business org & management
TRANSCRIPT
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Modern Business Organization&
Management
Chapters
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Chapter 1
Nature & Scope of Business
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Introduction
Business is a Typical activity with the object of earning an income . Economic activity
must be regular & continuous .
( 1 ) Production of goods ( 2 ) merely purchase of goods & selling it at a profit
Certain risk involved . Expected to meet threats & uncertainties involved . Earning of income /profits is not the sole objective of business
Real objective is to create a customer & ensure repeat sale possible only if customer is
satisfied
Modern business is called upon to serve demand & offer continuous satisfaction of
varied human wantsConcept of business
Old –sole objective was profit maximization , business as an end in itself
Changed concept –Modern business is social & economic institution business is not an
end but a means to an end . An institutionalized expression of our way of life
Urwick – profit can be no more the main objective of business than betting the sole
objective of horse racing or earning sole objective of living
Peter Drucker –main objective is to create a customer
A business enterprise has two main functions ( 1 ) marketing ( 2 ) innovation . These
alone are responsible for results all other are costs
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Primary purpose of every business is to secure & retain customers . Modern business
aims at profit through service not irrespective of customer satisfaction
Hence social responsibilities of business towards ( 1 ) owners ( 2 ) Workers ( 3 )
consumers ( 4 ) community ( 5 ) society ( 6 ) government
Branches of business
Business means the total enterprise of a country in Industry & commerce
Industry- production of goods & services required in the market
Commerce –Exchange or distribution of goods & services to the customers
Industry –. Industry undertakes prod of goods & services for sale or exchange at a
reasonable profit . There are threes aspects to modern industry , Specialization ,Standardization , & Simplification . Five sub-divided into five sub sections
1 Extractive --- agriculture , mining
2 genetic industries ---poultry, cattle
3 manufacturing –cotton , textile , machinery , Appliances
4 Construction
5 service –banks etc
Commerce --- An org system for Exchange of goods between members of the
industrial world . It constitutes a connecting link between primary products & ultimate
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Commerce deals with goods produced & supplied by industry . Goods have to reach the
final consumer therefore commerce has to bridge
( 1 ) place gap--- by use of Tpt & communications
( 2 ) time gap ---removed by warehousing , we have mass prod but consumption is
spaced out hence distribution has to be broken down into consumption quantityModern Business
Extractive, genetic , manufacturing ,
construction & services
Industry ( five
types)
Commerce ( distr )
Traders & mercantile
agents , Money & banking,
Tpt , warehouseSales promo , Ads ,
( goods prod )
Trade
Home Foreign
Wholesale Export
Retail import ,
Aid trade
1 Exchange ( buying /selling ) essence of business –needs exchange mech, usually monetary exch
2 business cannot be isolated from society draws resources from & must satisfy needs of society
3 must have regular & continuous Exch activity . Must offer mutual satisfaction
4 Every business involves intl forecasting , risk inherent , reduced by , research & mkt analysis
5 Modern business must have customer oriented market appch consumer interest /satisfaction
essence
6Industry must know customer& dealer demand & produce only want satisfying goods reqd
7 business is called upon thru self regulation fulfillment of social resp , to customers /emp
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Business System
A system is an org or complex whole , a combination of things or parts forming a
complex or unitary whole
A business enterprise is a system consisting of various sub systems which operate in a
coordinated well balanced& integrated manner to a make the whole as a business sys
Business includes all sectors ( 1 ) private ( 2 ) public ( 3 ) joint ( 4 ) Cooperative sectors .
It has twp parts
1 Operating structure ( 2 ) environmental factors in which the structure operates . The
operating structure is the entire group of business org s & enterprises
Business org as a SystemOrgs are perceived as open adaptive systems an org can be considered as an energy
system which ahs inputs –transformation process –output . Open as it is influenced by
environ continuously Business org as an open system
Inputs Outputs
Environment
Business org
Business org must adapt constantly with
changing environ conditions
Men ,
material, info
machinery
Material
services , info
Environ,( economy,
social cultural political,
competition
Output org input
environ & output
environ input to org
11
2
3
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Broadly speaking business org as a system has five sub systems ( 1 ) finance ( 2 ) production ( 3 )
Marketing ( 4 ) Personnel incl HR ( 5 ) R&D. each has a number of sub systems e. g marketing has
Product , price , promotion & distribution systems
Business is the heart of business sys it is an open adaptive sys with usual sys features ( 1 ) Input
( 2 ) process ( 3 ) output ( 4 ) feedback & control sys ( 5 ) environ ( supra )
Constituent elements may themselves be viewed as systems like
ProductionPlans Inputs Process output
Objectives ,
policies , rules ,
methods
Info . Energy ,
materials
Conversion of
inputs to output
Info , energy ,
materials
Objectives of modern Business
A business is an org of human , material & other intangible resources . Created to offer satisfaction
to customer , owners , stake holders , stock holders
Function of business is to create , retain & satisfy profitable customers as a means of successfully
achieving the desired ends of the enterprise . Business success is synonymous with marketing
success
Objectives must be pre determined , challenging but realistic or feasible . Management by objectives
(MBO ) is basic part of planning
Druckker first to articulate MBO there can not be one right objective , suggested objectives be
stated for each of the eight areas of accomplishment ( 1 ) Market standing ( 2 ) innovation ( 3 )
productivity ( 4 ) physical & financial resource ( 5 ) profitability ( 6 ) manager Performance &
develo ment 7 worker Pf & attitude 8 ublic re on ibilit
Obj ti f th fi t fi k b bj t t tit ti t l t d
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Objectives of the first five key areas can be subject to quantitative measurement , unless supported
by the other three there will be loss of market standing , loss of tech leadership , loss of productivity
& profit leading to loss of business
Objectives of Modern business
As a socio eco org
Basic objectives
1 provision of goods & services ( fair
price, quality
2 gen employment , income &
purchasing power to buy goods &
services . These two objs ensure
profit thru service & also ensure
1 Survival 2 growth 3 stability 4
prosperity & reputation /creditability
Key areas where Pf & results directly affect growth
1 Market standing –demand creation /satisfaction
2 Innovation –in products m activities , skills for
sustained growth
3 productivity in terms of economic Pf
4 Physical ./financial resources to secure stability
/growth
5 profitability
6 manager Pf & development
7 Employees pf & attitude
8 public /social responsibility
Last three areas assure the set objectless in the first
five key areas
I di t f d b i
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Ingredients of good business
A business represents an integration of structured activities . People work in groups using
knowledge & techniques in order to achieve common purpose
It is a Psycho –social –technological system ---typical combination of Human , material & tech
resources . Management coordinates these resources towards achievement of planned objs
Management of a business org operates both in internal /external environment . External givesopportunities to innovate to change to offer customer satisfaction , Also indicates risks /threats
Internal environment points to strengths /weaknesses & capability to exploit opportunities &
overcome risks
Management tries to maximize org & consumer satisfaction thru integrated business planning &
controlIngredients of good business
Business org
Psycho-social unit
1 Employee cantered
2 customer oriented
3 social sub sys
interacting with own
environ, all activities
viewed demand side
not su l side
It must have
1precise goals ,
2 Sound org structure
3 Emphasis on R& D
4 favorable Environ
5 effective leadership
Business management
1Sound business education
2 Winning personality
3 initiative , courage ,
foresight
4 Business morality
5 sound decision making
6 innovative spirit
Q ti
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Questions
1 Discuss the nature & scope of Business also old & new concept of business . Illustrate
scope with the help of a diagram . What are the various branches of business
2 What do you understand by business systems ? Elaborate the concept of business org
as a system ? Illustrate with the help of a diagram
3 what are the objectives of modern business , elaborate the essentials of good
business & how each aspect impacts business
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