Business Background ......!
Business Background ......!
Business Background
Business
All economic activities related to the production and distribution of goods and services to satisfy the needs and wants of people are called business.
Needs
The conditions that arise in humans and must be fulfilled are called needs.
• Food
• Clothing
• Housing
• Education
• Health
• Transportation
• Communication
• Love
Characteristics of needs
• Essential
• General
• Limited.
• Cannot be generated
Want
• The various ways of satisfying needs are called wants.
Food – Bittu, Roti, Idli
Clothing – Shirt, Skirt
Housing – House, Mansion, Cottage
Characteristics of wants
• Non-essential.
• Various types.
• Undefined.
• Can be generated
Difference between needs and wants
Stages of development of business..
• Barter period
• Cash flow period
• Technology application period
• Information technology application period / Electronics application period
Barter
The exchange of goods for goods by people to fulfill their needs is called barter system.
Disadvantages of barter
Incompatibility of dual needs.
• Inability to measure value properly
• Inability to store goods properly.
Money
Money is a common medium accepted by everyone and legally recognized by all and used in the exchange of goods and services.
Countries and their currencies
Country Currency Unit
United States US Dollar
England Sterling Pound
Europe (France, Italy) Euro
India Indian Rupee
Japan Yen
Parties Interested in a Business
The following are the parties interested in a business.
• Owner
• Manager
• Employees
• Customers
• Suppliers
• Competitors
• Financial institutions
• Government
• Society
1. Owner
• The person who starts the business by investing capital (money, assets) in the business
• The financial knowledge and experience of the business owner are the reasons for the success of a business.
• These owners are seen as individuals or 1 group.
2. Manager
• The person who implements the business operations is called a manager.
• The person who implements the decisions of the owner.
• A manager is a person who uses the resources available in a business in the right way to achieve the objectives of a business.
• A manager is a person who establishes good relations between customers and employees of the company
• Some companies are considered to be the owner of the company.
• Large companies have multiple managers such as financial manager, marketing manager, manager, human resource manager, etc.
3. Employees
• Employees are considered to be those who use their knowledge and skills to properly carry out the tasks assigned to them
• Their positive attitude and dedication will be the reason for the success of a business.
4. Customer
• The party that receives goods and services from a business Customer
• They acquire these goods and services for resale/reuse or for final use.
• The success of a business depends on the stability of the customer.
• The business carries out its activities by knowing the needs and wants of the customer
5. Suppliers
• The parties that provide various services (transportation, raw materials) required by the business.
• Quality raw materials and services should be provided at the right time and at a reasonable price.
6. Competitors
• However, competitors are those who produce and market products and services that are superior to the products produced by a business.
7. Financial institutions
• Banks and other institutions that provide loans, consulting services, etc. required by the business are called financial institutions.
8. Government
• The government sets the necessary policies for the economic development of the country
9. Society
• The entire population living in the country
• Journalists
• Pressure groups
• Community level groups
The purpose of stakeholders is to be concerned.
1. Owner
• To protect the invested capital
• To earn sufficient profit
• To develop the business in the future
2. Manager
• To achieve business objectives, make necessary decisions and implement them
• Job satisfaction
• Business development
3. Employees
• To receive fair wages
• To ensure job security
• To receive other benefits (extra pay)
4. Customer
• To receive quality goods and services.
• Obtaining goods and services at a fair price
5. Suppliers
• Receiving payments on time
Receiving money for orders placed
6. Competitor
• Determining the prices of their products
Getting information about how other businesses are doing business Facing the competitive situation.
7. Financial institutions
Recovering loans on time
Providing more loans
8. Government
• Collecting tax revenues in a proper manner
Creating employment opportunities
Increasing national production
9. Society
• Observing whether business activities are carried out in a way that does not harm the environment.
• Observing whether they are acting with concern for social welfare
The contribution that the business expects from stakeholders.
1. Owner
• Obtaining the necessary capital contribution.
• Conducting business activities with commitment and dedication.
• Reviewing business activities
2. Manager
• Implementing the business plan properly
• Making the right decisions.
3. Employees
• Fulfilling the assigned responsibilities properly
• Increasing their efficiency
4. Suppliers
• Providing quality raw materials
• Providing raw materials on time
5. Government
• Obtaining tax benefits.
• Obtaining other incentives such as loans at low interest rates
Purpose of businesses
• Main purpose
To make a profit
To satisfy the needs/wants of the people
• Secondary purpose
Maintaining the quality of goods and services.
Creating employment opportunities.
Maintaining employee benefits.
Manufacturing business
Companies that provide goods and services to the people are called manufacturing businesses.
• Based on the nature of production, businesses are divided into 2 types
1. Goods manufacturing business
2. Service manufacturing business
Goods manufacturing business
• Businesses that produce tangible physical goods that satisfy the needs and wants of people are goods manufacturing businesses.
• Goods manufacturing business is carried out by considering the taste, income level, lifestyle, and social status of the consumer.
Soft drinks
Furniture
School equipment
Service manufacturing business
• Companies that provide services, which are activities provided to consumers to satisfy the needs and wants of consumers through business, are called service manufacturing businesses.
Banking
Wholesale and retail trade
Insurance
Factors of production
The various resources required by businesses to produce goods and services.
The factors of production are classified as follows.
1. Land
2. Labor
3. Capital
4. Effort
Land
All resources obtained from nature are called land.
The resources found not only on the surface of the land but also under it are called land.
The resources obtained from the land are limited.
Mineral resources
Forest resources
Labor
The physical and mental contributions made in a business are called labor.
Physical labor providers: - Refinery workers, miners.
Mental labor providers: - Accountants, managers
Capital
The resources created by man for production and used as an aid during production are called capital.
Money
Machine
Furniture
Building
Enterprise
The act of organizing the factors of production such as land, labor, and capital required for production and starting and carrying out any production process is called enterprise.
The party who undertakes this enterprise is the entrepreneur
The party who carries out new discoveries and innovations is the entrepreneur.
Factors of production and their rewards
• Land – Rent
• Labor wages | Salary
• Capital – Interest
• Effort – Profit | Loss
Consumer
• The party who receives goods and services for final use.
Service production business
• Companies that provide services, which are activities provided to consumers to meet the needs and desires of consumers through business, are called service production business.
Bank
Wholesale and retail trade
Insurance
Business Background ......!
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