsibility: Organisations fixresponsibilities in order to complete thework.

8. Feed Back: Organisations collectinformation to know any what is happeningwithin and outside the organisation.

9. Minimising Cost: Organizations work forcost minimisation which is benefit for thecustomer.

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Intr.bus Chap 1