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BUSINESS
Anum Shah
Roll No#3367
WHAT IS BUSINESS?
WHAT IS BUSINESS
“An institution organized and operated to
provide goods and services to the society
under the incentive of private gain” (Wheeler)
WHAT IS BUSINESS
“A business embraces all those functions
involved in the making, buying and
transportation of goods” (Thomas Evelyn)
PROCESS OF ANY BUSINESS
INPUT PROCESS OUTPUT
Factors Of Production Purchasing Realization of Profits
Physical Labor:
Intellectual Labor:
Presentation:
CAPITAL
“Capital refers to that part of a man’s
wealth which is used in producing further
wealth or which yields an income”
CAPITAL
It is raised from the sole proprietor, partners or
shareholders.
Shapes of Capital: plant , machinery ,tools ,
and accessories , stocks of raw material
,goods in process and fuel
ENTREPRENEURS
Entrepreneur is the innovator
An entrepreneur is an individual who accepts
financial risks and undertakes new financial
ventures.
INFORMATION
Information resource plays a vital role
ECONOMIC SYSTEM
ECONOMIC SYSTEM
All businesses work under certain economic
system . The basic element s around which the
business revolves is capital which is the pivotal
factor in determining the type of economic system.
every system is basically meant to provide, goods
and services to the people at the right price. It
allows to establish business organizations so that
they produce goods and services demanded and
needed by the consumers.
KINDS OF ECONOMIC SYSTEM
Capitalism
Socialism
Islamic
Mixed economy
CAPITALISM
“The economic system allowing private
ownership of all or most of the means of
productions and distribution(land, industrial,
railways) with the main motivation of profit”
CAPITALISM
The economic system in which capital flows
freely in the society and finds its way to
production and distribution in the private
sector with the minimum interference of the
government
SOCIALISM
“socialism is an economic organization of society in
which the material means of production are
owned by the whole community and operated by
the organs representatives of, and responsible
to, the community according to a general plan,
all members of the community being entitled to
benefits from the results of such socialized
planned production on the basis of equal rights”
(Dickenson)
MIXED ECONOMIC SYSTEM
“Mixed economic system is a system
comprising of both capitalism and socialism
pattern”
“In other words an economic system in which
few characteristics of capitalism and few of
socialism are found is called mixed economy”
ISLAMIC ECONOMIC SYSTEM
“It is the system free from exploitation . It
allows every person to earn his or her
livelihood from legitimate sources and
discourages concentration of wealth and
extravagance”
MARKET BASED ECONOMY
MARKET
“Originally”, Says Jevons, “a market was a public place
in a town where provisions and other objects were
exposed to sales”
6000
5000
4000
price
3000
quantity demanded
2000
1000
0
1 2 3 4 5
PRICE DETERMINED
Price(thousand)Quantity Quantity supplied
Demanded KG
(kg)
10 5000 1000
20 4000 2000
30 3000 3000
40 2000 4000
50 1000 5000
6000
5000 Price(thousand
)
4000
Quantity
3000 Demanded (kg)
2000 Quantity
supplied KG
1000
0
1 2 3 4 5
MARKET BASED ECONOMY HISTORY
HISTORY
The Industrial Revolution
Laissez-Faire and the Entrepreneurial Era
Globally consumption
Global production
THE INTERNET ERA
How does the growth of the Internet affect
business?
1. The Internet will give a dramatic boost to trade in
all sectors of the economy, especially services.
Sole
Proprietorship
Partnership
Corporation
SOLE
PROPRIETORSHI
P
Limited Partnership
Type of partnership consisting of limited partners
and an active or managing partner
Claims of Creditors
Claims of Creditors
2-61
1-61
CORPORATI
ON
Corporations may:
Sue & be sued
Multinational or Transnational
Corporation
Form of corporation spanning national boundaries
CREATING AND MANAGING A
CORPORATION
Creating a Corporation
Corporate Governance
Board of Directors
2-74
1-74
STRATEGIC ALLIANCE
An agreement between two or
more individuals or entities stating that the
involved parties will act in a certain way
in order to achieve a common goal. Strategic
alliances usually make sense when the parties
involved have complementary strengths.
JOINT VENTURE
A contractual agreement joining together two
or more parties for the purpose
of executing a particular
business undertaking. All parties agree
to share in the profits and losses of
the enterprise.
SPECIAL ISSUES IN CORPORATE
GOVERNANCE
Employee Stock Ownership Plan (ESOP)
Arrangement in which a corporation holds its own
stock in trust for its employees, who gradually
receive ownership of the stock and control its
voting rights
Institutional Investors
Large investors, such as mutual funds and pension
funds, that purchase large blocks of corporate
stock
CORPORATE OWNERSHIP
MERGERS
Mergers are business combination transactions
involving the combination of two or more
companies into a single entity. Most state
laws require that mergers be approved by at
least a majority of a company's shareholders
if the merger will have a significant impact
on either the acquiring or target company.
MERGERS
Horizontal Merger
Merger involving firms in the same industry
Vertical Merger
Merger between firms that are customers and/or suppliers
to one another
Conglomerate Merger
Merger between firms in unrelated businesses
Takeover Tactics
A takeover is considered friendly when the acquired
company
DIVESTITURES & SPIN-OFFS
Divestiture
Strategy whereby a firm sells one or more of its
business units
Spin-Off
Strategy of setting up one or more corporate units
as new, independent corporations
SMALL BUSINESS AND
ENTREPRENEURSHIP
Advantages of new ventures
New blood
New ideas
Flexibility in the tenure
ENTREPRENEUR AND ITS
CHARACTERISTICS
An entrepreneur is an individual who accepts
financial risks and undertakes new financial
ventures.
CHARACTERISTICS:
Spontaneous creativity
The ability and willingness to make decisions
Courageous
Hardworking
Strong leadership
THREATS TO NEW SMALL BUSINESS
No expertise
Lack of experience
franchising
START UP
Advantages:
You are the boss
Business opportunity
Arrangement of financing
Financial assistance
DISADVANTAGES OF FRANCHISING
Franchise fee
Franchisor control
Unfulfilled promise
IMPACT OF NEW BUSINESS ON THE
ECONOMY
New employment opportunities
New ideas
New innovations
INTRAPRENEURS
Environment factors
Cultural factors
HUMAN RESOURCE PLANNING
assess future recruitment needs
anticipate and possibly avoid redundancies
Motivation
Familiarity
INTERNAL RECRUITING
Disadvantages of internal recruiting:
Inbreeding
EEO Criteria
More training
INTERNAL RECRUITING
Potential Advantages
easier to assess candidates since more
information is available
less costly and quicker than an external
search
promoted employee is already familiar with
organization policies, culture, etc.
signals to employees that career
opportunities exist in organization
improve employee morale and organization
loyalty
INTERNAL RECRUITING
Potential Disadvantages
narrowing of thinking and stale ideas
(inbreeding)
possible discontent of rejected applicants
initiate a turnaround
increase diversity
RESOURCES OF EXTERNAL RECRUITMENT
Employment websites
Govt and federal agencies
Personal references
Job fairs
Trade associations
EXTERNAL RECRUITING
Potential Disadvantages
takes longer and costs more
Price
Place (distribution)
Promotion
SUMMARY OF MARKETING MIX DECISIONS
Specialty
unsought
INDUSTRY GOODS
Purchase of merchandise
Fixed asset purchase
PRICING
Through this a company receives reward
against its product
More than the cost price
Maximizing profit
Minimizing loss
PROMOTION
“Communication techniques aimed at
informing, persuading a customer to buy a
particular product”
DISTRIBUTION
After promotion distribution of that product
takes place proper channels are used for
example wholesaler or retailer
MARKETING ENVIRONMENT
Cultural
Social
Legal
political
MARKET SEGMENTATION
The division of a market into different
homogeneous groups of consumers is known
as market segmentation
Geographic segmentation is based on regional
variables such as region, climate, population
density, and population growth rate.
Demographic segmentation is based on
variables such as age, gender, ethnicity,
education, occupation, income, and family status.
Psychographic segmentation is based on
variables such as values, attitudes, and
lifestyle.
Behavioral segmentation is based on
variables such as usage rate and patterns,
price sensitivity, brand loyalty, and benefits
sought.
TARGET MARKET
A certain group of people who have a same
taste of products and services
FACTORS INVOLVES IN TARGETING
MARKET
Social
Cultural
Political
Environmental
MARKETING RESEARCH
II. The Challenge
Brief description of product to be marketed
and associated goals, such as sales figures
and strategic goals.
III. Situation Analysis
Company Analysis
Goals
Focus
Culture
Strengths
Weaknesses
Market share
Customer Analysis
Number
Type
Value drivers
Decision process
Strengths
Weaknesses
Market shares
Collaborators
Subsidiaries, joint ventures, and distributors, etc.
Climate
Macro-environmental PEST analysis :
Economic environment
Technological environment
IV. Market Segmentation
Present a description of the market
segmentati
On
V. Alternative Marketing Strategies
List and discuss the alternatives that were
considered before arriving at the
recommended strategy. Alternatives might
include discontinuing a product, re-branding,
positioning as a premium or value product,
etc
VI. Selected Marketing Strategy
Discuss why the strategy was selected, then
the marketing mix decisions (4 P's) of
product, price, place (distribution), and
promotion
VII. Short & Long-Term Projections
The selected strategy's immediate effects,
expected long-term results, and any special
actions required to achieve them. This
section may include forecasts of revenues
and expenses as well as the results of a
break-even analysis
VIII. Conclusion
Summarize all of the above
CONSUMER BEHAVIOR
Psychological
MOTIVATION
Motivation is a desire to achieve a goal,
combined with the energy to work
towards that goal. Students who are
motivated have a desire to undertake
their study and complete the
requirements of their course.
THEORY X AND THEORY Y
Theory X Assumptions:
People inherently dislike work
Recognition
Work itself
Responsibility
Advancement
Growth
Hygiene factors are those whose absence
can create job dissatisfaction:
Supervision
Company policy
Working conditions
Salary
Peer relationship
Security
EQUITY THEORY
Specific goals increase performance, and
difficult goals, when accepted, result in
higher performance than easy goals.
An employee compares her/his job's inputs-
outcomes ratio with that of referents.
If the employee perceives inequity, she/he will
act to correct the inequity:
Lower productivity
Reduced quality
Increased absenteeism
Voluntary resignation.
LEADERSHIP
Leadership is one of the most salient aspects
of the organizational context.
“The ability to influence people towards the
attainment of organizational goals”
“Leadership is the ability to secure desirable
actions from a group of followers voluntarily ,
with out use of coercion””
THEORIES
Trait thoery
“Traits are the distinguished personal
characteristics of a leader , such as
intelligence, value and appearance”
Behavioural theory
Situational Theories:
• Focus on leadership in situations:
different situations need different
kinds of leadership.
• Leaders direct and a support.
• Group competence and commitment
determines necessary skill mix.
Contingency Theories
• Right leader’s style needs to be
matched
to the right setting.
• Two major styles – Task motivated and
relationship motivated.
• Three situation variables:
– Leader-member relations
– Task structure
– Position power
Great Man Theories Based on the
belief that leaders are exceptional
people, born with innate qualities,
destined to lead. The use of the term
'man' was intentional since until the
latter part of the twentieth century
leadership was thought of as a concept
which is primarily male, military and
Western. This led to the next school of
Trait Theories
Situational Leadership This approach
sees leadership as specific to the
situation in which it is being exercised.
For example, whilst some situations
may require an autocratic style, others
may need a more participative
approach. It also proposes that there
may be differences in required
leadership styles at different levels in
the same organisation
Transformational Theory The
central concept here is change and the
role of leadership in envisioning and
implementing the transformation of
organisational performance
Transactional Theory This approach
emphasises the importance of the
relationship between leader and
followers, focusing on the mutual
benefits derived from a form of
'contract' through which the leader
delivers such things as rewards or
recognition in return for the
commitment or loyalty of the followers
Contingency Theory This is a
refinement of the situational viewpoint
and focuses on identifying the
situational variables which best predict
the most appropriate or effective
leadership style to fit the particular
circumstances
GLOBALIZATION
Name for the process of increasing
the connectivity and interdependence of the
world's markets and businesses.
TRADING BLOCKS AND COUNTRY GROUPS
EUROPEAN UNION
Austria, Belgium, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, Netherlands,
Poland, Portugal, Slovakia, Slovenia, Spain,
Sweden, United Kingdom
http://www.europa.eu.int/index_en.htm
TRADING BLOCKS AND COUNTRY GROUPS
OPEC MEMBER COUNTRIES
Austria, Australia, Belgium, Canada, Czech
Republic, Denmark, Finland, France,
Germany, Greece, Iceland, Ireland, Italy,
Japan, Luxembourg, Mexico, New Zealand,
Netherlands, Norway, Poland, Portugal,
Republic of Korea, Slovak Republic, Sweden,
Switzerland, Turkey, United Kingdom, United
States of America
http://www.opec.org/
TRADING BLOCKS AND COUNTRY GROUPS
SAARC MEMBER COUNTRIES
Bhutan, India, Maldives, Nepal, Pakistan, Sri
Lanka
http://www.saarc-sec.org/
TRADING BLOCKS AND COUNTRY GROUPS
NATO MEMBER COUNTRIES
Belgium, Bulgaria, Czech Republic, Canada,
Denmark, Estonia, France, Germany, Greece,
Hungary, Iceland, Italy, Latvia, Lithuania,
uxembourg, Netherlands, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Turkey,
United Kingdom, United States of America
http://www.nato.int/
TRADING BLOCKS AND COUNTRY GROUPS
NAFTA MEMBER COUNTRIES
Canada, Mexico, United States of America
http://www-tech.mit.edu/Bulletins/nafta.html
TRADING BLOCKS AND COUNTRY GROUPS
COMMONWEALTH OF INDEPENDENT
STATES
Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyzstan, Moldova, Russia,
Tajikistan, Turkmenistan, Ukraine,
Uzbekistan
http://www.cisstat.com/eng/index.htm
TRADING BLOCKS AND COUNTRY GROUPS
APEC MEMBER COUNTRIES
Australia, Brunei Darussalam, Canada, Chile,
People's Republic of China, Hong Kong,
China, Indonesia, Japan, Republic of Korea,
Malaysia, Mexico, New Zealand, Papua New
Guinea, Peru, Philippines, Russia, Singapore,
Chinese Taipei, Thailand, United States of
America, Vietnam
http://www.apecsec.org.sg/
FDI
Foreign direct investment (FDI) in its
classic form is defined as a company from
one country making a physical investment
into building a factory in another country. It is
the establishment of an enterprise by a
foreigner..Its definition can be extended to
include investments made to acquire lasting
interest in enterprises operating outside of
the economy of the investor.
BARRIERS TO INTERNATIONAL TRADE
A trade barrier is a general term that
describes any government policy or
regulation that restricts international trade.
The barriers can take many forms, including
the following terms that include many
restrictions in international trade within
multiple countries that import and export any
items of trade.
BARRIERS TO INTERNATIONAL TRADE
Import duty
Import licenses
Export licenses
Import quotas
Tariffs
Subsidies
Embargo
EMBARGO
In international commerce and politics,
an embargo is the prohibition of commerce
(division of trade) and trade with a certain
country, in order to isolate it and to put its
government into a difficult internal situation,
given that the effects of the embargo are
often able to make its economy suffer from
the initiative.
TAX, TARIFF AND TRADE
The tax, tariff and trade laws of a political
region, state or trade bloc determine which
form of consumption and production tend to
be encouraged or discouraged. All three are
often changed by a trade pact.
SUBSIDY
Financial aid given by
the government to individuals or groups.
CARTEL
A cartel is a counterfeit agreement among
industries. It is an informal organization of
producers that agree to coordinate prices
and production. Cartels usually occur in
an oligopolistic industry, where there is a
small number of sellers and usually
involve homogeneous products.