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SESSION -I

SESSION -I UNIT-1 NATURE AND SCOPE OF BUSINESS UNIT-2 FORMS OF BUSINESS ORGANISATION-II ECO-01 BUSINESS ORGANIZATION BLOCK-I BASIC CONCEPTS & FORMS OF BUSINESS ORGANIZATION UNIT-1 NATURE AND SCOPE OF BUSINESS HUMAN ACTIVITIES Non-Economic Activities Economic-Activities Business

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SESSION -I

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  1. SESSION -I UNIT-1 NATURE AND SCOPE OF BUSINESS UNIT-2 FORMS OF BUSINESS ORGANISATION-II

  2. ECO-01 BUSINESS ORGANIZATION BLOCK-I BASIC CONCEPTS & FORMS OF BUSINESS ORGANIZATION

  3. UNIT-1 NATURE AND SCOPE OF BUSINESS HUMAN ACTIVITIES • Non-Economic Activities • Economic-Activities • Business • Profession • Employment

  4. BUSINESS A business (also called a firm or an enterprise) is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit to increase the wealth of owners. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk.

  5. Essential Features of Business • Dealings in goods and services • Production and/or exchange • Continuity and regularity in dealings • Profit motive • Element of risk

  6. OBJECTIVES OF BUSINESS • ECONOMIC OBJECTIVES • SOCIAL OBJECTIVES • HUMAN OBJECTIVES

  7. INDUSTRY An industry (from Latinindustrius, "diligent, industrious") is the manufacturing of a good or service within a category.[1] Although industry is a broad term for any kind of economic production, in economics and urban planning industry is a synonym for the secondary sector, which is a type of economic activity involved in the manufacturing of raw materials into goods and products.

  8. CLASSIFICATION OF INDUSTRIES INDUSTRIES Extractive Industries: Mining Farming Fishing Quarrying Genetic Industries: Nurseries Fish Culture Cattle Breeding Poultry farms Manufacturing Industries: Iron & Steel Cement Fertilizer Vanaspati Electronics Construction Industries: Buildings Roads Canals Dams

  9. COMMERCE Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer. It comprises the trading of something of economic value such as goods, services, information or money between two or more entities. Commerce functions as the central mechanism which drives capitalism and certain other economic systems (but compare command economy, for example). Commercialization or commercialization consists of the process of transforming something into a product, service or activity which one may then use in commerce.

  10. TRADE • Trade is the willing exchange of goods, services, or both. Trade is also called commerce. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.

  11. CATEGORIES OF TRADE • INTERNAL TRADE • Wholesale Trade • Retail Trade • EXTERNAL TRADE • Import Trade • Export Trade • Re-export Trade

  12. AIDS TO TRADE • Transportation • Warehousing • Insurance • Advertising • Banking

  13. UNIT-2 FORMS OF BUSINESS ORGANIZATION-I An organization is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment.

  14. Forms of Business Organization Non-Corporate forms Of organizations Corporate forms Of organization Sole Trader Organization Partnership Organization Joint Stock Company Cooperative Organization

  15. SESSION -II UNIT-3 FORMS OF BUSINESS ORGANIZATION-II UNIT-4 BUSINESS PROMOTION

  16. ECO-01 BUSINESS ORGANIZATION BLOCK-I BASIC CONCEPTS & FORMS OF BUSINESS ORGANIZATION

  17. UNIT-3 FORMS OF BUSINESS ORGANIZATION-II Business Organization is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment. When you plan to set up a new business, you have to decide which form of organization is more suitable for the proposed business.For this we have to critically analyze the suitability of various forms of organizations in the light of the nature of the proposed business.

  18. REQUISITES OF AN IDEAL FORM OF BUSINESS ORGANISATION • Ease of formation • Scope of raising capital • Extent of liability • Flexibility of operations • Stability and continuity • Effectiveness of management • Extent of government control and regulations • Business Secrecy • Tax burden • Ownership Prerogatives

  19. CRITERIA FOR THE CHOICE OF ORGANIZATION 1.CRITERIA AT THE TIME OF STARTING A BUSINESS- • Nature of business • Volume of business • Area of operation • Desire for control • Capital requirements • Extent of risk and liability • Government regulations

  20. 2. CRITERIA AT THE TIME OF EXPANSION- Need for larger financial resources Need for internal reorganization and control Need for specialized services Increase in governmental controls and regulations Increase in tax liability Increase in the problem of control and coordination

  21. UNIT-4 BUSINESS PROMOTION ENTREPRENEUR: An entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome. The term is a loanword from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome. An entrepreneur is a independent business individual who efficiently and effectively combines the four factors of production.

  22. ENTREPRENEURSHIP: Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities.

  23. Basic Elements of Entrepreneurship: Innovation Risk bearing CHARACTERISTICS of an Entrepreneur: Independence Hard work Desire to achieve goals Foresight & dynamic outlook Open-mindedness Optimistic outlook Working relationship Good organizers Innovative aptitude

  24. Functions of an Entrepreneur • Develop an idea and explores opportunities • Product analysis & market survey • Decides form of organization • Collects necessary capital • Places orders for machinery • Recruitment of labor • Designs internal organizational structure • Fulfils formalities & launches enterprise

  25. Distinction between Entrepreneur and Promoter TYPES OF PROMOTERS: Professional promoters Financial promoters Entrepreneurial promoters Institutional promoters Government

  26. SESSION -III UNIT-5 METHODS OF RAISING FINANCE UNIT-6 LONG-TERM FINANCING & UNDERWRITING

  27. ECO-01 BUSINESS ORGANIZATION BLOCK-II FINANCING OF BUSINESS

  28. UNIT-5 METHODS OF RAISING FINANCE Types of Financial needs: Fixed Capital and Working Capital Long term capital and short term capital Capital Structure: • Ownership capital • Borrowed Capital

  29. CAPITAL STRUCTURE Proportion in which different sources of long-term finance are used to meet the total funds requirements, like shares, debentures, loans, retained profits etc. Factors Determining the Capital Structure: • Nature of the business • Characteristics of the company • Management control • Cost of finance • Effect of debt financing on the earnings per equity share • Expected earning in relation to interest charges • Profitability of cash • Flexibility of capital structure

  30. Methods of Raising Capital • Issue of shares • Issue of debentures • Loans from financial institutions • Loans from commercial banks • Public deposits • Retention of profits • Trade credit • Factoring • Discounting bills of exchange • Public deposits • Bank overdraft and cash credit

  31. UNIT-6 SOURCES OF LONG TERM FINANCE & UNDERWRITING LONG TERM FINANCE: Finance required for a period of five years or more. Fixed assets are long-lived assets and, therefore, investment can be made only with long-term finance I.e. funds which will not have to be returned within five years.

  32. SOURCES OF LONG-TERM FINANCE • Capital market • Financial institutions • Leasing companies • Foreign Sources • Retained profits

  33. UNDERWRITING Agreement whereby the underwriter agrees to take up the shares or debentures issued by a company to the extent they are not subscribed by the public on payment of a commission Known as ‘Underwriting Commission’. Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products (equity capital, insurance, mortgage or credit).

  34. SESSION -IV UNIT-7 STOCK EXCHANGES UNIT-8 ADVERTISING UNIT-9 ADVERTISING MEDIA

  35. ECO-01 BUSINESS ORGANIZATION BLOCK-II FINANCING OF BUSINESS BLOCK-III MARKETING

  36. UNIT-7 STOCK EXCHANGES Stock exchange, securities exchange or (in Europe) bourse is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds.

  37. FUNCTIONS OF STOCK EXCHANGES • Primary Functions • Marketability and price continuity • Mobilizing surplus savings • Barometer of economic and business conditions • Mobility of capital • Contribution to capital formation • Shock absorber • Sifting process • Facilitates resource allocation

  38. Secondary Functions Safety of investment and equity in dealings Easy liquidity Accurate and continuous report regarding sales Full information regarding listed companies Helpful in re-investment decisions Safeguard to investors

  39. Types of Dealings in a Stock Exchange • Spot delivery contracts • Ready delivery contracts • Forward delivery contracts

  40. Bull or Long Bear Stag Contango Backwardation Cum-Dividend Ex-Dividend Cornering Margin trading Arbitrage Rigging the market Settlement day Blank transfer Jobber IMPORTANT TERMS

  41. LISTING:- It implies that the securities have met the satisfaction of stock exchange authorities, in respect of certain prescribed standards of legality, security and work-man ship. Advantages of Listing: It provides a continuous market for securities. It enhances the prestige of the company. It provides an indirect check against manipulation of prices by the management.

  42. FACTORS AFFECTING PRICES IN A STOCK EXCHANGE • Interest rate • Activities of the financial institutions • Performance of the company • Business cycle • Changes in Board of directors • Sympathetic fluctuations • Political events • Changes in government policy

  43. UNIT-8 ADVERTISING Advertising is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service. Important four expressions of advertising: • Paid form • Non-personal presentation • Ideas, goods & services • Identified sponsor

  44. PUBLICITY Publicity is the deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people (for example, politicians and performing artists), goods and services, organizations of all kinds, and works of art or entertainment. Important four expressions of advertising: • Non-sponsored • Commercially significant information • Disseminated by non-personal media • Without a financial charge to the company

  45. ADVERTISING Presented by non-personal media Identifiable sponsor Company has to pay money to the media for space & time It is intended to give favorable impression about the company or its product PUBLICITY Presented by non-personal medium No identifiable sponsor Does not make any payment to media It may have favorable or unfavorable influence on the public about the company or its product Difference b/w Advertising & Publicity

  46. Objectives of ADVERTISING • Introduction of new products • Inducing potential customers to buy • Reminding users • To create brand image • To intimate customers about new use of a product • To highlight brand character • Dealer support • Trafficking the retail trade

  47. ROLE OF ADVERTISING IN SOCIETY Arguments against Advertising: • Advertising leads to higher prices • Advertising leads to monopoly • It results in inefficient resource allocation • It causes undesirable social effects • It may act against the freedom of press

  48. ROLE OF ADVERTISING IN SOCIETY Arguments in Support of Advertising: • Advertising leads to reduction in the cost of goods • It need not necessarily lead to monopoly • It directs allocation of resources according to demand • Advertising and social values • It encourages autonomy of mass media • It provides useful information • It generates employment

  49. ESSENTIALS OF AN EFFECTIVE ADVERTISEMENT Features relating to the message: • Desirability • Exclusive • Believable • Attractive • Memorable and easy to recall Features relating to Consumer Reach: • Appropriate media • Frequency • Timing

  50. UNIT-9 ADVERTISING MEDIA MEDIA:- medium is the vehicle or carrier of advertising message to the target customers or prospects. The basic purpose of using media is to bring products and services to the notice of potential customers. It is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service.

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