2. (Slide 3-8) Ch1- Nature and purpose of business
Concept of business
Comparison between Business, Profession &Employment
Classification of business activities
Objectives of business
Business risk and starting a business
(Slide 9-14) Ch2- Forms of business organisations
Basic introduction to all forms of business organisations
Common features among all forms of business organisations
Distinguishing table between various forms of business
organisations
Analysing data for choice of better form of business organisations
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4. Business is an economic activity which is done for the
sake of earning profit .
Business has some characteristics which are idol for a
good business activity. These features are as follows :-
An economic activity
Production or procurement of goods and services
Sale or exchange of goods and services
Dealing in goods and services on regular basis
Profit earning and uncertainty of return
Profit earning
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5. 5
BASIC BUSINESS PROFESSION EMPLOYEMENT
1. Mode of
establishment
Entrepreneur decision
and other legal
formalities
Membership of a
professional body and a
certificate of practice
Appointment letter and
service agreement
2. Nature of work
Provision of goods and
services to public
Rendering of expert,
personalized service
Performing work as per
service contract
3. Qualification
No minimum
requirement
Expertise and training
in specific profession
Qualification as per
employer’s need
4. Reward or
return
Profit earned Professional fee Salary wages
5. Capital
investment
As per size and nature
of the business
Limited capital needed
for establishment
No capital requirement
6. Risk
Uncertainty of Profit
leading to risk
Fees is regular and
certain so less risk
No or little risk
8. Code of conduct
No code of conduct is
prescribed
Professional code of
conduct is to be
followed
Norms of behaviour as
per the employer
6. 6
business
Extractive – iron & coal ore
Genetic– Evolution of plants & animals
Manufacturin
g
Analytic Synthetic
Construction Processing Assembling
Banking, transportation, warehousing
etc
Internal - Wholesale and retail
External – import , export and entrepot
Transportation, warehousing,
insurance, banking and finance,
advertising
7. An business cannot work on a single objective of profit
rather than why business have multiple objective.
Some of them are (WIMPPSE) :-
o W- Workers performance and attitude
o I - Innovations
o M-Manager performance and devlopment
o P- Productivity
o P- Physical and financial resources
o S- Social responsibility
o E- Earning profit
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8. A Business risk is something which occurs due to
uncertainty of profit and losses. It is mainly of 2 types
Pure and Speculative.
Nature of business risk are :-
Its causes are natural, manmade, economic, others.
Basic factors for starting business are :-
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It arises due to
uncertainties
It is an
essential part
of business
It depends upon
the nature and
size of business
Profit is th
reward for
bearing the risk
Selection of line of
business
Size of firm Form of ownership
Location of business Physical facilities Tax planning
10. 1. Sole proprietorship – when an person is the single reciptent
of all profit and losses he is called the sole proprietor or single
owner, it is considered to be best form.
2. Joint Hindu Family Business – when any business is
carried by a Hindu Undivided Family using ancestral property.
It is followed in India only.
3. Partnership – when two or more people carry out an
business under an agreement.
4. Cooperative society – when group of people come together
for a common purpose for e.g. - Amul cooperative society.
5. Joint stock company - it is an association of people
carrying out a business. A company is said to have its own
legal identity
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11. 1. Formation and closure – it refers to the ease in formation
or closure in any form of business organisation.
2. Membership – it tells about the kind of members and form of
membership required for an form of business organisation.
3. Liability – it tells us about how much the owner or the
members have to face liabilities in an business.
4. Management and control – it tells us about how much
power an owner or members or partners have in a business.
5. Continuity – it tells about the capacity of a business whether
it can survive longer or not .
6. Separate Entity – it tells whether a business organisation has
its separate identity or it is just known by name of its owner.
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13. 1. Formation and closure – when ease of formation is
referred the most convenient is sole proprietorship as it has
least legal and capital requirements but at small scale but in
large partnership is most preferable. As compared to
companies and cooperative societies.
2. Capital consideration – when it is talked about the
capacity of introducing capital and expansion of business
company form is best as it can raise more funds by the help of
members, partnership also has some advantage but it is only
preferable at medium or small scale along with sole proprietor.
3. Liability – in the case of liability the sole proprietor and
partnership forms are most affected as their personal assets
can also be dissolved, even in HUF only karta is responsible for
losses so all these have unlimited liability whereas in
companies there is limited liability.
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14. 1. Management and control – sole proprietorship is not
preferable for management but when it comes on power the
proprietor is the head but in case of partnership and company
advantage is more as there are professionals to deal with different
problems and also if they agree decision making can become easier.
2. Continuity – in terms of continuity sole proprietorship and
partnership are adversely effected by death, insolvency, insanity but
it doesn’t occur in case of HUF, company or cooperative society so
they are more preferable for a permanent structure.
3. Nature of business – when we want to have a direct contact
with customers or run a small scale industry proprietorship is best
whereas at large scale organisation form is preferable and when we
need professional help partnership is best. Also the risk involves
depends on the nature of an organisations.
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