The document provides an overview of key concepts in business including definitions of business, the role and characteristics of business, different business sectors, types of business structures, and scope of commerce. It discusses concepts such as social responsibility, organizational structure, work specialization, and principles of organizational structure including chain of command, span of control, authority, and power.

2. OVERVIEW
There is little possibility that you would come to a true
understanding of the new global business environment or
the mind set of an entrepreneur simply by reading about it,
involvement, critical thinking, and most importantly, decision
making.
The experiences you gain in this program of study will lay a
foundation for future learning in business and in life. If a
student of business covers all of the essential areas of
study but misses the "feel" or perhaps, the anguish of
making critical decisions, then that student will only partly
understand what business is all about.

3. INTRODUCTION
Today is an interesting time to study business.
Advances in technology are bringing rapid changes in
the ways we produce and deliver goods and services.
The Internet and other improvements in
communication now affect the way we do business.
Companies are expanding international operations,
and the workforce is more diverse than ever.
Corporations are being held responsible for the
behavior of their executives, and more people share
the opinion that companies should be good corporate
citizens.

4. What is Business ?
DEFINITIONS:
1. “Business may be defined as human activities directed toward
providing or acquiring wealth through buying and selling of
goods.”
2. “Every human activity which is engaged in for the sake of
earning profit may be called business.”
3. “An institution organized and operated to provide goods and
services to the society, under the incentive of private gain” is
business.
4. Business as system is a combination of business commerce,
occupations, and resources to produces and distributes the
goods and services for profit while creating value for people in a
society .

5. Role of Business
Commerce
Occupations
Resources
=
INPUT PROCESS OUTPUT

6. CHARACTERISTICS
Following are the essential characteristics of a good business:
1. Capital
Capital is the lifeblood of every business. It is the most essential and
important element of business. In case of deficiency, loans can be
taken from various financial institutions.
2. Creation of Utility
Utility is an economic term referring to that characteristic of a
certain commodity, which can satisfy any human need. Business
creates utility, which gives benefit to the entire society as well as the
businessmen.
3. Dealing in Goods and Services
Every business deals with sale, purchase, production and exchange of
goods and services for some consideration.
4. Employment
Business is a good source of employment for its owners as well as for
other people, for example, employees, agents, transporters etc.

7. Con…
5. Islamic Process
Business is an Islamic way of earning living. Income from business is
known as profit, which is Rizq-e-Halal. The Holy Prophet Muhammad
himself did prosperous business.
6. Organization
Every business needs an organization for its successful working. A
proper organization is helpful in the smooth running of business and
achieving the objectives.
7. Productions or Purchase of Goods
A businessman deals in production or purchase of goods. These goods
are supplied to the people. So, it is necessary that more goods should
be produced so that demand of people may be fulfilled.
8. Risks and Uncertainty
Business involves a large volume of risk and uncertainty. The risk
element in business keeps a person vigilant and he tries to ward off his
risk by executing his policies properly.

8. NATURE OF BUSINESS
The following points state the nature of business in brief:
1. Economic Activity
Business is an economic activity as it is concerned with creation of wealth
through the satisfaction of human wants.
2. Human Activity
Business is an economic activity and every economic activity is done by
human beings. Thus, business is one of the most important human activities.
3. Social Process
Business is run by owners and employees with the help of professionals and
customers. Thus, business is a social process.
4. System
Business is a systematic arrangement of various elements, which leads to
the attainment of particular objective, according to a well-established plan.

9. Business sectors
Primary Tertiary
Secondary
Quaternary

10. Primary sector
 Larger sector in underdeveloped
& developing countries
 Less capital investment
 Less use of machinery
 Agriculture constitutes the
major part

11. Secondary sector
 Takes the output of the primary sector and manufactures
finished goods
 Important sector to promote economic growth and
development
 Important source of income in developing countries

12. Tertiary sector
 Significant contribution to GDP in developed
countries
 Provides key inputs to most other business
 Transformation of goods through providing
services

13. Quaternary Sector
The portion of an economy that is based on knowledge
applicable to some business activity that usually involves
the provision of services
Examples: Consultancy (offering advice to businesses) and
R&D (research, particularly in scientific fields)
Reasons for sectoral
change
 Cultural Changes
 Development of Markets
 Market orientation
 Rampant migration
 Focus on customer
relationship management

14. 14
Types Of Business
SOLE TRADER
Is a person that owns & runs their own
business
• one person provides all the
money(capital)
• one person makes all the
decisions
• one person keeps all the profit
Characteristics
• Easy to set up (no legal documents)
• Keep all the profits
• Make all the decisions
• Personal contact with customers
Advantages

15. 15
Con…
PARTNERSHIP
Two (2) to Twenty (20) people
collaborating together to run the business
as partners
• Capital provides by partners
• Collaborative decision making
• Partnership Agreement
Characteristics
• Share Profits , losses and risk
• Making shared decisions
• Less legal procedure
Advantages

16. 16
Cont.…
Private Limited Company
A business that is owned by 2 to 50 people
• 2 to 50 owners called shareholders.
• Shares (part ownership) cannot be
bought by the general public.
• Shareholder’s receive a vote for
every share they own
• Must have Ltd. After it’s name.
• Shareholders receive a share of the
profits called a dividend.
Characteristic
s

17. 17
• Limited liability - If the business fails
you can only lose the money that you
invested in the company. Your own
personal wealth cannot be touched.
• Business continues even when an owner
dies.
• Easier to raise finance as you have up
to 50 shareholders.
Advantages
Cont.…
• Legal Documents are needed to
set up a co.
• More costly to set up.
• Decision making and profits are
shared
Disadvantages

18. 18
Con…
FRANCHISING
Franchising is a form of business
organization in which a firm that
already has a successful product or
service (franchisor) licenses its
trademark and method of doing
business to another business or
individual (franchisee) in exchange
for a franchise fee and an ongoing
royalty payment.

19. 19
Con…
• Good work ethic.
• Ability to follow instructions.
• Ability to operate with minimal
supervision.
• Team oriented.
• Experience in the industry in
which the franchise competes.
• Adequate financial resources and
good credit history.
• Ability to make suggestions
without becoming upset if the
• suggestions are not adopted.
• Represents the franchisor in a
positive manner.
WHY
FRANCHISE?

20. SCOPE OF COMMERCE
1. TRADE
Trade is the whole procedure of
transferring or distributing the goods
produced by different persons or
industries to their ultimate consumers.
In other words, the system or channel,
which helps the exchange of goods, is
called trade.
TYPES OF TRADE :
There are two types of trade:
a) Home trade
b) Foreign Trade

21. Con…
2. AIDS TO TRADE
Trade mans biting and selling of goods, whereas, aids to
trade means all those things which are helpful in trade.
a) Banking
b) Transportation
c) Insurance
d) Warehousing
e) Agents
f) Finance
g) Advertising
h) Communication

22. 22
Social Responsibility
Social Responsibility definition:
Management philosophy that highlights the social and economic
effects of managerial decisions.
Or
The management’s acceptance of the obligation to consider
profit, consumer satisfaction, and societal well-being of equal
value in evaluating the firm’s performance.

23. 23
Organizational Structure
A chart that shows the structure of the
organization including the title of each manager’s
position and, by means of connecting lines, who is
accountable to whom and who has authority for
each area
Work specialization
A component of organization structure that involves
having each discrete step of a job done by a different
individual rather than having one individual do the whole
job
Principles/ Structure variables
• Chain of command
• Span of control
• Authority
• Power
• Responsibility

24. 24
Con…
Tall vs. Flat Organizations
• Tall organizations: more management layers and more
hierarchical controls.
• Flat organizations: fewer management layer and
decision making closer to the customer.