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Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university : The ordinary meaning of the word business is busyness, i.e., any activity in which a man is busy. A man may be busy in two kinds of activities: economic and non-economic. An economic activity denotes work or effort directed towards the production of wealth. In other words, economic activity is aimed at profit. Economic activity of a man is called business. Business, therefore, means the production or purchase of goods with a view to sell them at profit. Besides, if services are rendered on payment to others, they shall be included in business.

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods and services. The term business includes trade, commerce and industry. The process of buying and selling of goods, is called Trade. Such an activity may be carried on within a country when it is called home or domestic trade. It may be called foreign or international trade when it is carried on between two different countries. To help trade, some facilities such as storing, grading, financing, transporting and insuring are needed, these are called Commerce. Industry implies all those processes, which are responsible for the extraction and production of goods which are sold for either ultimate consumption or for further production.

So, we may say that Business = Industry + Trade + Commerce. We shall discuss the various components of business at the end of this lesson. Business Provides Services. There are service enterprises, which provide services like domestic services and financial services, etc., to individuals and business enterprises. Take the example of cinemas or hotels, they render services to the community at large. As observed by Urwick and Hunt, “A business is any enterprise which makes, distributes or provides any article or service which other members of the community need and are willing to pay for that.”

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

You have already noticed that a business enterprise may provide services but there are many individuals and firms that may also render services. These individuals or firms are a body of professional people, such as doctors, lawyers, engineers, etc. who may render one or the other useful services. But professional services are not business even when they are rendered in return for money. A professional like a doctor or lawyer renders a personal service of gaining intimate knowledge of a particular individual. On the other hand, a businessman is not concerned with the need of particular individuals in a general way.

A human need begins to interest him only when it is widespread and general. It is when a need becomes a general and ripens or matures into demand that it comes within the scope of business. Business is a social activity. All parts of society are related with it in one way or the other and contribute in its success directly or indirectly. The society provides inputs to business in the form of men, machines, materials, money etc., and expects useful goods and services from it at reasonable rates and adequate wages for its employees and correct taxes for the State. A business house cannot afford to ignore its social responsibility. For example, if a business house fails to please its employees, it leads to employees’ unrest causing disruption in its normal functioning and the existence of a large number of such irresponsible business houses may become the cause of national unrest.

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Motives for Business Following factors provide motives to business:

1. Ambition to earn profits

2. Psychological factors

3. Ambition to provide service

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

These factors are now discussed vis-à-vis the motives they provide.

1. Profit Motive:

Personal gain is one of the supreme motivating forces. Business is that sphere of a man’s activity where the amount of effort determines the size of profit. It is needless to say that greater personal effort brings in greater monetary reward. This single factor has resulted in the establishment, running and expansion of business by individuals or group of individuals.

2. Psychological Factors:

It is an old saying that a man does not live by bread alone. It is equally true in business. An entrepreneur may not work solely for amassing fortune. He may be guided by the ambition to build up a business empire. The biographer of William Lever, the founder of Lever Bros, Charles Wilson quotes Lever, who once said “My happiness is my business”. To grow and become big and to find an industrial empire has been valid psychological factors for business.

3. Service Motive:

It is also a great motivating force. Many people are motivated to render some service to their community. Henry Ford, the founder of Ford Motors stated that “Money chasing is not business”. In our country Jamsedji Tata built a steel plant with a great missionary zeal. Business have been founded with service as their motive. An enterprise must earn profit to remain intact and to grow and this element draws men to business. At the same time it is necessary that an enterprise must produce goods and services of the type and quality that the customers want, must offer right kind of employment conditions to its employees, and the society must accept it as a useful institution.

In fact, the mixing or blending of these two elements is necessary for any business enterprise. Of course profit is a significant motive for business without which an economy under capitalism may not grow. Consistent growth of an economy is necessary to provide more employment and a better standard of living. Thus the two motives must co-exist in a business enterprise for its existence, growth and status as a useful institution. The above discussion is more relevant for a private enterprise.

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Let us now consider the purpose of a public enterprise. The guiding factor in the case of a public enterprise is service but it shall be wrong to remark that a public enterprise should exist only for a few services. Profit may serve as a useful purpose where it is used for the economic growth of the country. It may be concluded that both types of enterprises should aim at not only the profit but also rendering service. Let us consider the profit from the point of view of a corporation or joint stock companies. The structures of modern economies are such that industrial, trading and commercial activities are carried on by these corporations. These corporations are owned by the shareholders and managed by managers who are not very much interested in them as owners.

These managers work for the good of shareholders, employees and consumers. Thus, they are liable to earn profit for the shareholders and to fulfil their obligations towards others. They are motivated to work hard not because they would gain some individual profits but because the profit being more would give them satisfaction and status. These managers aim at improving the process of marketing and production to earn more profit. The skill of these people is always at trial. In the process of proper planning for marketing and production, the manager of a large company applies Profit Test and the Profit Motive.

The latter is associated with individuals. In the long run, profits do indicate the health of a business enterprise vis-à-vis the consumers, the labour force and the shareholders. For example, lack of cooperation on the part of labour shall certainly mean lower profitability. The profit test, however, implies satisfactory profit and not huge profits. The importance of this test is immense. After all, on what basis you would assess the performance of a business enterprise? Even in communist countries this kind of test is being applied to a business unit to measure the efficiency of the enterprise.

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

In our country too, the public enterprises pursue profit motive with the aim of generating surplus for planned growth. So, both the profit motive and service motive are essential for the very existence of business. Profit is essential for making provision for depreciation, for paying better wage rates to employees and for the expansion of business. The huge size of big business houses like D.C.M. or Mafat Lal Group which we see today is primarily because of ploughing back of these profits. Service motive directly affects the profitability of a business. Poor service leads to lesser sales volume and hence low profits.

Moreover, to provide service to the community is the social responsibility of a business. Littlefield had rightly remarked that business must earn profits sufficient to compensate the owners for the use and risk of capital, must serve varied needs of employees and must contribute to the stability and progress of community. What may have started as purely economic venture for maximum profits may soon take on social and political dimensions. Further, in an economy such as that of India, where millions of business organisations create the major part of the nation’s wealth, income and employment, it is easy to see that the collective impact of the business is very great indeed.

This has been defined in a variety of ways by various authorities on the subject. The essence of the various definition is best reflected in the definition given by Haney. He defines organisation as a “harmonious adjustment of specialized parts for the accomplishment of some common purpose”. In simple words, organisation is putting together of men, material and machines to achieve the defined goals. Through organisation there is cohesion, which result in efficient functioning of an enterprise and resulting into profits to the enterprise, more wages to its employees and lower cost of goods to the consumer. Thus, the economic gains of such an enterprise are more and social costs are less.

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

The common features of a business can be given below:

(a) Dealing in goods and services for value: Business provides goods and services to society. The goods may be for consumption or for production. The first type of goods are called as consumer goods, e.g., clothes, shoes, fans, sugar etc. and the second type of goods are called as capital goods, e.g., plant and machinery. These goods and services are meant for sale. The goods and services produced for personal consumption are not within the scope of business. So, when a person repairs his own scooter, it is not business but when he opens a repair workshop that becomes business.

(b) Recurring nature of transactions: A single transaction of sale or purchase or any dealing casually does not amount to a business transaction though it might have resulted into profits. A transaction comes under business only when it occurs at regular intervals or it is recurring in nature. For example, where a person sells his scooter that is not business. But if he opens a garage and keeps a stock of scooters for sale that would constitute business.

(c) To earn Profits: Business is a human activity directed towards earning wealth. Profit is essential for the livelihood of the entrepreneur as well as survival and expansion of the business.

(d) Increase in Utility: Business activities create utility in one form or the other. Manufacturers convert raw materials into finished products: whole salers, retailers and transporters etc. help in their distribution. Thus each one of them increases the utility of goods.

(e) Risk element: Business is full of risks. Profits do not depend solely on efforts of entrepreneur. Certain other forces may intervene over which a business man had no direct control.

These factors may be changes in consumer tastes and fashions; changes in technology, strikes; power failures; loss by fire and theft etc. Some of these risks can be passed on to others by means of insurance while some risks have to be borne by businessman. Most of the business decisions relate to future and future is full of uncertainties. It is because of these uncertainties that business is also called as an adventure.

Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

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Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

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Unit I Foundation of Indian Business for Business Organisation and Management Bcom sem 1 Delhi university

Delhi University (DU) is one of the best University in India. This university every each year conduct the different type of exam and every year huge candidates are applied the application forms and every year lot of candidates are appeared the examination. 

The University of Delhi informally known as Delhi University is a public central collegiate university, located in New Delhi, India. it was established in 1922 as a unitary, teaching and residential university by an Act of the then Central Legislative Assembly of the British India. The University has grown into one of the largest universities in India. At present, there are 16 faculties, 86 academic departments, 77 colleges, and 5 other recognized institutes spread all over the city, with 132,435 regular students which include 114,494 undergraduates & 17,941 postgraduates. There are also 261,169 students in non-formal education program, of which UG students make up 258,831 whereas PG students are 2,338 in number. DU is one of the most sought after the institution of higher education in India. It is also among the university with highest publication count in India.

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