INTRODUCTION TO BUSINESS

Shubham Agarwal PGDM-RM Ro.no- 1995

Needs

and

Wants

Needs comprise the basic requirements for the

existence of life, such as food, clothing, shelter, and belongingness. A want arises when the basic needs are satisfied.

 Need :Basic Human requirements

Wants :When needs are directed to some specific objects that might satisfy the need.
Demand :Wants for specific products backed by

an ability to pay.

Can Marketers Create Needs ??

Marketers do not create needs: Needs preexist

Marketers with other social factors influence wants, marketers might promote the idea but they do not create needs.

Conspicuous Consumption

Human activities
Economic activities Non economic activities

Human Activities and Business

Economic activities are undertaken to earn

ones living and for the production of wealth. Non economic activities are undertaken not for any material reward or gain but for ones happiness, pleasure or satisfaction which can not be measured in terms of money.

Types of Economic Activities

Business Profession Employment

Business
An economic activity involving regular

production or purchase and distribution of goods and services with the object of earning profit.

Profession
Any activity which requires special

knowledge and skill to be applied by an individual to earn a living is known as profession

Employment
When a person works regularly for others and

gets wages in return he is said to be in employment.

Distinction between Business, Profession and Employment

Basis Business Profession Employment
Primary Objective Earning profit Rendering paid service Professional fees Earning wages

Reward

Profit

Salary

Nature of work

Production of purchase and sale Undefined

Expert service

Job performance

Qualification

Professional training

As per the need of employer

BUSINESS
DEFINITION

Urwick and Hunt: "Business is any enterprise which makes, distributes or provides any article or service which other members of the community need and are able and willing to pay for.

FEATURES

An economic activity Includes production or purchase and distribution Dealing in goods and services Continuous activity, implies regularity of transaction Aims at profit making through satisfaction of human wants Risk taking Innovative and dynamic in nature Servers social purpose by improving peoples standard of living. Legal control

BUSINESS OBJECTIVES
INTRODUCTION Every business unit is established in order to attain certain well-defined objectives. Attainment of these objectives is the only way an organization can justify its setting-up and existence. It is very important that every business unit decides and pursues a set of well-defined business objectives.

DEFINATION McFarland: "Objectives are the goals, aims or purposes that organization wish to achieve over varying period of time".

Objectives of Business
ECONOMIC OBJECTIVE Profit earning Return on capital invested Creation of customers, Survival in competition through regular innovations Best possible use of resources

SOCIAL OBJECTIVES Providing employment opportunities Production and supply of quality goods and services Adoption of fair trade practices Contribution to the general welfare of the society

Significance of business in modern society

Improvement in standard of living Proper utilization of resources Better quality and large variety of goods and

services Employment opportunities Workers welfare

Classification of Business Activities

Business activities are undertaken to satisfy human wants by producing goods or rendering services.

Classification on the basis of Size

The size of business may be measured by the

amount of capital invested, number of persons employed, the volume of transactions and the area of operation. On the basis of these, business activities can be grouped into small-scale and large-scale.

Classification on the basis of ownership

Business enterprises owned and managed by the government are called public sector enterprises.

These enterprises are formed by government as departmental undertakings, statutory corporations or government companies. Business enterprises owned and managed by individuals or group of individuals other than the Government are called private sector enterprises. These enterprises may be organized in the form of Sole Proprietorship, Partnership, Joint Hindu Family, Joint Stock Company and Cooperative Society.

Classification on the basis of Functions

We may classify business as Industry Commerce

Industry
Industry refers to all business activities, which

are connected with raising, producing and processing of goods and services. They convert raw materials into useful products by the application or use of human or mechanical power

Primary Industries
Industries engaged in extracting, producing and processing natural resources like minerals, oil, agricultural products, plants and animals. Extractive Industries- These industries are engaged in extraction of minerals, oil and natural gas from the earth, fish from the sea, timber from the forest etc. Genetic Industries- These industries are engaged in rearing and breeding birds and animals and growing plants for sale.

Secondary Industries
Secondary industries are those industries that engage in the production or processing of items produced by primary industries. Manufacturing Industries- Industries engaged in conversion of raw materials or semi-finished products into finished products. Construction Industries- Industries engaged in erection of buildings, dams, bridges, roadways, railways are called construction industries.

Tertiary industries
Industries providing services to consumers are called tertiary industries. These activities may include personal services like medical treatment, nursing, teaching, etc.,

Commerce
The sum total of activities involving the removal of hindrances in the process of exchange of goods and services and facilitates the availability for consumption or use.

Trade
Trade means buying and selling of goods and services on a continuous or regular basis. Home Trade refers to buying and selling of goods and services within the boundaries of a country. Foreign trade refers to buying and selling of goods or services between people living in different countries. (i) Import Trade (ii) Export Trade (iii) Entrepot Trade

Auxiliaries to trade
Transport, warehousing, insurance and banking, communication, etc., are activities which facilitate the business of a trader. Taken together these activities are known as auxiliaries or aids to trade.