Boe unit 1

KLE SOCIETY’S LAW COLLEGE
BENGALURU
(Constituent college of KLE Technological
University)
BUSINESS STUDIES - I:
Business Organization & Environment

Course Objectives:
• To acquaint the students of law to understand and
appreciate essentials of business and forms of
businesses.
• To know the minor and major factors affecting the
business in various streams and to understand the
different environment like political, legal,
technological, social and economic environment in the
business.
• To acquire the knowledge about government and its
policy that impacts the business.
• A student of law would be able to interrelate the
concept of business through the lens of law.

UNIT- I
Introduction to Business Organisation:
• Meaning, Nature, Scope and
• Social responsibility of Business,
• Objectives,
• Essentials of successful business,
• Functional areas of business.
• Concept of Business Organization.

Introduction
• Business is an organization comprising people who
strive together to achieve common objectives and goals.
• It is important for a business organization to have a
vision that implies what it intends to achieve in the
future and values that represent the organization’s
integrity.
• A business organization is a commercial, industrial, or
mercantile enterprise, and comprises the people who
constitute it.
• Business is a legally-recognized organization which
provides goods, services, or both to the consumers.

• The purpose of every business is to serve
customers well.
• It has to deliver value by offering good quality
goods/services at an affordable price.
• To survive and flourish in the economic
jungle, businesses have to win the hearts of
customers by putting resources to best use.
• Businesses, essentially, exist for customers.

Definition
• According to F. C. Hooper, “The whole complex field of
commerce and industry, the basic industries, processing and
manufacturing industries, the network of ancillary services,
distribution, banking, insurance, transport and so on, which
serve and interpenetrate the work of business as a whole,
are business activities.”
• A business [entity] is an organisation or any other entity
engaged in commercial, professional, charitable or
industrial activities. It can be a for-profit entity or a not-for-
profit entity and may or may not have a separate existence
from the people/person controlling it.
• A business [activity] is a commercial activity which
involves providing goods or services with a primary motive
of earning profits.

• 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”.
• Prof. Hancy efficiently summed up the meaning of
business activities in the following words – “On one hand
business rests on the technical processes of trade and
manufacture. On the other, it looks to the market. At the
junction stands the businessman, either directing the
technical process of production or gauging the market or
doing both but always engaged in buying and selling for
the purpose of gain.”
• According to Melvin Anshen, it is the way, men make their
living, in short, the term, and “Business refers to the
activity which is pursued by a human being of the
acquisition of wealth”. Literally, “Business” means the
state of being busy. It is associated with any activity that
one can be busy about.

Nature of Business
• Regular Process: It is an activity which is
performed repeatedly to generate profit.
• Economic Activity: The whole sole purpose is
maximizing wealth.
• Creates Utility: The goods or service must be
such that it creates form utility – conversion of
products in a consumable form, time utility –
making the goods and services available when
needed; and place utility – availability of goods or
services wherever required, for the consumers.

Nature of Business
• Capital Requirement: Any venture requires
fund depending on the size and its type.
• Deals in Goods and Services: It is related to
manufacturing and offering goods for sale or
catering services.
• Risk: All businesses have a risk factor or
uncertainties of failure and loss.

Nature of Business
• Profit Earning Motive: The initial motive of a
businessman is making a profit out of his venture.
• Satisfaction of Consumer’s Need: It is
concerned with the fulfillment of the
customer’s demands and needs.
• Involves Buyer and Seller: There are majorly
two parties involved, the customer and the
merchandise.
• Social Obligations: It has some social
responsibilities, like creating job opportunities,
dealing with licensed products, etc.

Scope/ Classification of Business
• The scope of ”Business” is wider than that of
the terms “Trade “ and “Commerce”.
• The term trade and commerce are often used
synonymously.
• This usage is not correct.

Industry
Industry is concerned with the making or manufacturing of goods. It
is that constituent of production which is involved in changing the
form of goods at any stage from raw material to the finished product,
e.g., weaving woolen yarn into cloth. Thus, industry imparts ‘form
utility’ to goods.
• The goods produced may either be used by other enterprises as raw
materials for further production, they are known as “producers
goods”.
• The production of plant, machinery equipment etc. are, examples of
producers’ goods. When goods are finally used by consumers they are
known as consumers’ goods. The examples of such goods are cloth,
bread, groceries, drugs, etc.
• An enterprise may produce materials which will further be processed
by yet another concern for converting them into finished goods.
• These goods are known as intermediate goods. The examples of this
category are—plastics, rubber, aluminium, etc.

Classification of industries
On the basis of type of goods produced:
(i) Primary and Genetic Industry
(ii) Extractive Industry
(iii)Construction Industry
(iv)Manufacturing Industry

On the basis of size and investment
(I) Large Scale Industry
(II) Small Scale Industry
On the basis of technology employed
(i) Heavy Industry
(ii) Light Industry

Commerce
• Business and Profession
• Business and Employment

On the basis of type of goods produced
The industries may be studied on the basis of the type of
goods produced
(i) Primary and Genetic Industry:
• Genetic industry is related to the re-producing and
multiplying of certain species of animals and plants with the
object of earning profits from their sale.
• Nurseries, cattle breeding, fish hatcheries, poultry farms are
all covered under genetic industry.
• The plants are grown and birds and animals are reared and
then sold on profit.
• No doubt nature, climate and environment play an
important part in these industries but human skill is also
important.

(ii) Extractive Industry
• The extractive industry is engaged in raising some form of
wealth from the soil, climate, air, water or from beneath the
surface of the earth.
• These industries are classified into two categories. In the
first category, workers merely collect goods already
existing.
• Mining, fishing, and hunting is covered in this category. In
the second category’, the goods are to be produced by the
application of human skill, i.e., agriculture and forestry.
• Extractive industries supply basic raw materials that are
mostly the products of the soil. Products of these industries
are usually transformed into many useful products by
manufacturing industries.

(iii) Construction Industry:
• This industry is engaged in the creation of infra-
structure for smooth development of the economy.
It is concerned with the construction, erection or
fabrication of products.
• These industries are engaged in the construction of
buildings, roads, dams, bridges, and canals.
• These industries use the products of other
industries such as cement, iron, bricks and wood,
etc. Engineering and architectural skills play an
important part in construction industry.
• Engineering and constructing firms are organised
for undertaking operations of construction industry.

(iv) Manufacturing Industry
• This Industry is engaged in the conversion of raw
materials into semi-finished or finished goods.
• This industry creates form utility in goods by
making them suitable for human use.
• Most of the goods which are used by consumers
are produced by manufacturing industries.
• These industries supply machines, tools and other
equipment’s to other industries too.

Assembling Industries
• Assembling Industries put together various
manufactured products and make a new
product as in the case of car, scooter, bicycle,
radio and television etc

II. On the basis of size and investment:
(i) Large Scale Industry:
• Though there may not be any hard and fast rule for such
classification but government has fixed certain limits on investments
which differentiate between large scale and small scale industries.
• At present the industries investing more than Rs. 3 crore in plant and
machinery in manufacturing units and in ancillary units are covered
in large scale sector.
• Large scale units are in a position to use latest methods of
production and economise on various inputs.
(ii) Small Scale Industry:
• The units having an investment upto Rs. 1 crore in plant and
machinery are small units.
• A small scale unit has the disadvantage of lower production and
comparatively higher cost of production.

III. On the basis of technology
employed
(i) Heavy Industry:
• The industry engaged in the production of
machinery, steel, power generation are called
heavy industry. These units need heavy
.investments and employ complex technology in
production.
(ii) Light Industry:
• Industries engaged in producing consumer goods
etc. arc called light industries. The production
technology is simple and machinery used is
inexpensive.

Commerce
• All those activities which are connected with
taking goods and services from producers to
users come under the purview of commerce.
• The goal of commerce is to ensure a proper
flow of goods and services for the benefit of
both producers and consumers.
• People are able to buy goods produced
anywhere in the world with the help of
commerce.

Commerce activities may precisely
be described as
(i) Commerce is related to the activities dealing with
distribution and exchange of goods and services. These
activities relate to trade aspect
(ii) Commerce covers all these activities which smoothen
or help trade. These activities are transport, banking,
insurance, warehousing, advertising, etc. These are
ancillary services and are called aids to trade.
(iii) Commerce is a part of business. Business is a wider
concept and includes industry too.
(iv) Commerce is a part of economics. Economics is a
study of human beings as consumers and producers and
it has a much wider scope than commerce.

Business and Profession:
Business is a sum total of activities pursued with a
purpose to produce and accumulate wealth.
A profession is also adopted to earn a living. The
purpose of both business and profession is to earn
a living.
Though both look similar yet there is a difference
between the two.
Business and Employment:
In employment a person serves an employer under
certain agreement and is paid an agreed
remuneration.
A business, on the other hand, is working for
himself and aiming at earning profit out of it.

Trade
• Trade is that branch of commerce which is
concerned with the sale, transfer or exchange of
goods and services.
• It involves in buying and selling of goods and
services.
• Trade is the nucleus of commerce because all
commercial services like transportation, storage,
insurance, banking, packaging, advertising, etc.,
revolve around it.
• The super-structure of commerce is built upon the
foundation of trade.

Trade is of the following types:
a. Internal or Home Trade:
• It implies the buying and selling of goods within the
boundaries of a country Payment for the goods sold is
made in national currency, either in cash or through the
banks.
• Such trade is also known as domestic trade or inland
trade.
Internal trade may be further classified into two
categories:
i. Wholesale trade – It refers to the purchase and sale of
goods of a specific variety in bulk. A wholesaler buys
goods in large quantities directly from manufacturer(s)
and sells them in comparatively smaller quantities to
the retailers.
ii. Wholesale trade constitutes a link between the
producers and the retailers.

ii. Retail trade – It involves the sale of goods to
the ultimate consumers. A retailer buys goods
from wholesaler or manufacturers and sells
them to the final consumers. He serves as the
last link in the chain of distribution.
Retail trade is carried on in several forms, e.g.,
departmental stores, multiple shops, mail order
houses, super bazaars, etc.
Small scale traders like hawkers, peddlers,
street stall holders, pavement dealers and
neighborhood stores also carry on retail trade.

b. International or Foreign Trade:
• It consists of the exchange of goods and services
between persons or organizations operating in two or
more countries.
• International trade involves the use of foreign currency
(known as foreign exchange) and international means
of transport.
• A system of international banking has been developed
to facilitate payment in the foreign exchange
transactions.
• International means of transport consist generally of
shipping and airways. International trade is also carried
on between the governments of different countries.

International trade may be further
classified into the following categories:
i. Import trade – It involves purchase of goods
from foreign countries for use in the domestic
market.
ii. Export trade – It is concerned with the sale of
domestic goods to foreign buyers or in foreign
markets.
iii. Entrepot trade – Entrepot or re-export trade
involves the import of foreign goods with a
view to re-export them.

Social responsibility(SR) of Business
• A business is permitted by society in order to carry
on commercial or industrial activities wit help of
that earn profit.
• But it is obligatory on the side of business that not
to do anything, that is undesirable from point of
view of society.
• The manufacture and sale of adulterated good, not
paying due tax, doing deceptive, polluting
environment works exploitation are some
examples of undesirable practice in the point of
view society.

Continuation of Introduction of SR
• Which may increase the enterprise’s profits but on
other hand have adverse effect on society at large?
Unlike to this, supplying good quality product,
having healthy working condition paying taxes
honestly, installing pollution controlling devises
or prevention of pollution and sincerely solve
customer complaints are some examples of social
desirable activities which improve of business as
well as make them profitable.
• Business can get durable success though social
responsible ethically upright behavior.

Definition of Social Responsibility
• “Social responsibility of business refers to the
obligations of businessmen’s decisions and
actions taken for reasons at least partially
beyond the firm’s direct economic and
technical interest.” —Keith Davis
• “Social responsibility is to pursue those
policies, to make those decisions, or to follow
those lines of action which are desirable in
terms of the objectives and values of our
society.” —Howard D. Bowen

Definition of Social Responsibility
• “Corporate Social Responsibility is a management
concept whereby companies integrate social and
environmental concerns in their business operations and
interactions with their stakeholders.” —United Nations
Industrial Development Organisation (UNIDO)
• “Corporate Social Responsibility is the continuing
commitment by business to behave ethically and
contribute to economic development while improving
the quality of life of the workforce and their families as
well as of the local community and society at large.” —
The World Business Council for Sustainable
Development (WBCSD).

Meaning of Social Responsibility
• Social responsibility means sustaining the equilibrium
between the two. It pertains not only to business
organizations but also to everyone who’s any action
impacts the environment. This responsibility can be
passive, by avoiding engaging in socially harmful acts,
or active, by performing activities that directly advance
social goals.
• According to concept of Social Responsibility of
business the objective of managers for taking decision
related to business is not only to maximize profit or
shareholder value but also to serve and protect the
interest of other members of its society like consumer,
worker and community as a whole.

Different views on Social
Responsibility
Communist view:
They are suggesting imposition of social
responsibilities on business through laws of the
states as organization will not satisfy the society if
not levied on them by force.
Capitalist view:
Businessmen should go with the business of
producing quality goods & services efficiently
and leave the solution of social problems to the
government.

Different views on Social
Responsibility
Pragmatic view:
First earn money and then the organization should
focus on SR. because a loss making organization is
actually social problem of the society. So development
of the organization comes first rather than the SR.
Trusteeship view:
It says that earn lots of money but do remember that
your wealth is not yours; it belongs to the people. The
view was influenced by GITA teaching of
APARIGRAHA (non-possession) and SAMBHAWA
(equalism).

Social Responsibility of business
towards different groups
Towards the consumers and the community:
• With the help of creativity, innovation, technology provide cheap
and quality product & services to their customers.
• Deciding priorities of production in the country’s interest &
conserving natural resources.
• Misleading ads, misbranding of articles with respect to their
material, quality, origin etc., selling second hand goods, cartels of
the companies, false claims should be stopped.
• Preventing the creation of monopolies.
• Providing after sales service & Eco-friendly production.
• Achieving better PR & supporting education, slum clearance etc.

Towards Employees and Workers
• A fair wage to workers as per the standard norms
of the industry and the government.
• Smooth selection process without any kind of
discrimination on grounds of sex, race, religion &
physical appearance.
• Security of job and good quality work life.
• Participative management.
• Freedom, self-respect, self-realizations.
• Providing the opportunities for creative talent and
incentives.

Towards the state
• To bring the harmony between limited enterprise
and wider social interest of the country.
• Avoid active participation in and identification
with political party.
• To provide the safeguard against the misbehaving
business practices.
• To implement rural uplift and secure balanced
development of the country.
• Maintaining equality of resource allocation and
enforce distributive justice.

Towards Shareholders and other
Businesses
• Should have the internal accountability and
transparency.
• Fairness in relations with competitors i.e.
competition on some ethics and fair play.

Social performance of business in
India
• ITC afforesting private degraded land to increase
the supply of raw material for its paper factory.
• ITC is giving some revenue part to the welfare of
child education when the customer purchase a
note book of ITC.
• Nestle providing financial and technical
assistance for constructing deep-bore well to the
milk suppliers at Moga, Punjab.
• Cadbury India, Glaxo, Richardson Hindustan are
helping the farmers to grow crops which serve as
a raw material for them.

• https://www.youtube.com/watch?v=uFI5CiiSH
0w&ab_channel=P%26GShiksha
• https://www.youtube.com/watch?v=822UpLM
zx_M&ab_channel=AdityaBirlaGroup

Need of business assuming social
responsibilities
(i) Response to Social Demand: It is a well known fact that
business is set up to earn profit by producing goods or
rendering services to the members of the society. Thus, the
business is the creation of the society in the sense that its
primary objective is to fulfil the needs of the members of
the society
(ii) Long-term self-Interest of Business: There is a growing
realization on the part of the enlightened businessmen that
it will be in their self-interest to fulfil the demands and the
aspirations of the society. People who have a good
environment, education, and opportunity make better
employees, customers and neighbours for business than
those who are poor, ignorant and oppressed. Acceptance of
a large measure of responsibility towards the community
is, therefore, good business as well as good citizenship.

iii. Government Intervention: If the businessmen do not
rise to the occasion in meeting the social
responsibilities, the Government will step in and make
them assume such responsibilities through legislation
iv. Public Image: The antennas of business managers are
turned to the public opinion as good public opinion is
a precondition to the success of any business.
Therefore, they seek to maintain a proper image of
their business in the public mind by assuming social
responsibilities.
v. Socio-Cultural Norms: A business operates within a
set-up of socio-cultural norms and restraints. No
society will allow a business to maximize its profits at
the cost of the society. It requires the business to
respond to social obligations.

vi. Consciousness among Consumers: The consumers
of today are well informed. They accept higher quality
products at reasonable rates from the business. They
can organize themselves in case a business resorts to
malpractices such as adulteration and black marketing.
vii. Strong Trade Unions: The level of education among
the workers has been increasing. They understand the
need of organizing themselves into unions to advance
their economic and social interests. The government
has also enacted social security measures due to which
it has become difficult for the business houses to
ignore the interests of the work force.

WHAT IS CORPORATE SOCIAL
RESPONSIBILITY (CSR)?
• Corporate social responsibility (CSR) is the idea that a business has
a responsibility to the society that exists around it.
• Firms that embrace corporate social responsibility are typically
organized in a manner that empowers them to be and act in a
socially responsible way.
• It’s a form of self-regulation that can be expressed in initiatives or
strategies, depending on an organization’s goals.
• Exactly what “socially responsible” means varies from organization
to organization.
• Firms are often guided by a concept known as the triple bottom line,
which dictates that a business should be committed to measuring its
social and environmental impact, along with its profits.
• The adage “profit, people, planet” is often used to summarize the
driving force behind the triple bottom line.

TYPES OF CORPORATE SOCIAL
RESPONSIBILITY
1. Environmental Responsibility
2. Ethical Responsibility
3. Philanthropic Responsibility
4. Economic Responsibility

1. Environmental Responsibility
• Environmental responsibility refers to the belief that organizations
should behave in as environmentally friendly a way as possible. It’s
one of the most common forms of corporate social responsibility.
Some companies use the term “environmental stewardship” to refer
to such initiatives.
• Companies that seek to embrace environmental responsibility can do
so in several ways:
• Reducing pollution, greenhouse gas emissions, the use of single-use
plastics, water consumption, and general waste
• Increasing reliance on renewable energy, sustainable resources, and
recycled or partially recycled materials
• Offsetting negative environmental impact; for example, by planting
trees, funding research, and donating to related causes

2. Ethical Responsibility
• Ethical responsibility is concerned with ensuring an
organization is operating in a fair and ethical manner.
Organizations that embrace ethical responsibility aim to
achieve fair treatment of all stakeholders, including
leadership, investors, employees, suppliers, and customers.
• Firms can embrace ethical responsibility in different ways.
For example, a business might set its own, higher minimum
wage if the one mandated by the state or federal government
doesn’t constitute a “livable wage.” Likewise, a business
might require that products, ingredients, materials, or
components be sourced according to free trade standards. In
this regard, many firms have processes to ensure they’re not
purchasing products resulting from slavery or child labor.

3. Philanthropic Responsibility
• Philanthropic responsibility refers to a business’s aim to
actively make the world and society a better place.
• In addition to acting as ethically and environmentally
friendly as possible, organizations driven by
philanthropic responsibility often dedicate a portion of
their earnings.
• While many firms donate to charities and nonprofits
that align with their guiding missions, others donate to
worthy causes that don’t directly relate to their
business.
• Others go so far as to create their own charitable trust
or organization to give back.

4. Economic Responsibility
• Economic responsibility is the practice of a
firm backing all of its financial decisions in its
commitment to do good in the areas listed
above.
• The end goal is not to simply maximize
profits, but positively impact the environment,
people, and society.

FACTS
• India is the first country in the world to make
corporate social responsibility (CSR)
mandatory, following an amendment to
the Companies Act, 2013 in April 2014.
• Businesses can invest their profits in areas
such as education, poverty, gender equality,
and hunger as part of any CSR compliance.

OBJECTIVES OF BUSINESS
• Each organization needs a clear vision, mission, goals, objectives,
and long-term strategies to make their business grow.
• These statements help in outlining the organization’s future. Also,
create a mental image of the organization.
• Business objectives are something, which a business organisation
wants to achieve or accomplish over a specified period of time.
• It is generally believed that a business has a single objective, that is,
to make profit and safeguard the interests of its owners.
• However, no business can ignore the interests of its employees,
customers as well as the interest of society as a whole.
• Business objectives also need to be aimed at contributing to national
goals and aspirations as well as towards international wellbeing.

Power
Quality
Products and
Services
Profit
Growth
Employee
Satisfaction and
Development
Market
Leadership
Service to Society
Joy of Creation
Challenging

OTHER OBJECTIVES OF
BUSINESS
Thus, the objectives of business may be
classified as –
(a) Economic objectives
(b)Social objectives
(c) Human objectives
(d)National objectives
(e) Global objectives

Economic objectives
Economic objectives of a business refer to the objective
of earning profit and those which have a direct impact on
the profit-earning objective of business.
Some of the main economic objectives of business are:
(i) Earning of adequate profits;
(ii) Exploring new markets and creation of more
customers;
(iii) Growth and expansion of business operation;
(iv) Making innovations and improvements in goods and
services; and
(v) Making use of available resources in the best possible
manner.

Social objectives
Social objectives of business are those, which are desired to
be achieved for the benefit of the society. Some of the major
social objectives are:
(i) Production and supply of quality goods and services to the
society;
(ii) Making goods available at reasonable prices;
(iii) Avoidance of unfair practices like hoarding, black-
marketing, over-charging, etc.;
(iv) Contributing towards the general welfare and upliftment of
the society;
(v) Ensuring fair return to the investors;
(vi) Taking steps in the direction of consumer education; and
(vii)Conserving natural resources and wild life and protecting
the environment.

Human objectives
Human objectives of business primarily refer
to the objectives aimed at safeguarding the
interest of its employees and their welfare.
Some of the major human objectives are:
(i) Providing fair remuneration and incentives to
the employees;
(ii) Arrangement of better working conditions
and proper work environment for the
employees;

Human objectives
(iii) Providing job satisfaction by making the jobs
interesting and challenging, putting the right
persons in right job;
(iv) Providing the employees with more and more
promotional opportunities;
(v)Organising training and development
programmes for the growth of the employees; and
(vi) Providing employment to the backward classes
of the society and people who are physically and
mentally challenged.

National objectives
National objectives of business are the objectives of
fulfilling the national goals and aspirations like:
(i) Creation of employment opportunities;
(ii) Promotion of social justice;
(iii) Produce and supply goods in accordance with the
national interest and priorities;
(iv) Payment of taxes and other dues honestly and
regularly;
(v) Helping the state in maintaining law and order by
promoting good industrial relations; and
(vi) Implementing government’s economic and financial
policies framed from time to time.

Global objectives
Global objectives of business are the
objectives of facing the challenges of global
market. Some of the global objectives are:
(I) Making available globally competitive goods
and services; and
(II) Reducing disparities among rich and poor
nations by expanding its operations.

Essentials of successful business
1. Setting Objectives
2. Proper Planning
3. Sound Organisation
4. Proper Financial Planning
5. Location and layout of Plant
6. Marketing System
7. Research / An action-oriented approach
8. Dynamic leadership
9. Product-market fit
10. The right people
11. Customer loyalty
12. Targeted advertising.

Setting Objectives
• Objectives is the first thing to be done by the
management.
• What is to be done.
• Means will be determined to achieve the objectives.
• The nature of product to be produced, whether to
produce the whole product or part of it should be
decided.
• In case of service business the nature and type of
service to be provided should be decided.
• It is not only the management which should be
conversant with the business objectives but every
person in the concern should know the aims and goals
of the business.

Proper Planning
• After determining, the objectives, the work should be
planned in all its perspectives.
• Planning involves forecasting and laying down the course of
action.
• It involves planning for both present and future. What is to
be achieved and how it is to be achieved is of primary
significance for the present.
• Future is always uncertain and the estimation of future
happenings is very difficult.
• In planning for the future, an effort is made to estimate the
future uncertainties and determine the possible course of
action for the coming period.
• Thus, planning also helps the management to prepare itself
for facing the uncertainties of tomorrow.

Sound Organisation
• Organisation is an arrangement by which tasks are assigned
to employees so that their individual efforts contribute
effectively to the achievement of clearly defined purposes.
• The duties and responsibilities of all persons arc defined
and they should know what they arc to do.
• An effective organisation system is essential for the success
of a business.
• Firstly, a decision should be taken about the form of
ownership, i.e., sole trade, partnership, Joint Stock
Company.
• Then a suitable internal organisation should be developed.
No work should be left unassigned. The supervisors and
subordinates should know their roles in the business.

Proper Financial Planning
• The requirements of finance and its possible
sources should be decided at the time of starting
the enterprise.
• The purpose of financial planning is to make
sure that adequate funds are raised at the
minimum of cost.
• The required capital should be made available
at all times, otherwise, it will hamper the work.
• The scarcity of capital and too much of it both
will be bad for the concern.

• The availability of excess capital may tempt the
management to spend more money on
inventory and on fixed assets.
• A proper plan is necessary for providing funds
for the present needs and future developmental
plans.
A financial plan will determine:
(a) The needs of capital,
(b) Sources for collecting funds, and
(c) Administration of capital structure.

Location and layout of Plant
• One of the important decisions are regarding the location of the
plant.
• The plant should be located at a place where all factors of production
arc available at lowest costs.
• The aim of reaching an optimum point will be achieved only if the
place of location of the businesses is suitable.
• Raw materials, labor, power and markets for the finished products
should be available near the place of location.
• After deciding about location, a decision is made about layout of the
plant.
• The setting up of the machinery and equipment should be systematic
so that the flow of production should be smooth and uninterrupted.
• The office building and warehouse etc., should be located near the
factory. Proper layout will enable the economical use of available
space.
• Proper location and layout of the business are necessary for the
success of a business.

Marketing System
• The marketing aspects of a business are more important
than even production.
• There is no use of producing a thing if it cannot be sold.
• Marketing management is essential for earning profits.
• Management should decide about the channels of
distribution.
• Whether to sell directly to consumers or to sell through
wholesalers?
• It should be decided after taking into consideration
various aspects of goods.

Research / An action-oriented approach
• Change is the essence of business.
• Research is essential to start a business, and need to
continuously invest in own knowledge as you run and
grow your business.
• Many miss this opportunity to become business owners
because they spend too much time dreaming about it
and not moving forward.
• Successful business owners understand the risk and
potential rewards of starting a business.
• They put their knowledge into practice and continually
learn from their successes and failures.

Dynamic leadership
• The success of an enterprise will depend upon the
efficiency of its management. The task of
management is to plan, organise, co-ordinate and
direct various activities for achieving business
objectives.
• This will be possible only if the leadership is
dynamic.
• The operation managing the concern should have
foresight, initiative, courage and aptitude for a
change.
• These qualities are necessary in the leadership to
take the concern on the road of progress.

Product-market fit
• If customers want and can afford what you’re
selling, then you may have found a good
product-market fit: your product fits your
target market.
• Whether you’re selling a physical product,
teaching a course online, opening a restaurant
or providing a service, finding the best way to
market your offering is essential to success.

The right people
• Most small businesses rely on teamwork. whom to
hire and whom to fire. hire employees with skills
for the job and reflect your company’s mission and
values.
• Your team includes the consultants and experts you
hire, such as an accountant or a business attorney.
• Additionally, you could find ways to meet other
business owners and learn from their experiences,
or find a mentor.
• Learning from others’ experiences, and sharing
your own business successes or failures, is
valuable regardless of the type of business you run.

Customer loyalty
• Building a loyal customer base can take time, but it’s also a
sign of a successful business.
• Loyal customers provide two great benefits: recurring
revenue and word-of-mouth referrals.
• How do you build customer loyalty? Provide excellent
customer service, tell the story of your company’s vision or
mission, and explain the value of the products or services
you sell.
• Some customers may even be loyal to small business
owners who are outstanding members of their community.
• Many communities encourage people to “buy local” to
support and grow the economy and help their community
thrive.

Targeted advertising
• Customers can’t support your business if they
don’t know it exists.
• Whether you’re running a physical store or e-
commerce shop (or both),
• you’ll want to create a marketing plan
to promote your business and figure out which
types of advertising are most effective with
your audience.

FUNCTIONAL AREAS OF BUSINESS
• HUMAN RESOURCES (HR)
• ACCOUNTING AND FINANCE
• MARKETING AND ADVERTISING
• PRODUCTION
• INFORMATION TECHNOLOGY
• OPERATIONS
• CUSTOMER SERVICE
• PURCHASING
• LEGAL DEPARTMENT

HUMAN RESOURCES (HR)
• Recruiting people into the company is probably the
most well-known task of this business department.
However, there’s actually a lot to Human Resources
than just filling in the headcount.
• They have to make sure that the people they recruit have
the right skills, experience, and qualifications based on
what the company needs.
• Aside from recruitment and staffing, HR is also in-
charge of major areas like compensation and benefits,
training and learning, labor and employee relations, and
organisation development.
• Success of any organisation lies in its people, Human
Resources is considered as the most critical asset of a
company.

ACCOUNTING AND FINANCE
• If Human Resources is the heart of a company, Accounting and
Finance can be considered as its lifeblood since it takes care of all
money matters. After all, a company will not be able to operate
without cash even though it is possible to start a business with no
money.
• The two primary responsibilities of Accounting and Finance have to
do with the money that is going in (Accounts Receivables) and
money that’s going out (Accounts Payable). They are also the ones
in charge of Payroll, making sure that all employees are paid
accurately and on time.
• Reporting and financial statements that can be used for budgeting,
forecasting and other decision-making processes are also being
handled by this department. If you plan on automating your
business, accounting apps and software can help make your business
more productive.

MARKETING AND
ADVERTISING
• Business department plays a vital role not only in promoting
business as well as its mission and vision.
• Developing product packaging, pricing, as well as creative materials
for the company’s target customers. Department may carry out
research and do surveys to have a better understanding of what
customers need.
• Responsibilities of the Marketing and Advertising Department may
also include one or more of the following:
• Defining and managing your brand
• Social media management and monitoring
• Content creation for your website
• Serving as media liaison
• Producing internal marketing communications for your employees

PRODUCTION
• This is the functional area of business that turns inputs (raw
materials) into finished products or outputs through a series
of production processes.
• Running a t-shirt printing company, Production Department
will be the people who use the printing machines.
• The products that are to be sold to customers need to be of
good quality and free from defects.
• Department follows specific standards and targets for each
section of the production process.
• Both the quality and quantity of products coming from the
production line will and should always be monitored closely
by the Production Department.

INFORMATION TECHNOLOGY
The Information Technology (IT) Department is responsible for the
architecture, hardware, software and networking of computers in a
business.
Their main tasks include:
1. Providing various forms of support so employees can make the
most effective use of IT resources that are relevant to the business
2. Managing information security to protect the IT infrastructure and
corporate data from viruses, cybercriminals, and other threats.
3. Data management which includes the collection, storage, and
distribution of data to employees who need to access them
4. Development and operation of the network to support effective
communication and collaboration within the company
5. Website maintenance

OPERATIONS
• The exact duties of the Operation Department vary
from business to business.
• However, its goals, including that of the managers who
run them, are generally the same.
• Mainly, it is the one responsible for overseeing,
designing and controlling the process of production.
They can also redesign business operations if necessary.
• To ensure that the business is running efficiently, a
well-run Operations Department does as much as it can
using as little resources and time whenever possible.
• Operations Departments also aim to deliver the highest
quality products or services.

CUSTOMER SERVICE
• The one who is in charge of interacting with customers is the
Customer Service Department. It can include answering inquiries,
processing of orders, and addressing customer concerns and
complaints.
• Customer Service Representatives are the first line of contact with
the public for many businesses.
• Primary responsibilities of this department is to establish and
cement the relationship of your business to the public.
• A good Customer Service Department will be able to create,
maintain, and retain the relationship of the business to its
customers.
• Retaining your customers is not always about having the best
products or services to offer. Although these things also play a
considerable role, some customers are actually willing to pay
slightly more in exchange for excellent customer service.

PURCHASING
• The procurement of raw materials, machinery,
equipment, and supplies are being handled by the
Purchasing Department.
• In a manufacturing company, for instance, the
Purchasing Department will take care of getting all the
necessary materials for production.
• On the other hand, it will make sure that there are
enough products on the shelves or in the warehouses
for retail companies.
• Whatever the case may be, this department sees to it
that the materials needed are of the right quantity, the
right price, and are available at the right time.

LEGAL DEPARTMENT
The Legal Department is responsible for providing legal services
and advice to the company, its departments, and its employees. They
act as the official or formal representatives on behalf of the company
or the owner.
This department also deals with legal matters concerning the
company including:
1. Business development
2. Contract management
3. Real estate transactions
4. Customer claims against the company for product damages and
defects
5. Litigation
6. Employment law
7. And a whole lot more.

Concept of Business Organization

Concept of Business
• The business concept is the fundamental idea
behind the business.
• The business model, plan, vision, and mission
are developed based on this concept.
• Uber, for example, was started on the concept
of aggregating taxi drivers and providing their
services on demand under one brand. Every
other business strategy was developed based
on this concept.

VISION
• A Vision is a broad explanation of why the firm exists
and where it is trying to lead.
• The vision provides the point of reference on the
horizon - a beacon of light.
• The vision seeks to answer the following questions;
 Where do we go from here?
 What changes lie ahead in the business landscape?
 What differences will these changes make to the
company's present business?

VISION OF KLELCB
• To inspire, sculpt and empower the students
through holistic education to attain the
objective of ‘Learn with Purpose and Live with
Purpose’.
• The Vision of Infosys is - “To be a globally
respected Corporation that provides best – of
– breed business solutions Technology
vendors and society at large”.

MISSION
• A Mission statement outlines the fundamental purpose of the
organization.
• A Vision becomes tangible as a mission statement.
• If the vision statement answer the question “ where do we go from
here?”, the mission statement answer “what is our business ?”
• A mission statement typically gives the organization its own unique
identity, business emphasis and path for development. A mission
statement incorporates four elements:
1. Customer needs, or What is being satisfied
2. Customer groups, or Who is being satisfied
3. The Company’s activities, technologies and competencies, or How the firm
goes about creating and delivering value to customers and satisfying their
needs.
4. The Company’s concern for survival, its philosophy, its self – concept and
its concern for public image.

MISSION OF KLELCB
• To disseminate industry oriented legal education of global
standards rooted in social values.
• To impart coherent legal education by laying special emphasis on
participative clinical learning.
• To promote the values of democracy, diversity and inclusiveness.
• To calibrate curricular, co-curricular and extra –curricular activities
in tune with the vision of the Institution and also foster democratic
values.
• To organize community and social concern oriented programmes in
the domain of law with the common man as focal point.
• To create an apt atmosphere for learning with the aim of
developing ethically strong and morally exalted individuals with the
values of love , truth, service and sacrifice.
• To promote research culture and nurture innovative ideas among
the faculty and students.

• The mission statement of Infosys companies is
as follows:
“To achieve our objectives in an environment
of fairness, honesty and courtesy towards our
clients, employees, vendors and society at
large” – Infosys

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