Business Environment

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Business Environment

• Introduction to Business

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Definition of Business

• Business is a human activity directed towards
  producing or acquiring wealth through buying and
  selling activities.
• - L. H. Haney

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Nature/ Features/ Characteristics of Business

• Organized Activity
• Customer Satisfaction
• Profit Motive
• Risks and Uncertainties
• Regularity in dealing
• Goods and Services
• Government rules and Regulations
• Business System and the society

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Importance/ Role/ Functions of Business

• Creates Employment
• Meaningful use of resources
• Aids Economic Development
• Generates Tax Revenue to government
• Provides goods and services to consumers
• Creates Entrepreneurs
• Customer Satisfaction
• Enhances Corporate Image

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Scope of Business
Scope of Business
Commerce
Industry

• Primary
• Extractive
• Genetic
• Manufacturing
• Basic
• Capital goods
• Intermediate goods
• Consumer goods (Durables Non- Durables)
• Construction
• Service
• IT

Aids to Trade
Trade

1. Transport
2. Warehousing
3. Advertising Salesmanship
4. Insurance
5. Mercantile Agents Traders
6. Banking and Finance

External
Internal

1. Retail
2. Wholesale

1. Import
2. Export
3. Entreport

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Scope of Business

• INDUSTRY ( Production side of the business)
• 1. Primary
• Related to the production of primary goods like
  wheat, rice, cotton etc.
• 2. Extractive
• Involves extracting materials or minerals from
  natural resources. E.g. Mining, Oil-
  drilling.
• 3. Genetic
• Involves Reproduction and multiplication. E.g.
  Plant nurseries, cattle breeding.

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Scope of Business

• INDUSTRY
• 4. Manufacturing (Processes raw materials into
  intermediates or finished goods.)
• Basic
• Provides bases for development of other
  industries. E.g. Fertilizers is a basic input of
  agriculture. Coal, Oil, Electricity are examples
  of basic industries.
• Capital goods
• Helps in producing other goods and services.
  These cannot be consumed directly.
  E.g. Machines, equipments or tools.
• Intermediate goods
• Goods which have already undergone manufacturing
  process but which form inputs for other
  industries as a material for further processing
  part or component. E.g. Tyres and tubes.
• Consumer goods
• Durables Goods which are used up at once in a
  short period. E.g. Food stuff, soap
• Non- Durables Goods which serve the consumer
  over a long period of time. E.g. Car, T.V etc.

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Scope of Business

• INDUSTRY
• Construction
• Means process of constructing. E.g. Construction
  of buildings, bridges etc.
• Service
• Includes services like Banking, Insurance etc.
  Also professional services like doctors, lawyers
  etc.
• IT
• Information Technology industry deals with the
  use of computers and telecommunications for
  storing, retrieving and sending information.
  Telecommunications is the technology related to
  long- term distance communication by means of
  cable, telephone, broadcasting, satellite, etc.

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Scope of Business

• COMMERCE
• Trade (Buying Selling of goods and services)
• Internal (Conducted inside or within the home
  country)
• Retail (Involves buying of goods from the
  manufacturer selling them to the final
  consumer. )
• Wholesale (Buying Selling of goods in large
  quantities)
• External (Trade done between two or more
  countries)
• Import (It involves buying of goods by buyers of
  one country from the sellers of another country.)
• Export (It involves selling of goods by sellers
  of one country to the buyers of another country.)
• Entreport (It involves buying of goods from one
  country for the purpose of re-exporting (selling)
  to another country.)

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Scope of Business

• COMMERCE
• Aids to Trade (ATD are those activities which
  remove the difficulties of trade helps in the
  smooth flow of goods services from the
  producers to the consumers)
• Transport
• Removes difficulty of Place. Helps in moving the
  goods from the place of production to the place
  of consumption
• Warehousing
• Warehousing is a place for storing raw materials
  or manufactured goods.
• Removes difficulty of Time. Fills in time gap
  between time of production time of consumption.
  

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Scope of Business

• COMMERCE
• Aids to Trade
• Advertising Salesmanship
• It fills the information gap.
• Insurance
• Business firms insure their risks like loss due
  to fire, theft, etc.
• Mercantile Agents Traders
• The wholesaler, retailers etc. create a link
  between the firms and the buyer.
• Banking Finance
• BF helps in fulfilling the working capital and
  fixed capital needs of the businessmen.

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Role of Business

• TO FIRMS
• Achievement of objectives
• Increasing knowledge skills
• Product development
• Development of good relations
• Good corporate image
• Optimum utilization of resources
• Expansion of business
• Social status Prestige

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Role of Business

• TO CONSUMERS
• Provides quality goods and services
• Provides goods at reasonable prices
• Higher standard of living
• Customer satisfaction
• Better facilities and services

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Role of Business

• TO SOCIETY
• Economic growth
• Regional development (industries set-up in
  backward areas.)
• Social welfare
• Employment opportunities
• Revenue to the government
• Capital formation
• International relations

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Role of Profit in Business

• Indicates Efficiency
• Rewards for risks and uncertainties
• Return on investment
• Helps in survival of business
• Helps in providing facilities to the employees

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Meaning of Business Environment

• Environment of the business means the aggregate
  of all the conditions, events and influences that
  surround and affect it.
• Keith Davis
• Business environment is the total of all the
  things external to firms and individuals, which
  affect their organization and operations.
• - B. O. Wheeler

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Features of Business Environment

• Environment is the surrounding situation of
  business
• Environment is dynamic
• Business to a greater extent cannot control the
  environment
• Environment controls the scope of the business
• Direct and lasting effect
• Environment is inseparable part of business
• Business environment is complex

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Features of Business Environment

• Environment creates opportunities and threats
• Business Environment is a challenge
• Environment requires adaptability
• Environment needs continuous study by businessmen

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