2. DEFINITION
• Business is a set of organized economic activities related to production and
exchange of goods or services with the aim of achieving certain objectives.
• The main objective of business is to earn profit.
• It includes all those activities which are connected with production or
purchase of goods and services with the object of selling them at a profit.
• It is not related with the non-economic activities of person.
3. NEW CONCEPT
• According to Peter.F.Drucker, the objective of business is to create
customers.
• The customer is the master and to serve him well is the only purpose of
business. Business cannot survive without customers.
• Modern business aim at profit through service.
• According to Robert. N. Owens, “Business is an enterprise engaged in the
production and distribution of goods for sale in market or rendering service
for a price.”
4. CHARACTERISTICS OF BUSINESS
• Economic activity
• Sale, transfer and exchange
• Deals in goods and services
• Regularity in dealings
• Profit motive.
• Elements of risk
• Utility creation
5. OBJECTIVES
1. Economic objectives
• Earning Profits
• Creating customers
• Innovations
2. Social objectives
• Supplying desired goods at
reasonable prices
• Fair remuneration to employees
• Employment generation
• Fair return to investors
• Social welfare
• Payment of government duties
6. OBJECTIVES (CONT…)
3. Human Objectives
• Labor welfare
• Developing human resources
• Participative management
• Labor management cooperation
4. National objectives
• Optimum utilization of resources
• National self-reliance
• Development of small scale
industries
• Development of backward areas
8. TYPES OF COMPANIES IN PRIVATE
SECTOR
Private sector
Sole
proprietorship
Partnership
Private limited
company
Co-operatives
Joint Hindu
Family
Joint stock
company
10. Pros and Cons
Pro’s
• Own boss
• Total control
• Greater opportunity for flexible
working
• Keep all profits
• Easy to set up – few legal
requirements
Con’s
• Unlimited liability
• No one to share decision making
• Lack of specialisation
• No continuity of existence
• Time off/holidays
• Limited finance
11. Partnership
Features
• 2 - 20 owners
• 0 to any number of employees
• ASleeping Partner - someone who invests money but takes no part in the day
to day running.
• A Deed of Partnership - lays out rules for running and dissolution of the
Partnership .eg :sharing of profits.
12. Pro’s and Con’s
Pro’s
• Shared decision making
• Increased capital invested
• Increased specialisation
• Easy to set up – few legal
requirements
Con’s
• Unlimited liability
• Profits have to be shared between
partners
• No continuity of existence
• Partners may have disagreements
• Limited finance
13. Private limited company
Features
• Ltd after its name
• Owners called shareholders
• A separate legal existence from owners
• Shareholders who are family and friends
• Governed by two legal documents: Memorandum of Association, Articles of
Association
14. Private limited company (cont.…)
• Controlled by a Board of Directors
• Run by a Managing Director.
15. Pro’s and Con’s
Pro’s
• Limited liability
• Greater availability of finance
• Specialization can occur
Con’s
• More complicated to set up - legal
formalities
• Loss of individual control
16. Co-operatives
Features
• All members can contribute to the running of the business, sharing the work
load, responsibilities and decision making.
• All members have one vote at important meetings.
• Profits are shared equally among members.
17. Pro’s and Con’s
Pro’s
• Buying in bulk.
• Working together to solve
problems and make decisions.
• Good motivation of all members
to work hard as they will benefit
from shared profits.
Con’s
• Poor management skills unless
professionals are employed.
• Capital shortages because no sale
of shares to the non-member
general public is allowed.
• Slow decision making if all
members are to be consulted.
18. Joint stock company
Features
• AJSC is a type of corporation or partnership involving two or more individuals
that own shares of stock in the company.
• Certificates of ownership are issued by the company in return for each financial
contribution.
• The shareholders are free to transfer their ownership interest at any time by
selling their shareholding to others.
19. Pro’s and Con’s
Pro’s
• Huge financial resources.
• Limited liability
• Perpetual existence
• Transferability of shares
• Diffusion of risks
• Efficient management
Con’s
• Difficulty in formation
• Delay in decision making
• Seperation of ownership and
management
• Speculation on shares
• Too many regulations
20. Success forYOU…
…in the new global and diverse
workplace requires
excellent Business skills!
