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UNIT I- BOB.pptx
- 1. BASICS OF BUSINESS AND BUSINESS ENVIRONMENT Mrs. ANANTHAVALLI S P Assistant Professor Department of BBA School of Management
- 2. Business - Meaning Business is an organization comprising people who strive together to achieve common objectives and goals. Business is a legally-recognized organization which provides goods, services, or both to the consumers.
- 3. Business - Definition Prof. Owen defines, “A Business is an enterprise engaged in the production and distribution of goods for sale in the market or rendering of services for a price” Lewis Henry defines business as, "Human activity directed towards producing or acquiring wealth through buying and selling of goods.“ Stephenson defines business as, "The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants."
- 4. Nature of Business Economic Activity Buying and Selling Activity Continuous Process Profit Motive Existence of Risk and Uncertainty Creative and Dynamic Customer Satisfaction Social Activity Government Control Optimum Utilization of Resources
- 5. Objectives of Business Profit Earning Market Share Creation of Customers Regular Innovations Best Possible use of Resources Productivity Adoption of Fair Trade Practices Contribution to the General Welfare of the Society Economic Well- being of the Employees Social and Psychological Satisfaction of Employees
- 6. Cont… Development of Human Resources Creation of Employment Promotion of Social Justice Production According to National Priority Contribute to the Revenue of the Country Self-sufficiency and Export Promotion
- 7. Functions of Business Internal Acquisition of Finance Purchasing of raw-materials Hiring of labour Overhead expenses Production of goods External Marketing research Advertisement Sales promotion Appointing of sales agent Support
- 8. Comparison among Business, Profession and Employment Profession Profession includes those activities, which require special knowledge and skill to be applied by individuals in their occupation. Such activities are generally subject to guidelines or codes of conduct laid down by professional bodies. Those engaged in professions are known as professionals. Business Business refers to those economic activities, which are connected with the production or purchase and sale of goods or supply of services with the main object of earning profit. People engaged in business earn income in the form of profit. Employment Employment refers to the occupation in which people work for others and get remunerated in return. Those who are employed by others are known as employees.
- 12. Sole Proprietorship Sole Proprietorship in simple words is a one-man business organization. Furthermore, a sole proprietor is a natural person(not a legal person/entity) who fully owns and manages this type of entity. In addition, a sole proprietorship usually does not have to be incorporated or registered. Thus, it is the simplest form of business structure and the ideal choice to run a small business or medium scale business.
- 13. Features of Sole Proprietor Single ownership One man control Undivided risk Unlimited liability No separate entity of the business No Government regulations.
- 14. Advantage of Sole Proprietor Simplicity Quick Decisions High Secrecy Direct Motivation Personal Touch Flexibility
- 15. Disadvantage of Sole Proprietor Limited Funds Limited Skills Unlimited Liability
- 16. Partnership As a business enterprise expands beyond the capacity of a single person, a group of persons have to join hands together and supply the necessary capital and skills. According to Section 4 of the Partnership Act, 1932 partnership is “the relation between persons who have agreed to share the profits of a business carried on by all or anyone of them acting for all”. In other words, a partnership is an agreement among two or more persons to carry on jointly a lawful business and to share the profits arising there from. Persons who enter into such agreement are known individually as ‘partners’ and collectively as ‘firm’.
- 17. Characteristics of Partnership Association of two or more persons - maximum 10 in banking business and 20 in non-banking business Contractual relationship—written or oral agreement among the partners Existence of a lawful business Sharing of profits and losses Mutual agency among partners No separate legal entity of the firm Unlimited liability Restriction on transfer of interest Utmost good faith.
- 18. Formation of Partnership A partnership firm can be formed through an agreement among two or more persons. The agreement may be oral or in writing. But it is desirable that all terms and conditions of partnership are put in writing so as to avoid any misunderstanding and disputes among the partners. Such a written agreement among partners is known as Partnership Deed. It must be signed by all the partners and should be properly stamped. It can be altered with the mutual consent of all the partners.
- 19. Partnership Deed Name of the firm. Names and address of all the partners. Nature of the firm’s business. Date of the agreement. Principal place of the firm’s business. Duration of partnership, if any. Amount of capital contributed by each partner. The proportion in which the profits and losses are to be shared. Loans and advances by partners and interest payable on them. Amount of withdrawal allowed to each partner and the rate of interest. Amount of salary or commission payable to any partner. The duties, powers and obligations of all the partners. Maintenance of accounts and audit. Mode of valuation of goodwill on admission, retirement or death of a partner. Procedure for dissolution of the firm and settlement of accounts. Arbitration for settlement of disputes among the partners. Arrangements in case a partner becomes insolvent. Any other clause(s) which may be found necessary in particular kind of business.
- 20. Registration of Partnership Firm The Partnership Act, 1932 provides for the registration of firms with the Registrar of Firms appoint A partnership firm can be registered at any time by filing a statement in the prescribed form. The form should be duly signed by all the partners. It should be sent to the Registrar of Firms along with the prescribed fee.
- 21. Cont… Name of the firm. Principal place of its business. Name of other places where the firm is carrying on business. Names in full and permanent addresses of all the partners. Date of commencement of the firm’s business and the dates on which each partner joined the firm. Duration of the firm, if any. Nature of the firm’s business.
- 22. Cont… On receipt of the statement and the fees, the Registrar makes an entry in the Register of Firms. The firm is considered to be registered when the entry is made. The Registrar issues a Certificate of Registration. Any change in the above particulars must be communicated to the Registrar of Firms within a reasonable period of time so that necessary alterations may be made in the Register of Firms. The register is open for inspection on payment of a nominal fee.
- 23. Merits of Partnership Ease of Formation Larger Financial Resources Specialisation and Balanced Approach Flexibility of Operations Protection of Minority Interest Personal Incentive and Direct Supervision Capacity for Survival Better Human and Public Relations Business Secrecy
- 24. Demerits of Partnership Unlimited Liability Limited Resources Risk of Implied Agency Lack of Harmony Lack of Continuity Non-Transferability of Interest Public Distrust
- 25. Joint Hindu Family The Joint Hindu Family Business is a distinct form of organisation peculiar to India. Joint Hindu Family Firm is created by the operation of law. It does not have any separate and distinct legal entity from that of its members. The business of Joint Hindu Family is controlled under the Hindu Law instead of Partnership Act. The membership in this form of business organisation can be acquired only by birth or by marriage to a male person who is already a member of Joint Hindu Family. There are two schools of Hindu Law-one is Dayabhaga which is prevalent in Bengal and Assam and the other is Mitakshara prevalent in the rest of the- country. According to Mitakshara law, there is a son’s right by birth in the property of joint family. It means, when a son is born in family, he acquires an interest in the property jointly held by the family. The business of the Joint Hindu Family is controlled and managed by one person who is called ‘Karta’ or ‘Manager’. The Karta or manager works in consultation with other members of the family but ultimately he has a final say. The liability of Karta is unlimited while the liability of other members is limited to their shares in the business.
- 26. Characteristics of a Joint Hindu Family business Governed by Hindu Law Management Membership by Birth Liability Permanent Existence Implied Authority of Karta Minor also a Partner Dissolution
- 27. Advantages of Joint Hindu Family Business Easy to Start Efficient Management Secrecy Prompt Decision Economy Credit Facilities Natural Love between Members Freedom regarding Selection of Business
- 28. Disadvantages of Joint Hindu Family Business Limited Membership Limited Sources of Capital Limited Managerial Skill Unlimited Liability Misuse of Power
- 29. Joint Stock Company A Joint Stock Company is an organisation which is owned jointly by all its shareholders. Here, all the stakeholders have a specific portion of stock owned, usually displayed as a share. Each Joint Stock Company share is transferable, and if the company is public, then its shares are marketed on registered stock exchanges. Private joint stock company shares can be transferred from one party to another party. However, the transfer is limited by agreement and family members. A company is “an association of many persons who contribute money or money’s worth to a common stock and employ it in some trade or business, and who share the profit and loss (as the case may be) arising therefrom.” — James Stephenson “A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.” —Prof. L.H. Haney
- 30. Features of Joint Stock Company Separate Legal Entity Perpetual Number of Members Limited Liability Transferable share Incorporation
- 31. Types of Joint Stock Company Chartered Company – A firm incorporated by the king or the head of the state is known as a chartered company. Statutory Company – A company which is formed by a particular act of parliament is known as a statutory company. Here, all the power, object, right, and responsibility are all defined by the act. Registered Company – An organisation that is formed by registering under the law of the company comes under a registered company.
- 32. Advantages of Joint Stock Company Limited liability Perpetual existence Scope for expansion Professional management
- 33. Disadvantages of Joint Stock Company Legal formalities Lack of secrecy Lack of motivation Oligarchic management
- 34. Cooperative Society The word ‘co-operation’ stands for the idea of living together and working together. Cooperation is a form of business organisation the only system of voluntary organisation suitable for poorer people. It is an organisation wherein persons voluntarily associate together as human beings on a basis of equality, for the promotion of economic interests of themselves. The co-operative movement has been necessitated to protect the interests of weaker sections of society. The primary objective of this movement is ‘how to protect economically weaker sections of society’. In all forms of organisation, be it is a sole trade, partnership or joint stock company, the primary motive is to increase profits.
- 35. Features of Cooperative Society Voluntary Association Spirit of Cooperation Democratic Management Capital Fixed Return on Capital Cash Sale Moral Emphasis Corporate Status
- 36. Types of Cooperative Society Consumers’ Co-Operative Societies Producers’ Co-Operative Societies Co-Operative Marketing Societies Co-Operative Housing Societies Co-Operative Credit Societies Co-Operative Farming Societies Other Co-Operatives
- 37. Formation of Cooperative Society Name and address of the society. Aims and objectives of the society. Names and addresses of members of the society. Share capital and its division. Mode of admitting new members. A copy of the bye laws of the society.
- 38. Advantages and Disadvantages of a Cooperative Society Advantages Equality in Voting Status Limited Liability Stable Existence Economy in Operations Support from Government Ease of Formation Disadvantages Limited Resources Inefficiency in Management Lack of Secrecy Government Control Differences of Opinion