28ff business 2

BUSINESS ENVIRONMENT

Business refers to commercial activities relating to production & distribution of goods & services for economic gain. i.e. profit.

is a group effort of PRODUCERS, DISTRIBUTORS (like banks, insurance companies) etc.

To satisfy human wants

Not only profit is the motive but also social interest and customer satisfaction.

Meaning of business

Includes distinct features which are as follows:

Nature of business

Organized activity :

Identify customer problems or needs. Produce/supply goods & services. Monitor customer satisfaction.

Profit motive:

It’s the primary objective of any business. It’s reward for the risks undertaken by the

business firm. Firm must utilize its net profits for growth &

expansion.

Regularity in dealings:

Firm should engaged in business activity on a regular basis.

A single or rare act of buying & selling can’t be called as business activity.

For ex: a construction firm may take fairly a long time to construct and sell buildings or flats, as compared to a retailer who may buy & sell goods everyday. Both these activities can be termed as business.

Risks & uncertainties :

Business is subject to risk & uncertainties. It may earn profit or may also occur loss due to

risk

For ex: change in fashion, tastes of customers, change in govt. policies, recession, change in technology, damage to goods/property due to fire, natural

calamities, riots etc.

Social responsibilities:

Firms try to fulfill their social responsibility towards various groups such as:

EMPLOYEES : by providing better wages, working conditions ,welfare facilities etc.

CUSTOMERS: better quality of goods & services at right prices.

GOVERNMENT: Paying proper taxes & duties. SHAREHOLDERS: Enhancing their value,

payments of dividends etc. COMPETITORS: adopting fair business

activities. SOCIETY: sponsoring education, sports,

culture etc.

Creative & dynamic:

◦ Modern business is creative in nature.◦ Firms must come up with innovative ideas toproduce & distribute consumer goods & services.◦ No business can say that they provide 100% thereis always a scope for improvement.Government control:

Business firms are subject to government control in the form of rules & regulations. For ex: laws like 1. Indian Companies Act ,19562. Foreign Exchange Management Act , 19993. The Competition Act , 2002

REGULAR SUPPLY OF GOODS OF SERVICES:We can’t produce goods on our own.It helps in promoting welfare & development of the

society.GENERATING EMPLOYMENT OPPORTUNITIES:It generates employment for people.Provides direct employment related to the

production, marketing, & service sectors like transport, communications, banking etc.

REVENUE TO GOVERNMENT:In the form of taxes & duties payments.Uses this revenue for development of railways,

roadways, irrigation, rural development, etc.

Need of business

SOCIAL WELFARE: It leads to prosperity & happiness Business is connected to almost every area

of our social & personal life. For ex: participating in activities like sports,

education, donations etc.

FACILITATES ECONOMIC GROWTH, CREATION OF RICH & DEVELOPED COUNTRY :

Also earn foreign exchange

CAPITAL FORMATION:

It facilitates capital formation in the country. It takes place because of savings &

investments.

Objectives of business

ESSENTIAL PILLARS OF BUSINESS

Economic objectives: Its related to the profit or monetary term. To earn profit Creation of customer Innovation in products Optimum utilization of resources. Creation wealth in form of goods & services.

SOCIAL OBJECTIVES: Responsibility towards:

HUMAN OBJECTIVES: is related with the workers who provide their

services for the efficient working of the business.

To ensure following things:-

Equal work Equal pay

NATIONAL OBJECTIVE: SOCIAL JUSTICE:- means providing equal

opportunities to all, protecting interest of neglected, prevention of any sort of exploitation.

For ex: a business unit should do justice to their handicapped workers, & women employees.

PRODUCTION AS PER NATIONAL PRIORITIES: Analyze the taste, interest, and also The

population then accordingly produce goods.

SELF SUFFICIENCY:

Make use of available natural resources & manpower for economic development.

Should reduce dependence on foreign countries by producing goods or increasing exports and reducing imports.

SOCIAL WELFARE: Adopting schools in backward areas, Funds for rural development, irrigation etc. Health camps. In December 2010, Azim Premji, the chairman of

Wipro ltd transferred 213million shares valued at rs.8,846cr. Held by him in Wipro Ltd. To a trust as an endowment to fund social development activities( health, education, etc.)

Important things:

Sectors Description examples

PRIMARY AGRICULTURE, ANIMAL HUSBANDRY

COTTON, WHEAT, RICE ETC.(AMUL)

EXTRACTIVE FROM NATURE DIAMOND, COAL, GOLD, SILVER ETC

GENETIC BREEDING POULTRY FARMING

SECONDARY PRODUCTION OF FINISHED GOODS & COMPONENTS.

MANUFACTURING, FOOD PROCESSING, RAW MATERIALS INTO GOODS.

TERTIARY PROVIDES SERVICES TEACHERS, LAWYERS, BANKERS.

IT SOFTWARES & HARDWARES

SATYAM, INFOSYS ETC.

The main sectors

Business is all around us…!

Best of Indian corporates…

Mr. Anil Ambani Mr. Laxmi Mittal

Mr. Azim Premji Mr. Ratan Tata

you

Thank you !