Unit 01 Introduction to Business PDF

UNIT 01 Introduction to Business & Business Environment Concept of Business Evolution of Business Changes in production due to industrial revolution Definition of Business...

UNIT 01 Introduction to Business & Business Environment Concept of Business Evolution of Business Changes in production due to industrial revolution Definition of Business  Small scale businesses converted to large scale  New machinery and technology has been introduced Any economic activity which fulfills human needs and wants is  Output quality and quantity increased a business Changes in commerce due to industrial revolution  New banks established  Improvements in communication and transportation  Usage of money became popular __________________________________________________ Changes in society due to industrial revolution  Increase in the living standard of people  Increase in the environmental pollution  Development of new cities Importance of goals and objectives Division of Labour: Separation of a work in to number of tasks, with each task performed by a separate person or group of  Provides a clear direction persons  Motivation  Ability to measure progress Advatages Disadvantages  Provides clear action target and decision making -Generates personal specialization -Workers may suffer from boredom Goals Objectives -Individual specialization could -Absense of one worker could increase the efficieny level of hault the entire production -Long Term -Short Term workers process -General -Specific - Increasing the productivity of the -There is no personal growth -Broad -Narrow business due to increase in related to the employees job -Bigger Picture -Minor Chunks efficiency careers Mission Statement – A formal written statements of the purpose of a company or organization  Commerce Business as a Process of Inputs & Outputs Production means process of creating goods and services to satisfy human needs and wants. Trade Auxiliary Services Production Process  Converting inputs (Raw materials) to Commerce: Process of distributing finished product to final outputs (Finished goods) consumer efficiently and effectively Inputs Process Output Trade: Process of exchanging goods and services among two Land -Research and development -Product or more parties for a monetary concern Labour -Human resource management Auxiliary services: Services provided to increase efficiency of Capital -Production Enterprise -Marketing trading activities Ex: Banking, Insurance, Communication Information -Finance E-business: Doing all business activities electronically Time -Administration Knowledge  E-commerce, E-communication, E-banking, E-money,  Resources could be classified based on 7m’s: E-retail, E-marketing Men, Money, Machines, Methods, Minutes, Materials and Media E-commerce: Buying and selling goods and services through  Management classification is based on: internet Physical resources, Human, Finance, Information  Business to Business (B to B)  Business to Customer (B to C)  Customer to Customer (C to C)  Business to Government (B to G) New Trends in Business -Globalization -Business process outsourcing -Downsizing -Emergence of electronic businesses -Technological -Powerful consumers and consumer Goods Services advances protection -Tangible -Intangible -High competition -Use of electronic money -Homogenous -Variable Classification of business -Separable -Inseparable Nature of Production Production Sector -Can be stored -Cannot be stored (Perishable) Primary Agriculture  Agriculture  Farming Stakeholders  Livestock  Livestock  Forestry  Forestry The different parties who are interested in a business  Fishing  Fishing organization are considered as stakeholders  Mining & Quarrying Secondary Industry Internal – Stakeholders within the business organization  Manufacturing  Mining & Quarrying  Construction  Manufacturing External – Stakeholders outside the business organization  Constructing Stakeholder Reason for interest  Electricity, Gas & Water Owner -To obtain fair return on investment Tertiary Service -To know the growth of business  Electricity, Gas & Water  Transportation  Transportation  Communication Manager -To maximize profit of business -To know successfulness of decisions  Communication  Banking  Banking  Other services Employees -To obtain fair salary  Other -To get promotions  Based on Ownership  Private & Public Customers -To obtain quality products -Obtain products at reasonable price  Based on Objective  Profit & Not for Profit Suppliers -To receive continuous orders  Based on Scale  Small, Medium & Large -To collect money on time Government -To collect taxes on time -To measure economic development Shareholder concept  Satisfying need of shareholder and External Environment maximizing shareholders values at the expense of other Task Environment – Outside the business but represents a stakeholders. specific group Stakeholder concept  Meeting needs of wide range of 1. Customers  Individuals who purchase products stakeholders 2. Suppliers  Individuals who supply raw materials Business Environment – Anything which surrounds and affects 3. Competitors  Businesses that offer same product the business organization 4. Producers of substitute goods  Businesses that offer alternative products Benefits of studying about the Business Environment 5. Intermediaries  All the third party  Can identify the strengths 6. Investors  Potential individuals who will be willing to Internal Environment invest into the business  Can identify the weaknesses  Can identify the opportunities External Environment  Can identify the threats Internal Environment External Environment -Within business -Outside the business organization organization Micro environment = Internal environment + Task environment -Controllable environment -Uncontrollable environment Macro Environment – The bigger force that can influence the -Can identify strengths and -Can identify opportunities & business in a positive manner (opportunities) or in a negative weaknesses threats manner (threats) Internal Environment – Environment within the business 1. Economic Environment 1. Owner  Party who contribute resources to business 2. Manager  Formulate plan & takes decision for business -Inflation -Living cost -Per capita income 3. Employees  Engage in work related to plans & decisions -Savings -Taxes -Level of employment 4. Organizational culture  beliefs, values, norms, habits 2. Political Environment 5. Organizational structure  way in which functions, Political stability, political groups, political structure resources and authority of business is distributed 3. Legal Environment – Rules & Regulations 6. Resources  Inputs used in production 4. Technological Environment 5. Demographic Environment – Related to population Population growth rate, size of population, gender ratio, age distribution, dependency ratio 6. Natural Environment Climate & weather, Natural disasters, resource scarcity 7. Social and cultural environment Cultures, customs, attitudes, religion, beliefs, values 8. Global Environment International trade, foreign investment, trade agreement