Module I Introduction to business

Prog: B.Com LLB Sem : 1st Faculty: Dipanwita Biswas Roy

Business
Economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. The traditional definition of a business is an entity that brings together time, effort and capital in order to produce a profit.

Business Activities
activity undertaken as part of a commercial enterprise. Characteristics of Business are mainly: Creation of goods, utilities and services Recurring activities Transfer of title Mutual benefit Expectation of earning

Classification of business
There are many different ways of classifying businesses but here are the main types: Manufacturer Service businesses Retailers and distributors Agriculture and mining

Financial businesses Utilities Real estate Transportation businesses etc.

Objectives of Business

An objective is something you want to achieve. Similarly, business objectives are something which a business organization wants to achieve or accomplish over a specified period of time.

Classification of Objectives of Business

Economic Objectives Social Objectives Human Objectives National Objectives Global Objectives

Economic Objectives
Profit earning Creation of customers Regular innovations Best possible use of resources

Social Objectives
Production and supply of quality goods and services Adoption of fair trade practices Contribution to the general welfare of the society

Human Objectives
Economic well being of the employees Social and psychological satisfaction of employees Development of human resources Well being of socially and economically backward people

National Objectives
Creation of employment Promotion of social justice Production according to national priority Contribute to the revenue of the country Self-sufficiency and Export Promotion

Global Objectives
Raise general standard of living Reduce disparities among nations Make available globally competitive goods and services

Business Environment
Surroundings and circumstances, which influence business operations. This environment consists of forces and factors internal or external to a business firm. So, Business environment can be explained in two parts: i. Internal Environment ii. External Environment

Internal Environment

Conditions, entities, events and factors within an organization which influence its activities and choices, particularly the behavior of the employees. For ex: organizational mission statements, formal structures, managerial philosophies and managerial leadership styles, etc.

External Environment

Conditions, entities, events and factors, surrounding an organization which influence its activities and choices, and determine its opportunities and risks are considered to be as the external environment for business.

The external environment is divided into two parts: Directly interactive (owners, customers, suppliers, competitors and employee unions ) Indirectly interactive (sociocultural, political and legal, technological, economic)

SWOT Analysis
Acronym for Strengths Weaknesses Opportunities Threats

The SWOT analysis is an extremely useful tool for understanding and decisionmaking for all sorts of situations in business and organizations. Provide a good framework for reviewing strategy, position and direction of a company or business proposition, or any other idea. It is often helpful to complete a PEST analysis prior to a SWOT analysis. A SWOT analysis measures a business unit, a proposition or idea; a PEST analysis measures a market.

Benefits
SWOT analysis can be used to assess: a company (its position in the market, commercial viability, etc) a method of sales distribution a product or brand a business idea a strategic option, such as entering a new market or launching a new product

a opportunity to make an acquisition a potential partnership changing a supplier outsourcing a service, activity or resource an investment opportunity

Strength
Advantages of proposition? Capabilities? Competitive advantages? USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns?

Marketing - reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioural? Management cover, succession?

Weaknesses

Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness?

Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession?

Opportunities

Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's?

Tactics - surprise, major contracts, etc? Business and product development? Information and research? Partnerships, agencies, distribution? Volumes, production, economies? Seasonal, weather, fashion influences?

Threats

Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners?

Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects?

Network Marketing/Multi-level marketing

A business model in which a distributor network is needed to build the business. Network marketing is a type of business opportunity that is very popular with people looking for part-time, flexible businesses. E.g.- Avon, Mary Kay Cosmetics , Amway and Tupperware.

Franchising

Arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications. cont.

Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees).
E.G - Franchises of LG, Sony, etc.

E- Commerce

A type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. ECommerce has allowed firms to establish a market presence, or to enhance an already larger market position, by allowing for a cheaper and more efficient distribution chain for their products or services. One example of a firm having successfully used eCommerce is Chapters, which not only has physical stores, but an online store where the customer can buy books, CDs and DVDs.

M-Commerce

Electronic commerce (e-commerce) transacted over mobile communication devices such as cell phones or personal digital assistants (PDA). The term m-commerce is short for Mobile commerce, and recognizes that the transactions may be conducted using cell phones, personal digital assistants and other hand held devices that have operate with Internet access.

Business Process Outsourcing (BPO)

Business process outsourcing (BPO) is the act of giving a third-party the responsibility of running what would otherwise be an internal system or service. For instance, an insurance company might outsource their claims processing program or a bank might outsource their loan processing system. Other common examples of BPO are call centres and payroll outsourcing.