Business Org & Management

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Modern Business Organization&

Management

Chapters



Chapter 1

Nature & Scope of Business



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



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



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



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



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



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



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



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

Business Org & Management

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