Chapter 1: Nature And Purpose Of Business (Business Studies PDF)

Business Studies Mind Map CHAPTER-1 NATURE AND PURPOSE OF BUSINESS...

Business Studies Mind Map CHAPTER-1 NATURE AND PURPOSE OF BUSINESS 12+21+ 81=12m I) Industry/Industries-Concerned with production & Business refers to those activities, which are processing of goods & material. connected with the production or purchase and Business refers to an occupation in which people regularly sale of goods or supply of services with the engage in activities related to purchase, production and/or A) Primary Industries – Production of Natural sale of goods and services with a view to earning profits. Meaning Resources. main object of earning profit. i) Extractive Industries – Raw material/ E.x.-Farming, E.x. Businessman Mining, Harvesting, Hunting, fishing. Lewis H. Haney - “Business may be defining as human ii) Genetic Industries -breeding plants & Animal/ Profession involves those activities, which activity directed towards producing or acquiring wealth E.x.- Cattle breeding, poultry farms, fish hatchery. require special knowledge and skills to be (possession/money) through buying & selling of goods.” applied by individual their occupation. Those B) Secondary Industry- extracted at the primary state. engaged in professions are known as E.x.- Mining-to- iron- to- steel (making finish products) Professionals. i) Manufacturing Industries – producing goods E.x.- Doctor, Lawyer, Engineer, C.A., C.S. etc. An Economic Activity through processing of raw materials Production or Procurement of Goods and Services Features Sale or Exchange of Goods and Services 1) Analytical Industry – Oil Refinery Dealings in Goods and Services on a Regular Basis Employment refers to the occupation in 2) Synthetical Industry – Cement which people work for others and get Profit Earning 3) Processing Industry – Sugar & Papers remunerated in return. Those are employed by Uncertainty of Return others are known as Employees. Element of Risk 4) Assembling Industry – Assemble car, TV. Business E.x. Banker, Agent, Manager, Clerk, Peon etc. ii) Construction Industries- Buildings, Dams, Bridges  Market Standing  Innovation C) Tertiary Industry –Support services to Primary &  Productivity Objective Secondary Industry  Physical and Financial Resources  Earning Profit II) Commerce - Provides the necessary link between producers and consumers. 1. Nature And  Manager Performance and Development  Worker Performance and Attitude A) Trade – Buying & Selling of Goods & Services. Purpose of Business  Social Responsibility a) Internal/Home/Domestic Trade -Buying & Selling Goods & Services within the country. Business Risks’ refers to the possibility of i) Wholesale – Bulk in Orders & selling to Retailers Meaning inadequate profits or even losses due to ii) Retail – Large Quantities and selling small Qnts. uncertainties or unexpected events. b) External/ Foreign Trade- Buying & Selling Goods & Services outside the country Starting a Business Basic Factors ❖ Business Risks arise due to Uncertainties i) Import – purchase from another the country. ▪ Selection of Line Business ❖ Risk is an Essential Part of Every Business Nature ii) Export – Sale to another the country. ▪ Size of the Firm ❖ Degree of Risk Depends Mainly Upon the ii) Entrepot - imported for export to other countries ▪ Choice of Form of Ownership Nature and Size of Business ▪ Location of Business Enterprise ❖ Profit is the Reward for Risk Taking B) Auxiliaries to Trade - for assisting trade ▪ Financing the Proposition a) Transport and Communication ▪ Physical Facilities b) Banking and Finance ▪ Plant Layout Natural Causes – heavy rain, flood, earthquake Causes c) Insurance ▪ Competent & Committed Workforce Human Causes -Dishonesty, strikes, inefficiency d) Warehousing ▪ Tax Planning Economic Causes – Demand of Goods, Prices e) Advertising ▪ Launching the Enterprise Other Causes -Political, Exchange rates Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 1  Business Studies Mind Map CHAPTER-2 FORMS OF BUSINESS ORGANISATIONS 12+21+ 41+81=16m Features of the Forms Write 2 Sole Proprietorship refers to a form of The word co-operative means working together Partnership- Section 4 of the Indian Partnership Merits & Act,1932 defines- “ Partnership as the relation business organisation which is owned, and with others for a common purpose. the Demerits between persons who have agreed to share the managed and controlled by an individual who Co-operative Societies Act 1912. At least 10 profit of the business carried on by all or any one of is the receiving all profits and bearer (carry) of Members needed. them acting for all.” Min. 2 and Max. 50 Partners all risks.” Types of Co-operative Societies Types of Partners Merits ▪ Consumers Co-op ▪ Marketing Co-op Active Partner Sleeping/Dormant Partner Ease of Formation and Closure ▪ Farmer’s Co-op ▪ Credit Co-op Secret Partner Nominal Partner Quick Decision Making Partner by Estoppel Merits Direct Incentives (Profit Receiver) Co-operative Societies Sole Proprietorship ► Ease of Formation Control Types of Partnerships ► Limited Liability Sense of Accomplishment I) Classification on the basis of Duration- ► Equality in Voting Status i) Partnership at Will ii) Particular Partnership Demerits ► Stable Existence II) Classification on the basis of Liability-  Limited Resources ► Support from Government i) General Partnership ii) Limited Partnership  Unlimited Liability Demerits Factors Influencing Merits  Limited life of a Business Concern the Choice of Form of ▪ Limited Resources ▪ Ease of Formation and Closure  Limited Managerial Ability Business ▪ Inefficiency in Management ▪ Balanced Decision Making  Limited Capital & Technology Organisation ▪ Lack of Secrecy ▪ More Funds o Cost and Ease in ▪ Government Control ▪ Sharing of Risks Setting Up the ▪ Secrecy 2. Forms of Business Organisation o Liability Demerits Organisation o Continuity  Unlimited Liability o Management Ability Partnership A company is an association of persons formed  Limited Resources for carrying out business activities and has a legal o Capital Considerations  Possibility of Conflicts The business is controlled by the head of the status independent of its members. o Degree of Control  Lack of Continuity family who is the eldest member and is called o Nature of Business  Lack of Public Confidence “Karta.” Min. 2 Members required. Types of Companies All members have equal ownership right over A) Public Company- Min. 7 & Max. Unlimited Partnership Deed the property of an ancestor and they are known B) Private Company- Min. 2 & Max. 200 The written agreement which specifies the terms as Co-parceners. Hindu Succession Act, 1956. Merits Joint Stock Companies and conditions that govern the partnership is called the “Partnership Deed.” Merits ✓ Limited Liability Formation ✓ Transfer of Interest Contents of Partnership Deed Hindu Joint Family Effective Control ✓ Perpetual Existence  Name of firm  Nature of business and location of business Continuity ✓ Scope for Expansion  Duration of business Limited Liability of Members ✓ Professional Management  Investment made by each partner (capital) Increased Loyalty And Co-operation  Distribution of profits and losses Demerits  Duties and obligations of the partners Demerits  Complexity in Formation  Interest on capital and interest on drawings Limited Resources  Lack of Secrecy  Method of solving disputes Unlimited Liability of Karta  Impersonal Work Environment Dominance of Karta  Numerous Regulations Limited Managerial Skills  Delay in Decision Making Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 2 Business Studies Mind Map CHAPTER-3 PUBLIC, PRIVATE AND GLOBAL ENTREPRISE 12+21 41=8m These enterprises are established as departments Changing Role of Public Sector Public Sector Enterprise - The of the ministry and are considered part or an public sector (public enterprises) ⬧ Development of Infrastructure extension of the ministry is/are called consists of various organisations owned ⬧ Regional Balance ‘Departmental Undertakings.’ and managed by the Government. ⬧ Economies of Scale E.x.- Railways, Post and Telegraph Department E.x.- The Indian Railways, Nationalised ⬧ Check Over Concentration of etc. Banks, the Posts and Telegraphs, IOCL, Economic Power Features ONGC etc. ⬧ Import Substitution ⬧ Finance ⬧ Accounting and Audit Private Sector ⬧ Appointment of Employees Departmental Undertaking Sole Proprietorship ⬧ Formation Partnership ⬧ Minister Responsibility 3. Public, Private and Joint Hindu Business Merits ✓ Complete Government Control Global Enterprise Joint Stock Companies Multinational Corporations ✓ Fair Practices ✓ Revenue Statutory Corporations are public enterprises ✓ Suitable for National Security brought into existence by a Special Act of the ✓ Strict Audit Control Parliament.” A Government Company is a company registered Demerits E.x. LIC of India, MRTP Act, IT Commission etc. under The Companies Act, 2013 and in which not  Inflexibility of Operation less than 51 per cent of the paid-up capital is held Features  Delay in Decisions by Government. (Central & State government) Corporate Body  Red Tapism State-owned Corporations E.x.- Bharat Highway Electronic Limited (BHEL), Statutory Corporations  Bureaucracy Employee Autonomy: State Bank of India (SBI). Bharat Sanchar  Government Interference Financial Autonomy Nigam Ltd (BSNL) etc. Accountable to the Legislature Features Merits  Separate Legal Entity Government Company Global Enterprise or Multi-National  Finance  Initiative & Flexibility Corporations are huge industrial organisations  Management  Administrative Autonomy which extend their industrial and marketing  Accounting and Audit Procedures  Quick Decisions operations through a network of their in several  Professional Management Merits countries E.x.- Sony, Samsung, Pepsi, Apple brands etc  Easy to Raise Capital ❖ Easy Formation Global Enterprises Demerits ❖ Operational Autonomy Features ❖ Independent Status Huge Capital Resources o Autonomy only on Paper ❖ Prevents Unhealthy Business Practices Foreign Collaboration o Lack of Initiative Advanced Technology o Rigid Structure Demerits Product Innovation o Conflict of Interests  Freedom only in name Marketing Strategies  Lack of Accountabilit Expansion of Market Territory o Suitability  Defeats the main Purpose Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 3 Business Studies Mind Map CHAPTER-4 BUSINESS SERVICES 12+41+ 81=14m Banking & E-banking Intangibility Insurance- Inconsistency ▪ Life Insurance , ▪ General Insurance Inseparability Services are all those economic activities ▪ Fire Insurance, ▪ Marine Insurance Less Inventory that are intangible and imply an interaction Communication Services Involvement to be realised between the service provider ▪ Post Services ▪ Telecom Services and the consumer.” Transportation  Personal Services – are those services Warehousing which are experienced differently by Types of Services different customers/ clients. E.x-Doctor, Lawyers Insurance – Insurance is a contract or agreement under  Social Services- are those services that are generally provided voluntarily 4. Business which one party agrees in return for a E.x- NGOs etc. Services consideration to pay an agreed amount of money to another party to make a loss,  Business Services- are those services which are used by business enterprises. damage or injury to something of value in E.x.-Banking & Insurance etc. which the insured has a pecuniary interest Communication Services- as a result of some uncertain event. Communication Services are helpful to Banking means accepting, for the purpose the business for establishing links with Functions of Insurance of lending and investment of deposits of Warehousing is a form of  Providing Certainty business services in which the outside world viz., suppliers, money from the public, repayable on customers, competitors etc.”  Protection demand or otherwise and withdrawable by warehouse act as a storage Communication Types  Risk Sharing cheques, draft, order or otherwise. service provider and a logistical a) Postal Services  Assist in Capital Formation service provider. Financial Facilities Insurance Type of Banks Principles of Insurance Warehousing Services Central Bank – RBI. Types of Warehouses Mail Facilities ✓ Utmost Good Faith Commercial Banks- SBI, PNB, IOB. ✓ Private Warehouses b) Telecom Services- Types ✓ Insurable Interest Co-operative Banks- NBARD ✓ Public Warehouses Cellular Mobile Services ✓ Indemnity ✓ Bonded Warehouses Fixed Line Services Specialised Banks- IDBI, ICICI ✓ Proximate Cause ✓ Government Warehouses Cable Services ✓ Subrogation Functions of Commercial Banks ✓ Co-operative Warehouses VSAT Services & DTH Services ✓ Contribution ✓ Acceptance of Deposits ✓ Mitigation Banking ✓ Lending of Funds Basis Goods Services ✓ Cheque Facility 1. Nature A physical object. An activity or process. Types of Insurance – ✓ Remittance of Funds E.x.-Video cassette of E.x.-Watching a movie in a cinema 1) Life Insurance-Types ✓ Allied Services movie. hall Whole Life Policy 2. Intangibility Tangible. E.x.-medicine Intangible. E.x.-doctor treatment Endowment Life Assurance Policy E-Banking - Benefits to Customers 3. Inconsistency Different customers getting Different customers having Joint Life Policy (JLP) ‣ Transparency ‣ 24 x 7 Service standardised demands different Annuity Policy ‣ Convenient ‣ Records ‣ Security fulfilled. E.x.-Mobile Demands. E.x.-mobile services Children’s Endowment Policy phones 2) General insurance E-banking services to customer 4. Inseparability Separation of production and Simultaneous production and i) Fire Insurance  Payment of bills consumption. consumption. ii) Marine Insurance-Types  Checking Accounts E.x.-purchasing ice cream E.x.-., eating ice-cream in a ▪ Ship or Hull Insurance  Managing Savings from a store restaurant ▪ Cargo Insurance  Applying for loans 5. Inventory Can be kept in stock. Cannot be kept in stock. ▪ Freight Insurance  Electronic Fund Transfer E.x.- train journey ticket E.x.-experience of a train journey. iii) Other Insurance Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 4 Business Studies Mind Map CHAPTER-5 EMERGING MODES OF BUSINESS 11+21+ 41=7m Scope of E-Business Process/ Steps of Online ❖ B2B Commerce - Business to Business E-business may be defined as the Transactions/Trading ❖ B2C Commerce - Business to Consumers conduct of industry, trade and from a Customer’s ❖ Intra-B Commerce- Transactions within a commerce using the computer Standpoint given business firm. networks. ❖ Registration ❖ C2C Commerce – Consumers to Consumers ❖ Placing an Order ❖ Payment Mechanism ‣ Cash-On Delivery Meaning E-Business Risks (COD ▪ Transaction Risks ‣ Cheque ▪ Data Storage and Transmission ‣ Net-Banking Transfer Risks ‣ Credit or Debit Cards ▪ Risks of Threat to Intellectual ‣ Digital Cash Property and Privacy Benefits of E-Business 5. Emerging Modes Some E-Business Applications ✓ Ease of Formation – Easy to Start E-Procurement ✓ Convenience- 24X7 Available of Business E-Bidding/e-Auction ✓ Speed – Very speed transaction E-Communication/E-Promotion ✓ Global Reach- throughout the earth E-Delivery ✓ Paperless Society – No Paper E-Trading needed Point of Difference Traditional Business E-Business Limitations of E-Business 1. Ease of formation Difficult Simple  Low Personal Touch 2. Physical presence Required Not Required  Incongruence Order 3. Cost of setting up High Low as no requirement of Taking/Giving and Order Resources Required for Successful physical facilities Fulfilment Speed E-Business 4. Nature of contact Indirect through Direct  Need for Technology Capability  People Resistance Implementation intermediaries  Ethical Fallouts ► Money, Men and Machines 5. Opportunity for Much more Less (Hardware) interpersonal ► Website 6. Nature of human Semi-skilled Technically and ► Internet capital professionally qualified ► Computer System 7. Transaction risk Low Risk High Risk Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 5 Business Studies Mind Map CHAPTER-6 SOCIAL RESPONSIBILITY OF BUSINESS AND BUSINESS ETHICS 11+21+41=7m Arguments For Social Responsibility Social Responsibility of business refers to its obligation to take those decisions and The presence in or introduction into the  Justification for Existence and Growth perform those actions which are desirable in environment of a substance or thing that  Long-Term Interest of the Firm terms of the objectives and values of our has harmful effects.  Avoidance of Government Regulation  Maintenance of Society society.  Availability of Resources with Business  Better Environment for Doing Business Types of Pollution o Air Pollution Arguments Against Social Responsibility o Water Pollution  Violation of Profit Maximisation Objective o Land Pollution  Burden on Consumers o Noise Pollution  Lack of Social Skills  Lack of Broad Public Support 6. Social Responsibility Need for Pollution Control Reality of Social Responsibility ❖ Threat of Public Regulation of Business and ✓ Reduction of Health Hazards ✓ Reduced Risk of Liability ❖ Pressure of Labour Movement ❖ Impact of Consumer Consciousness Business Ethics ✓ Cost Savings ✓ Improved Public Image ❖ Development of Social Standard for Business ✓ Other Social Benefits ❖ Development of Business Education Kinds of Social Responsibility Role of Business in Environmental Economic Responsibility Protection Legal Responsibility Commitment by top management Ethical Responsibility Ensuring the Commitment Discretionary Responsibility Developing clear-cut policies and programmes Business Ethics concerns itself Participation in government programmes Social Responsibility towards Different with the relationship between Interest Groups Periodical assessment of pollution control business objectives, practices, and i) Responsibility towards the Shareholders/Owners- programmes techniques and the good of society.” Fair returns to stakeholders. ii) Responsibility towards the Workers/Employees –  Promotion, good working conditions, Co-operation with workers, respect of workers union, Elements of Business Ethics Ethics is concerned with what is right and fair wages/salary, Participation in Management.  Top Management Commitment what is wrong in human behaviour judged  Publication of a ‘Code’ on the basis of a standard form of conduct/ iii) Responsibility towards the Consumers -  Establishment of Compliance behaviour of individuals, as approved by  Good quality of goods, fair prices, honest Mechanisms society in a particular field of activity. with consumers, Environment friendly goods  Involving Employees at All Levels  Measuring Results Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 6 Business Studies Mind Map CHAPTER-7 FORMATION OF A COMPANY 11+21+41=7m III) Subscription Of Capital Stage - I) Promotion of a Company - II) Incorporation Stage – A public company can raise the required funds from ❖ Promoter After completing the aforesaid formalities, the public by means of issue of securities (shares and Any person or a group of persons or even a company promoters make an application for the debentures etc.). For doing the same, it has to issue (proceeds) may have discovered an opportunity. incorporation of the company. a prospectus, which is an invitation to the public to The application for registration must be subscribe to the capital of the company and undergo Functions of a Promoter accompanied with certain documents- various other formalities. Identification of Business Opportunity 1. MOA duly Stamped, signed & Witnessed. Feasibility Studies/Detail Investigation ❖ Prospectus 2. AOA duly Stamped, signed & Witnessed. ⬧ Technical Feasibility - It is an invitation to the public to subscribe to 3. Written consent of Proposed Directors ⬧ Financial Feasibility the capital of the company and undergo various 4. The agreement as a Whole-time other formalities. ⬧ Economic Feasibility Directors/Managers. Name Approval 5. A Copy of a Registrar`s letter approval Contents of Prospectus Fixing up Signatories to the Memorandum of 6. Statutory declaration 1. Name and Address of the Company Association 7. Evidence of Payment of Registration fees. 2. Main Objects of the Company Appointment of Professionals 3. Details of Shares Preparation of Necessary Documents 4. Details regarding voting rights, meetings of shareholders and directors etc. Documents Required to be Submitted - A) Memorandum of Association (MOA) - The following Steps are required for Raising Funds ✓ The Name Clause from the Public - ✓ Registered Office Clause SEBI Approval ✓ Objects Clause Filing of Prospectus ✓ Liability Clause Appointment of Bankers, Brokers, ✓ Capital Clause Underwriters 7. Formation of Minimum Subscription Application to Stock Exchange B) Articles of Association (AOA) - The following are the contains in AOA - a Company Allotment of Shares 1. The amount of Capital issued 2. Share certificates Basis of Differences Memorandum of Association Article of Association 3. Voting Rights 1. Objectives It specifies the power & objective It specifies the Rules & 4. Seal of the company. Internal Management of a 5. appointment and delegations of powers & company Remuneration of directors 6. Procedures and Conduct of Meetings & notices 2. Position Main Document Subsidiary Document 7. Winding up and Indemnity. 3. Relationship The relationship of the company The relationship of the C) Consent of Proposed Directors with outsiders. members and the company. D) Agreement 4. The Registration Registered during incorporation. Isn’t mandatory to register. E) Statutory Declaration 5. Necessity Every company has to file a It is not compulsory for a F) Receipt of Payment of Fee Memorandum of Association. public ltd. company to file (Compulsory) Articles of Association. Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 7 Business Studies Mind Map CHAPTER-8 SOURCES OF BUSINESS FINANCE 12+22+42=14m Business Finance -Money/funds D) Lease Financing G) Issue of Shares H) Debentures- Debt Capital required for carrying out various business Merits a) Equity Shares Merits activities is called ‘Business Finance’. Lower Investment Merits ☺ Low Cost and Low Risk Simple Documentation ✓ Higher Returns ☺ Fixed Returns Deduction in Tax ✓ Payout of Dividend ☺ No Dilution of Control/Ownership Owners Fund- Equity & Retained Earnings Greater Flexibility ✓ Permanent Capital ☺ Tax Deductible Borrowed Funds-Loans from bank, ✓ High Credit Standing Limitations Debentures, Public Deposit, Trade Credit Limitations ⬧ Certain Restrictions on the Use of Assets Limitations  Fixed Obligations ⬧ Affect to Normal Business Operations  Risk of Fluctuating Returns  Charge on Assets A) Retained Earnings- ⬧ Higher Payout Obligation  Cost of Equity  Reduction in Creditability Merits ⬧ Never Becomes the Owner of the Asset  Dilutes the Ownership  No Voting Rights Permanent Source of Finance  More Legal Formalities No More Cost Operational Freedom and Flexibility J) Financial Institutions Increase in the Market Price b) Preference Shares Merits ✓ Long-Term Finance Demerits/Limitations  Dissatisfaction Amongst the 8. Sources of Merits  Fixed Rate of Returns ✓ Managerial and Financial Advice Shareholders Business Finance  Low Risk on Returns ✓ Increase Goodwill ✓ Reasonable Interest Rate  Uncertain Source of Funds  No dilutes of Ownership  Associated with Opportunity Cost  Preferential Rights Limitation Limitations Rigid Criteria E) Public Deposits Fluctuating & Low Returns Restrictions on divided B) Trade Credit Merits - Nominees on the BOD Voting Rights Merits Simple and No contain Restrictions Fixed Obligations ✓ Continuous Source of Funds Lower Cost Than Banks No Deduction in Tax ✓ Readily Available in case the Credit No Charge on any Assets Factors Affecting the Choice of Worthiness No Voting Rights the Source 0f Funds ✓ Promote the Sales Limitations  Cost ✓ Increase its Inventory Level o Difficult to Raise Funds I) Commercial Banks  Financial Strength and Stability Demerits/Limitations o Unreliable Source of Finance Merits of Operations  Over-Trading o Public Deposits may Prove Difficult Timely Assistance  Form of Organisation and Legal  Only Limited Amount of Funds Maintain Secrecy Status  Costly Source of Funds Easier source of funds  Purpose and Time Period F) Commercial Paper (CP)- Flexible source of funds  Risk Profile C) Factoring Merits - Limitation  Control Merits  Unsecured Basis o Uncertain source of funds  Effect on Credit Worthiness ❖ Cheaper Finance  Freely Transferable Instrument o Security of Assets  Flexibility and Ease ❖ Accelerated Cash flow  More Funds Available o Difficult Terms & Conditions  Tax Benefits ❖ Flexible (Credit Sales & Cash Credit  Continuous Source of Funds ❖ Contrate on main Business Limitations International Financing Demerits/Limitations  Highley Rated Firms Only  Commercial Banks- Standard Chartered. ▪ Expensive  Limited Size of Money  International Agencies and Development Banks- EXIM, IFC, ADB. ▪ Higher Interest  No Extend of Maturity Period  International Capital Markets- GDR, ADR,IDR, FCCBs. ▪ Third Party (Discomfort) Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 8 Business Studies Mind Map CHAPTER-9 MSME AND BUSINESS DEVELOPMENT 12+21+41=8m Intellectual Property Rights (IPR) The definition used by the Government of India to describe MSME is Problems of MSMEs Legal rights conferred on such products are called based on the investment in plant and machinery and turnover. This  Finance ‘Intellectual Property Rights.’ measure seeks to keep in view the socio-economic environment in  Raw Materials Types Of Intellectual Property Rights (IPR) India where capital is scarce and labour is abundant.  Managerial skills A) Copyrights  Labour Copyright is the right to “Not Copy.” It is offered  Marketing when an original idea is expressed by the creator Manufacturing Industry- Where Production is done. or author.” Copyright Act 1957. Village Industries- Located in Rural Areas.  Technology Cottage Industries- Very small amount. Needed for B) Trademark investment. Role of MSME A Trademark is any word, name, or symbol (or ► Improve Economic Condition their combination) that lets us identify the ► Provide Employment goods made by an individual, company, Types of Units Investment Turnover organization, etc.” Trademark Act 1999 in plant & Opportunities Machinery ► Variety of Products C) Patent ► Use Simple Technology A patent is a type of IPR which protects the Micro Enterprises 1 Crore Does not exceed 5 Crore scientific inventions (products and or process) which shows technical advancement over the Small Enterprises 10 Crore Does not exceed 50 Crore already known Products. Patents Act 1970. Medium Enterprises 50 Crore Does not exceed 250 Crore D) Designs A 'Design' includes shape, pattern, and arrangement of lines or colour combination that is applied to any article. It is a protection given to Entrepreneurship is the process of aesthetic appearance or eye-catching features.” setting up one's own business as distinct Designs Act 2000. from pursuing any other economic activity, 9. MSME and E) Geographical Indication be it employment or practising some profession. Business Development A Geographical Indication (GI) is primarily an indication which identifies agricultural, natural or Entrepreneur -The person who set-up manufactured products (handicrafts, industrial his business is called an ‘Entrepreneur.’ goods and food stuffs) originating from a definite Enterprise -The output of the process, geographical territory, where a given quality, that is, the business unit is called an reputation or other characteristics are essentially ‘Enterprise.’ attributable to its Geographical Origin. Semiconductor Integrated Circuits Layout Design Geographical Indications of Goods Act, 1999. Characteristics/Features of (SICLD) F) Plant Variety Entrepreneurship Development A Semiconductor is an integral part of every computer chip. Plant Variety is essentially grouping plants into ☺ Systematic Activity Any product that contains transistors and other circuitry categories based on their botanical characteristics. ☺ Lawful and Purposeful Activity elements used and formed on a semiconductor material, It is a type of variety which is bred and developed ☺ Innovation as an insulating material, or inside the semiconductor by farmers. This helps in conserving, improving ☺ Organisation of Production material. Its design is to perform an electronic and making available plant genetic resources. ☺ Risk-Taking circuitry function.” Plant Varieties & Farmers' Rights Act 2001. Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 9 Business Studies Mind Map Features- Write 2 CHAPTER-10 INTERNAL TRADE 13+21+81=13m Role of Commerce and Industry Associations Merits & Demerits is in Promotion of Internal Trade Interstate Movement of Goods A) Itinerant Retailers are Octroi and Other Local Levies Wholesale Trade- Purchase and Retail Trade- Purchase and sale of traders who do not have a fixed Harmonisation of sales tax structure and Value sale of goods and services in large goods in relatively small quantities, place of business to operate from. Added Tax quantities for the purpose of resale generally to the ultimate consumers, They Marketing of Agro Products and related Issues or intermediate use is referred to is referred to as Retail Trade. keep on moving with their wares Weights and Measures and Prevention of as Wholesale Trade. A) Services to Manufacturers from street to street or place to Duplication Brands A) Services to Manufacturers and Wholesalers place, in search of customers. Excise duty Itinerant Retailers Retailer ⬧ Large Scale Production ❖ Help in Distribution of Goods Promoting sound infrastructure ⬧ Bearing Risk ❖ Personal Selling Types of Itinerant Retailers Labour legislation ⬧ Financial Assistance ❖ Collecting Market Information  Peddlers and Hawkers Wholesaler ⬧ Storage ❖ Help in Promotion  Periodic Market Traders B) Services to Retailers B) Services to Consumers  Street Traders Availability of Goods Regular availability of products  Cheap Jacks B) Fixed Shop Retailers Marketing Support As is evident from the name, these New Products Information Features of Itinerant Specialised Knowledge are retail shops who maintain Wide Selection Retailers Risk Sharing permanent establishment to sell After-Sales Services ✓ Limited Resources their merchandise. They, therefore, ✓ Deal in Consumer Products do not move from place to place to ✓ Door step Delivery serve their customers. ✓ Limited Inventory GST 1 July, 2017 (CGST+SGST) (IGST) Features Fixed Shop Retailers Benefits - o Large Scale Reduction in overall tax burden o Deals in Different Products No hidden taxes o Greater Creditability Development of a harmonised national market for goods and services 10. Internal Trade Types of Fixed-Shop Retailers 1) Small Shop-Keepers Higher disposable income in hand, 2) Large Retailers education and essential needs Internal Trade Buying and selling of Customers to have wider choice goods and services within the boundaries of Increased economic activity a nation are referred to as Internal Trade More employment opportunities iv) Departmental Stores and v) Super Market 1) Small Shop-Keepers iii) Consumer Co- Merits  General Stores i) Chain Stores/Multiple Operative Store ✓ Attract Large Number of  Speciality Shops Shops ii) Mail Order Houses Merits Customers (Diff. Products)  Street Stall Holders Merits Merits ✓ Convenience in Buying ✓ Ease Information  Second-Hand Goods Shop Economies of Scale Convenience ✓ Limited Liability ✓ Attractive Services 2) Large Stores (Retailers) Elimination of Middlemen Elimination of Middlemen ✓ Lower Prices ✓ Promotion of Sales  Departmental Stores No Bad Debts Absence of Bad Debt ✓ Cash Sales ✓ Convenience Location  Chain Stores Or Multiple Shops Transfer of Goods Wide Reach Demerits Demerits  Mail Order Houses Demerits Demerits Lack of Initiative  Lack of Personal Attention  Consumer Co-Operative Store ⬧ Limited Selection of Goods ❖ Lack of Personal Contact Shortage of Funds  Huge Capital Requirements  Super Markets ⬧ Lack of Initiative ❖ High Promotion Cost Lack of Patronage  High Possibility of Loss  Automated Vending Machines ⬧ Lack of personal touch ❖ No After Sales Service Lack of Business Training  Inconvenient Location (AVM) ⬧ Difficult to change demand ❖ No Credit Facilities  Mishandling of Goods Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 10 Business Studies Mind Map CHAPTER-11 INTERNATIONAL BUSINESS (I.B.) 12+41+81=14m B) Contract Manufacturing- A) Exporting And Importing - Outsourcing of Products. Manufacturing and trade beyond the Benefits of International Business Merits Sending goods one country to boundaries of one’s own country is known A) Benefits to Countries (Nations) ✓ Less Investment another. as International Business or External  Earning of Foreign Exchange ✓ Less Risk Merits Business.”  More Efficient use of Resources ✓ Lower Costs ❖ Easiest and Simplest Reason for International Business  Improving Growth Prospects and ✓ Better Utilisation of ❖ Less Investment Increase Sales - Employment Potentials Resources ❖ Less Risky Attracting New Talents  Increased Standard of Living Demerits ❖ Availability of Resources Increasing Competition B) Benefits to Firms  Lock of Production Design Demerits Government Policies and Regulations  Prospects for Higher Profits Extra Cost and Quality Standards Growth of Market Overseas  Increased Capacity Utilisation Regulations  Loss of Control Scope of International Business  Prospects for Growth Documentation  No Authority to Sell Products Merchandise Exports and Imports  Improved Business Vision Multitasking Service Exports and Imports Licensing and Franchising C) Licensing and Franchising- Foreign Investments Firm grants access to its parents to Modes of I.B. another firm in foreign country. Merits Domestic/Home Trade Foreign/ Export Trade  Less Expensive Method 1. Trade within the boundary 1. Trade outside the boundary  Lesser Risks of the nation. 2. Less Capital needed to be of the country. 2. Huge capital needed to be 11. International  Greater Market Knowledge and Contacts invested. 3. Less risk association. invested. 3. High risk association. Business  Legal Safety Demerits 4. Does not earn foreign 4. Earn foreign currency.  Risks of Starting a Similar currency. Business 5. Less profit to be earned. 5. High profit to be earned.  Problem of Secrecy  Conflicts and Disputes Export Procedure  Receipt of Enquiry and Sending D) Joint Ventures- Import Procedure Quotations Agreement between to firms of  Trade Enquiry E) Wholly Owned Subsidiaries  Receipt of Order or Indent two nations.  Procurement of Import Licence Merits  Assessing the Importer’s Merits  Obtaining Foreign Exchange ► Complete Control Creditworthiness and Securing a Economies of Scale  Placing Order or Indent ► Secrecy Guarantee for Payments Innovation  Obtaining Letter of Credit ► Synergy  Obtaining Export Licence Brand Exposure  Arranging for Finance ► Diversification  Obtaining Pre-shipment Finance Access to Technology  Receipt of Shipment Advice Demerits  Production or Procurement of Goods Demerits  Retirement of Import Documents ❖ Not ideal for Small Businesses  Arrival of Goods  Pre-Shipment Inspection  Clash of Culture ❖ Burden of Entire Loss  Customs Clearance and Release of  Excise Clearance  Trade Disclosure ❖ Political Risk Goods  Obtaining Certificate of Origin ❖ Diverse Rules and Regulations  Conflict of Control  Reservation of shipping space  Lack of Co-ordination Lec. S.Y. Dhekolkar, KLS Gogte PU College of Commerce and Science, Belagavi 11