Business Organization and Communication 1
Business Organization and Communication 1
Business Organization and Communication 1
SYLLABUS
B.Com. (Hons.) I YEAR
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B.Com. 1st Year Subject- Business Organization and Communication
UNIT – I
Business –
Business implies those activities which are carried on with a view to earn profit/wealth. It is the human
activity directed towards the acquisition of wealth through the production and exchange of goods and
services.
Objectives of Business:
Object of Business: The following are the main objects of business:
(a) Economics object or profit motto.
(b) Social object or service motto.
(c) Human object.
(d) National object.
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B.Com. 1st Year Subject- Business Organization and Communication
Organization –
An organization is a group of people intentionally organized to accomplish an overall, common goal or set
of goals.
Characteristics of Organization –
1) Division of labour
2) Coordination
3) Accomplishment of common objectives
4) Authority responsibility structure
5) Communication
Business Organization –
Business organization is concerned with the study of the methods and procedures of establishing and
operating business enterprises with the purpose of earning profits by rendering service to the society.
The scope is very wide. It comprises business ownership, the types of traders engaged in the supply of
goods and services, the institutions which facilitate trade, the financial arrangements used to conduct
business, the problems of location and layout of the undertaking, the principles of management, forms of
combinations, methods of wage payment, etc.
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B.Com. 1st Year Subject- Business Organization and Communication
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B.Com. 1st Year Subject- Business Organization and Communication
II. Commerce
Commerce means those activities which are done from production of commodities and their supply to
consumers with the object of earning profit.
Characteristics-
(i) Trade is included in commerce.
(ii) Subsidiary activities of trade like insurance, banking, transportation are also included in
commerce.
(iii) Commerce is a link between a producer and a consumer.
(iv) Commerce creates time and place utility.
(v) Commerce removes obstacles arising in exchange of commodities.
III. Trade
Purchase and sale of goods in a business in order to earn profit is called trade. Thus the following are the
characteristics of trade-
(i) Purchase and sale of commodities and services.
(ii) Two parties- Buyer and sellers. Middleman are also included in it.
(iii) The main object of trade is to earn profit.
(iv) Medium of trade is money.
(v) Element of risk and enterprise exists in trade.
(vi) Business activities remain regular and continues.
(vii) Purchase of a commodity is meant for sale.
Features:
1. Social responsibility is a two-way traffic
2. It is related with business organizations
3. Universal concept
4. Supremacy of public interest
5. Scope of social responsibility is not limited
6. Establishes new socio-economic values: it establishes new economic and social values such as
decentralization of power, equal and justified distribution of resources, business morality, etc.
7. Source of gaining social power
8. Basis of business success
9. It is a continuous process
Objectives:
1. Social Welfare
2. Satisfaction of human wants and improvement of standard of living.
3. Promotion of business
4. Creation of positive public image
5. Development of nation.
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B.Com. 1st Year Subject- Business Organization and Communication
2. Substituting optimum profits against maximum profits When a company is operating under
voluntarily imposed restraints, it is said to be satisfying rather than maximizing profits.
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B.Com. 1st Year Subject- Business Organization and Communication
PROMOTION OF BUSINESS
PROMOTION
‘Promotion of a business enterprise’ refer to the act and process of establishing a new business unit.
Promotion may e defined as the discovery of business opportunities and the subsequent organization of
funds, property and managerial ability into a business concern for the purpose of making profits
therefrom.
Methods/Stages in Promotion –
1) Discovery of Idea
2) Investigation and verification
3) Assembling
4) Financing the proposition
PROMOTER
The term ‘Promoter’ stands for a person who conceives the business idea and takes various steps to bring
the enterprise into existence and to grow is as a successful venture.
Types of Promoters
1. Occasional Promoters: The are those entrepreneurs who promote a business enterprise and
manage its affairs after it comes into being. Promotion is not occupation of such entrepreneurs.
2. Professional Promoters: these person are specialists in promoting new business ventures.
Promotion is their whole time occupation.
3. Financial promotes: their main object is to make use favorable investment climate to earn
profits.
4. Technical Promoters: they are expert in technical matters. Areas of their expertise may relate to
law, engineering, consultants, architects, etc. such promoters are given fee for their consultancy
services.
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B.Com. 1st Year Subject- Business Organization and Communication
5. Specialized institutions: These institutions float new business enterprises either at their own or
by collaborating with other entrepreneurs. Example of such entrepreneurs are IDBI (Industrial
Development Bank of India), NIDC (National Industrial Development Corporation).
6. Government
7. Political Promoters
FUNCTIONS OF PROMOTERS
(A) Procedural functions /
1. Risk taking – Risk taking is a primary function of entrepreneur & profit is the reward for it.
2. Deducing the profit – The foremost function of promoter is to decide the nature of the project to
be undertaken.
3. Size of unit – Determination of the size of the unit is another imp. Area.
4. Location – The choice of the area & selection of a specific sight in such area.
5. Razing fund – After the selection of the project promoter has to arrange for finance
6. Choice of organization –He decides the correct type of organization to be formed.
7. Production planning – Promoter makes decision regarding technology, machinery, equipments,
plants & another project facilities.
8. Earning project
9. Project report – The promoter takes responsibilities regarding preparation of project report.
10. Tax Planning – Promoter consult tax experts to minimize the tax liabilities on the new venture.
FORMULATION OF COMPANY
I. Promotion
II. Incorporation – Once the promotion process is complete, the enterprise is to be registered as a body
corporate. For this purpose an application is to be to the Registrar of Companies o the prescribed form
accompanied with the following documents:
1. Memorandum of Association
2. Article f association
3. A list of Directors
4. Written consent of the Directors to act in that capacity.
5. A Statutory Declaration
6. Notice of the registered office of the company
7. Copy of the letter in which the name of the company has been approved
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B.Com. 1st Year Subject- Business Organization and Communication
1. To ensure that the proposed issue of securities complies with the guideline laid down by the
Securities and Exchange Board of India (SEBI).
2. To make agreement with the underwrites for underwriting of securities.
3. To apply to the stock exchange for listing of securities.
4. To appoint bankers, share brokers, managers to the issue of securities.
5. To file a copy of the prospectus with the Registrar of Companies.
6. To advertise the issue of securities and to issue the prospectus for public subscription.
7. To get the application form printed and supplied to the public.
8. To receive application along with the applications money through the bankers of the company.
9. To make allotment of securities. In case of over subscription the allotment must be made in
consultation with stock exchange concerned.
10. To file allotment return with the Registrar of Companies within 30 days fro completion of
allotment.
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B.Com. 1st Year Subject- Business Organization and Communication
Partnership
Definition of Partnership:
“Partnership is the relation existing between person competent to make contracts who have agreed
to carry on a lawful business in common, with a review of private gain”
The Indian Partnership Act 1932 defines “Partnership” as the relation between persons who have
agreed to share the profits of a business carried on by all or any of them acting you all”
Characteristics of Partnership:
1. Formation (two more person)
2. Agreements- among partners
3. Legal business as per the registration under partnership Act.
4. Profit Motive
5. Unlimited liability
6. Non transferability of share
7. Full management and control
8. Mutual agency
9. Utmost good faith
10. Individuality of the partner
11. No separate entry
Advantages of Partnership
1. Easy formation
2. Benefit of greater resources
3. Sharing of risks
4. Protection of minority interests
5. Flexibility
6. Balanced judgment
7. Personal supervision
8. More scope for expansion
9. Free from various expenses
10. Benefit of personal contracts of partners
Disadvantages of Partnership
1. Unlimited liability
2. Limited resources
3. Non-Transferability of shares
4. Instability
5. Lack of quick decisions
6. Lack of public confidence
7. Conflicts
8. Lack of secrecy and privacy
9. Absence of separate legal status
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B.Com. 1st Year Subject- Business Organization and Communication
Partnership Deed
Meaning
The partnership Deed is a document which embodies the terms and conditions of the partnership
agreement laying down the mutual rights, duties and obligations of partners. The deed is stamped in
accordance with the stamp Act.
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B.Com. 1st Year Subject- Business Organization and Communication
2. Common approach
3. Minimum number and mutual confidence
4. Skills and talents of partners
5. Adequate long term capital
6. Long duration
7. Written agreement
8. Registration
REGISTRATION OF PARTNERSHIP
Under the Partnership Act, it is not compulsory for a firm to be registers, but there are certain
disabilities to an unregistered from which it desirable, even virtually compulsory, that the firm be
registered.
Procedure of Registration
The statement should contain information relating to the following particulars:
(i) The name of the firm
(ii) The principle place of business
(iii) Name of other places where the firm varies on business
(iv) The dates on which various partners joined the firm
(v) The names in the full and addresses of the partners and
(vi) The duration of the firm.
DISSOLUTION OF PARTNERSHIP
According to section 39 of the Indian Partnership Act. 1932, the dissolution of partnership between all
the partners of a firm is called the dissolution the firm. Section 48 of the partnership act, 1932 lays down
the following procedure for the settlement of accounts between partners after the dissolution of the firm:
1. Losses including deficiencies of capital should be made good
(a) First of profits
(b) Then out of capital
(c) If need be out o personal contributed of partner in their profit sharing rations.
2. The assets of the firm including any sum contributed by partners to make up deficiencies of
capital will be applied for setting the debts of the firm, in the following order, subject to any
agreement to the contrary.
a) First, in paying of the debts of the firm due to third parties.
b) Then in paying to each partner ratably any advance or loans given by him in addition to or apart
from his capital contribution.
c) If any surplus is available after discharging the above liabilities, the capital contributed by the
partner may be returned, if possible, in full or otherwise ratably.
d) The surplus, if any, shall be divided among the partner in their profit sharing rations.
MODES OF DISSOLUTION
(A) DISSOLUTION WITHOUT INTERVENTION OF COURT
1. Dissolution by agreement.
2. Dissolution by notice.
3. Dissolution or the happening of certain contingencies.
i. By the expiry of the term of duration of the firm.
ii. By the completion of the adventure or task of which the firm was contributed.
iii. By the death of a partner.
iv. By the adjudication of a partner as insolvent.
1. Compulsory dissolution:
a) When all the partner except one become insolvent.
b) When all the partners become insolvent.
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B.Com. 1st Year Subject- Business Organization and Communication
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B.Com. 1st Year Subject- Business Organization and Communication
UNIT-2
JOINT STOCK COMPANY
Definition & Meaning: - A company is a voluntary association of persons formal and registered under
the present company act, or under any previous laws. In the eyes f law. It is an artificial person having
separate entity from its members, with perpetual succession and common seal. The capital of the
company is divided into transferable shares and shareholders are called members.
Characteristics of Company:-
1. Members/subscribers
2. Artificial person
3. Separate legal entity
4. Perpetual succession
5. Common seal
6. Limited liability
7. Share capital
8. Transferable shares
9. Separate property
10. Capacity to sue & to be sued
11. Limited capacity to contract
12. Management team
13. Existence Independent
14. Statutory obligation
15. Business or property on the name other than its own
16. Registered voluntary association/body corporate
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B.Com. 1st Year Subject- Business Organization and Communication
d. Companies with liability limited by shares: The liability of members in such a company is
limited only to the amount of the shares held by them.
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B.Com. 1st Year Subject- Business Organization and
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Company Formation
Memorandum of Association:-
According to section 2 (28) of the Companies Act “memorandum means the memorandum of
Association of a company as originally framed or as altered from time to time in purchase of any
previous companies law or of this act.
Features
1. Fundamental document
2. Essential for every company
3. Originally framed
4. Limitations for power
5. Unalterable
Article of Association
Article is the association is the document of a company which contains rules, regulation or laws of
company
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B.Com. 1st Year Subject- Business Organization and
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Content of Articles
1. Share capital and rights attached to different clauses of shares.
2. Adoption of Preliminary contract
3. Calls & lien on shares
4. Redemption, Transfer, forfeiture of share
5. Alteration capital
6. General meetings
7. Appointment & removal of directors
8. Dividend relevance.
9. Accounting related
Prospectus
A prospectus s any document which is described or issued as a prospectus by a company for any or
the following purpose.
1. For inviting deposits from the public
2. For inviting offers fro public for purchasing of share and debenture.
Contents of Prospectus
1. Objective of company
2. Information related to share capital
3. Information related to Directors
4. Information related to auditing
5. Remuneration relate to promoters
6. Preliminary expenses
7. Reserve & surplus
8. Auditing
CO-OPERATION ORGANIZATION
Meaning:- Co-operation is a form of organization, where in persons voluntary associate together as
human being on the basis of equality for the promotion of economic interest of them self.
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B.Com. 1st Year Subject- Business Organization and
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7. Distribution of profit
8. No transfer of shares
9. Liability
10. Cash Trading
Types of co-operative
1. Consumers’ Co-operative: A consumer co-operative store ensures supply of consumer
services of standard quality to its members, at fair prices. It purchases gods on wholesale basis
and sells to its members on retail basis at reasonable prices.
2. Producers’ or Industrial co-operative societies: Generally, small-scale and cottage
industries are set up under the system of co-operative organization. Industrial co-operative is
undertake the functions of purchasing and supplying raw materials. Tools and equipment to
its members, marketing their finished goods, securing contracts from government, public
bodies and other and setting hem executed with the help of members.
3. Co-operative marketing societies: Marketing co-operative are established by producers for
selling their products at remunerative prices. Modern marketing is a complicated procedure. It
involves various marketing functions like standardization, grading, warehousing, branding,
packing and packaging, advertising and promotion.
4. Co-operative housing societies: Low and middle income group, especially in metropolitan
cities, may find it difficult to construct their own houses. Housing co-operative help people to
construct their own houses.
5. Co-operative credit societies: such societies are formed by socially and economically
backward sections of society such as industrial workers, agriculturists, artisans, salary
earners, etc. in order to meet their financial demands.
6. Co-operative farming societies: Co-operative farming societies are formed by the farmers,
who pool their land jointly conduct their agricultural operations.
Disadvantages:
1. Limited resources
2. Limited size
3. Weak management
4. Non-equitability of selfness workers and leadership
5. Absence of motivation or personal attachment
6. Lack of secrecy
7. Lack of public confidence
8. Non-cooperation among members
Co-operative Organization
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B.Com. 1st Year Subject- Business Organization and
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Co-operative society may be defined as a voluntary association of persons organized to look after their
common interests through manual Co-operation.
According to India Cooperative Societies Act, 1912. A co-operative society is a society which has its
objects its promotion of the economic interests of its embers in accordance with co=operative
principles.
In sense, it is nothing but self help made effective by organization.
Main Features:
1. Voluntary organization
2. Democratic management
3. Service motive
4. Equal voting right
5. No dividend hunting and fair return on capital
6. Government control
7. Mutual relation (Limited we stand divided we fall)
8. Non Transferability of shares
9. Cash sale
10. Training grounds for mutual solidarity
Advantages of Co-operatives-
1. Easy formation
2. Limited liabilities
3. Perpetual existence
4. Open membership
5. Availability of Government assistance
6. Social service
7. Development of human values
8. Reduction in the cost of marketing
9. Tax advantage
10. Democratic management (one member one vote)
Disadvantages:
1. Lack of secrecy
2. Lack of initiative and incentive
3. Specialized management is not always possible
4. Excessive state participation
5. Lacks business leadership
6. Limited scope
7. Good ground for selfish interest
8. Lack of mutual interest.
Formation of Co-operative:
To get a co-operative society registered there must be at least ten adult persons. These persons will
have to submit a joint application for registration to registrar. It contain following information-
1. The name of the society.
2. The aims of objectives
3. Division of share capital
4. Names & addresses of the embers
5. Two copies of the bye-laws
6. Two copies of the rule and regulation of the society.
One receipt of the application, the Registrar will scrutinize it and he will issue a certificate of
registration.
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B.Com. 1st Year Subject- Business Organization and
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Company Organization
Meaning: A joint stock company is a body corporate with a common seal and perpetual succession
owned by a large number of persons known as shareholders who contribute to the capital of the
company with the right to transfer their individual shareholdings.
In brief, a company can be defined as an artificial person with its independent legal entity.
Main features:
1. Artificial legal person
2. Common seal
3. Perpetual succession – continues life & stable existence
4. Distinct legal entity
5. Limited liability
6. Expert management due to separation of ownership from management
7. Transferability of share
8. Large membership
9. Association of persons
10. Wide investment facilities
Advantages:
1. Limited liability
2. Transferability of shares
3. Facilities of large scale production
4. Stimulus to saving
5. Permanent existence
6. Diffused risk
7. Lower tax liability
8. Flexibility in management
Disadvantages:
1. Difficulty in formation
2. Lack of personal interest
3. Lack of secrecy
4. Fraud by promoters
5. Delay in decision making
6. Linhealthy speculation
7. Cumbersome and excessive legal control.
KINDS OF COMPANIES
There are three main bases of company classification and they are as know:
CLASSIFICATION OF COMPANIES
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B.Com. 1st Year Subject- Business Organization and
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Promotion of a Company
The procedure for the formation of a company may be divided into four principal stages-
(a) Promotion: Promotion means discovery of business opportunities and the subsequent
organization of funds, property, management ability into a business enterprise for the purpose
of making profit there from.
(b) Incorporation Stage: After preliminary steps, the following documents are required to
submit for the purpose of registration-
1. Memorandum of Association
2. Article of Association
3. Notice of address of Registered Office
4. Contracts with managing agents, secretary & reassures etc.
5. Consent of the directors.
6. List of directors with their name, address, occupation and age.
7. Statutory declaration
(c) Capital subscription stage- A public company having a share capital has to pass through the
capital subscription stage before it can commence the business.
(d) Commencement of Business- To obtain this certificate a company will have to file following
documents with the Registrar-
1. Prospectus or statement in lieu of prospectus
2. Declaration of fulfillment of minimum subscription
3. Declaration of fulfillment of directors of contract to purchase qualification shares.
4. Statutory declaration.
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B.Com. 1st Year Subject- Business Organization and
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Public Enterprises
Meaning
A public enterprise may be defined as an enterprise which may be (i) owned by the state, (ii) managed
by the state or (iii) owned and managed by the state.
Advantages:
1. Growth o key and heavy industries (e.g. Steel Industry)
2. Avoidance of uncertainty
3. Greater, better and cheaper products
4. Helps in preservation of national wealth
5. Encourages the industrial growth of under developed countries.
6. No exploitation of labour, capital or management.
7. Planned progress.
8. Prevents the concentration of wealth
9. Helps in the social and economic welfare by keeping the public utility concerns out of the
clutches of the private sector.
Disadvantage
1. Cheaper, better and cheaper production is a myth
2. Top heavy administration expenses.
3. Nepotism and favoritism (reference to relative of legislators and officials in appointment)
4. Delay in decision.
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B.Com. 1st Year Subject- Business Organization and
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Importance
1. Creation of the social basic facilities for balanced economic growth.
2. Speed up the pace of industrialization.
3. Remove regional economic imbalances by the industrialization of backward areas.
4. Have equitable and just distribution of wealth.
5. Increase job opportunities.
6. Nationalize sick mills
7. Solve the problem of unemployment
8. Encourage private sector to supplement the economic growth of the country.
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B.Com. 1st Year Subject- Business Organization and
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Merits:
1. There is no complex and politically difficult apparatus of special Registration.
2. It is a flexible form and run like a private enterprise in regard to finance, operation and
taxation.
3. There is no under departmental interference.
4. It is the chicest compromise between the departmental form and public corporation.
Demerits:
1. The democratic character of management becomes a more fiction or myth because Govt. is the
major shareholders.
2. Ministerial interference is found to be frequent.
3. Lack of imitativeness.
4. Parliament has no effective control, only annual audit reports are discussed here.
5. The autonomy is vitiated by the executive order of the Govt. issued without reference to the
parliament.
IV Public Corporation from of Management
Features
1. It is an autonomous body created by a special act of the parliament.
2. Directors are nominated by the Govt.
3. It enjoys administrative autonomy and financial autonomy also.
4. Public accountability is important feature of his form.
5. The capital is mostly provided by the central or the state Government.
Merits
1. Public corporation. Enjoy administrative and financial autonomy.
2. There is adequate flexibility AND INITIATIVE.
3. IT CAN EMPLOY TRAINED AND EXPERT MANAGERS.
4. Accountability of parliament that the corporation is not managed against the public interests.
5. The interests of the consumers are protected due to the service motive.
Demerits
1. Autonomy is mere myth, in practice, the minister, government officers very often interfere.
2. Due to big in size they create problems of management.
3. Amendment can be done only by parliament, it gives rigidity.
4. Public accountability is a great problem associated with public corporation.
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B.Com. 1st Year Subject- Business Organization and
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INTERNATIONAL TRADE
International trade is exchange of capital, goods and services across international borders or
territories.
EVOLUTION
Since times immemorial.
Unexpected expansion after World War II.
The post 1990s has given greater fillip to international trade.
The MNCs which were producing the products in their home countries and marketing them
and various foreign countries before 1980s, started located their plants other manufacturing
facilities in foreign/host countries.
ADVANTAGES OF MNCs
Promotes economic growth
Provide slower-period, higher-quality goods to consumers
Brings capital
Transfer technology: including organizational, management and marketing skills
Pay higher wages (increase productivity)
Introduces competition to domestic firms
DISADVANTAGES OF MNCs
Foreign business can destroy local businesses
The finance brought into a country by an MNC may be badly managed by that country’s
government.
Avoidance of taxes by manipulating prices.
Market power-After firms driven out can exert market power and increase prices, create
barriers to entry
IMPORTANT FACTS
500largest MNCS control over ½ of global trade flows and 1/5 of global GDP.
90% of world’s 500largest MNCs are in North America, Japan and Europe.
More than 40% of the total exports of China is done by MNCs affiliates.
BP (British Petroleum) operates in more than 100 countries.
Marks & Spencer source its gods from more than 70 countries.
WHY GO INTERNATIONAL?
Expanding the production Capacities beyond the Demand of the Domestic Country.
Serve Competition in the Home country.
Limited Home Market.
Nearness to Raw materials.
Availability of Quality Human Resources at Low Cost.
To Increase Market Share.
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B.Com. 1st Year Subject- Business Organization and
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INDIA 8
The largest component of the annual $2.5 trillion trade in international services is travel and
tourism.
MNCs IN INDIA
Since the economic liberalization ushered in 1991, many multinationals in different lines of
business shave entered the Indian market.
The scenario for ‘MNC in India’ has changed a lot in recent years, since more and more firms
from European Union like Britain, Italy, France, Germany, Netherlands, Finland, Belgium etc.
have outsourced their work to India.
Finnish mobile handset manufacturing giant Nokia has the second largest base in India.
India is perceived to be at par with China in terms of FDI attractiveness by ‘Multinational
Companies in India’.
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B.Com. 1st Year Subject- Business Organization and
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UNIT 3
COMMUNICATION
3. Appraisal:-
Having implemented the decision, management needs to determine whether the desired outcome is
being achieved. Statistics on such factors as cost, sales, market share, productivity and inventory
levels are compiled. This is done through computers, manual papers, memos or reports.
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B.Com. 1st Year Subject- Business Organization and
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EXTERNAL COMMUNICATION:
1. Hiring the employees:-
If a company wants to hire someone, it advertises the vacancy, receives applications, calls the
candidates, takes the interview and then offers job to the successful candidates. The whole process
requires communication.
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B.Com. 1st Year Subject- Business Organization and
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covering letter, so that a better initial impression could be created. No doubt, conversational skill right
at the time of interview is equally countable towards success of the candidate. Listening abilities on
the other could prove to be fruitful especially when the interviewer is making a comment or asking a
question. In short we can say that the presence of above mentioned five communication skills could
give a better chance of being selected during an interview.
PROCESS OF COMMUNICATION
“Communication is a two way process of exchanging ideas or information between two human
beings”.
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Communication
Communication simply means exchange of ideas & information between two persons. A person sends
a message to another person and gets the response from the receiver on the message. This whole
phenomenon can be explained as under.
1. Sender’s thoughts:-
The very first step in the process of communication is generation of thought in the sender’s mind.
These thoughts may be about a request, order, inquiry production or any other such activity.
2. Encoding / Message:-
The thought generated in the mind of sender is ambiguous and unable to be communicated unless it is
put into a receivable form. This step is known as encoding where the sender converts his thought into
a message by means of a language. For example, a sender thinks about having a job. Now, he will put
his thought on a paper. That is called job application. In his way, his thought becomes a message.
5. Decoding by Receiver:-
Having received the message from the sender, the receiver attempts to understand and interpret the
message. This process of converting the language of message into thoughts is known as decoding. For
instance, the receiver, having received job application, reads the application and understands the
message conveyed by the applicant.
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6. Idea Received:-
As soon as the process of decoding is finished, the idea given by the sender is received by the receiver.
It means the thought that was generated in the mind of sender has been transmitted to the mind of
receiver. In our example, the sender wanted to inform the receiver about his thought of having a job.
Now the sender has got this idea.
7. Feed back:-
Process of communication is incomplete until the receiver responds to the sender. This response may
be negative, positive, or for further enquiry. It means when the receiver of job application welcomes
or regrets the sender, the process of communication is deemed to be complete.
Communication is the exchange of ideas between two minds. This process of exchanging idea is based
on following five factors.
1. Sender:-
Sender is the person who initiates the process of communication. He generates an idea in his mind
regarding production invention, innovation, request, order, enquiry etc. So, he is the first factor of
communication process and his function is to generate an idea. Therefore, it is necessary that the idea
should be clear, and convertible into message. For this purpose, the sender needs to apply his
knowledge and imaginative power.
2. Message:-
The idea in the mind of sender is transformed into words that is called message. The sender decides
on the length, style, organization and tone of the message. The message may be presented in many
ways, depending on the subject, purpose, audience, personal style, mood and cultural background.
3. Media:-
The media of transmission of message are electronic media as T.V., radio, computer and print media as
newspapers, letter, magazine etc. media play a very important role in helping the receiver’s
understand the message. A wrongly chosen medium can interrupt the process of communication,
Selection of medium depends upon message, audience, urgency and situation.
4. Receiver:-
Receiver is the person who gets the message from the sender, decodes it, understands it and
interprets it.
5. Feed Back:-
Having understood the message, the receiver responds to the sender in yes or no or asks further
questions. This process is called feedback.
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Communication
VERBAL COMMUNICATION
VERBAL COMMUNICATION: Verbal communication means such a communication that takes place by
means of a language or words”. It includes the following contents.
a. Oral communication (Speaking & listening)
b. Written communication (writing & reading)
1. Speaking:-
In order to send message in business, speaking plays a vital role. Giving instruction, conducting
interviews, attending meetings, sending orders through telephone calls are very common in today’s
business.
2. Writing:-
It is used when a complex message is sent. Placing order through letters, informing employees
through circulars, sending reports and memos, filling different government forms, keeping records in
writing are some examples of this aspect of verbal communication.
3. Listening:-
People in business spend more time in obtaining information then transmitting it. Listening is the
most important way to receive information: information regarding order of employers, instruction,
rules and regulation, customer trend etc, are obtained through listening. But in listening, people
generally forget 75% of the message after few days.
4. Reading:-
Reading reports, memos, policies, circulars, and different business statements are essential for an
organization: Reading involves understanding and interpreting the material.
SWOT Analysis
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Tip:
Strengths and weaknesses are often internal to your organization, while opportunities and threats
generally relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-
External Analysis and the SWOT Matrix is sometimes called an IE Matrix. To help you to carry out a
SWOT Analysis, download and print off our free worksheet, and write down answers to the following
questions.
Strengths:
What advantages does your organization have?
What do you do better than anyone else?
What unique or lowest-cost resources can you draw upon that others can't?
What do people in your market see as your strengths?
What factors mean that you "get the sale"?
What is your organization's Unique Selling Proposition (USP)?
Consider your strengths from both an internal perspective, and from the point of view of your
customers and people in your market.
Also, if you're having any difficulty identifying strengths, try writing down a list of your organization's
characteristics. Some of these will hopefully be strengths!
When looking at your strengths, think about them in relation to your competitors. For example, if all of
your competitors provide high quality products, then a high quality production process is not a
strength in your organization's market, it's a necessity.
Weaknesses:
What could you improve?
What should you avoid?
What are people in your market likely to see as weaknesses?
What factors lose you sales?
Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses
that you don't see? Are your competitors doing any better than you?
It's best to be realistic now, and face any unpleasant truths as soon as possible.
Opportunities:
What good opportunities can you spot?
What interesting trends are you aware of?
Useful opportunities can come from such things as:
Changes in technology and markets on both a broad and narrow scale.
Changes in government policy related to your field.
Changes in social patterns, population profiles, lifestyle changes, and so on.
Local events.
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Tip:
A useful approach when looking at opportunities is to look at your strengths and ask yourself whether
these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you
could open up opportunities by eliminating them.
Threats
What obstacles do you face?
What are your competitors doing?
Are quality standards or specifications for your job, products or services changing?
Is changing technology threatening your position?
Do you have bad debt or cash-flow problems?
Could any of your weaknesses seriously threaten your business?
Tip:
When looking at opportunities and threats, PEST Analysis can help to ensure that you don't overlook
external factors, such as new government regulations, or technological changes in your industry.
Strengths:
We are able to respond very quickly as we have no red tape, and no need for higher
management approval.
We are able to give really good customer care, as the current small amount of work means we
have plenty of time to devote to customers.
Our lead consultant has strong reputation in the market.
We can change direction quickly if we find that our marketing is not working.
We have low overheads, so we can offer good value to customers.
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Weaknesses:
Our company has little market presence or reputation.
We have a small staff, with a shallow skills base in many areas.
We are vulnerable to vital staff being sick, and leaving.
Our cash flow will be unreliable in the early stages.
Opportunities:
Our business sector is expanding, with many future opportunities for success.
Local government wants to encourage local businesses.
Our competitors may be slow to adopt new technologies.
Threats:
Developments in technology may change this market beyond our ability to adapt.
A small change in the focus of a large competitor might wipe out any market position we
achieve.
As a result of their SWOT Analysis, the consultancy may decide to specialize in rapid response, good
value services to local businesses and local government.
Marketing would be in selected local publications to get the greatest possible market presence for a
set advertising budget, and the consultancy should keep up-to-date with changes in technology where
possible.
Key Points
SWOT Analysis is a simple but useful framework for analyzing your organization's strengths and
weaknesses, and the opportunities and threats that you face. It helps you focus on your strengths,
minimize threats, and take the greatest possible advantage of opportunities available to you.
SWOT Analysis can be used to "kick off" strategy formulation, or in a more sophisticated way as a
serious strategy tool. You can also use it to get an understanding of your competitors, which can give
you the insights you need to craft a coherent and successful competitive position.
When carrying out your SWOT Analysis, be realistic and rigorous. Apply it at the right level, and
supplement it with other option-generation tools where appropriate.
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UNIT-IV
NON-VERBAL COMMUNICATION
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Para Language-
It refers to the non-verbal elements of communication used to modify meaning and convey
emotions.
Paralanguage may be expressed cautiously & incautiously
It includes pitch, volume, voice, tone.
The study of paralanguage is known as paralinguistic.
Audio Signs-
* The non-verbal communication in which the sounds are easily recognized without verbal or visual
communication. Like sirens, clarinets, flute, ambulance, police jeep, train horn, etc.
Visual Signs- the signs which are generally used so as to know the meaning which the sign identifies.
The best example are the similes used during chatting in yahoo or other mails.
Channel of Communication
Meaning – Communication channel are established by the organization and are accepted &
recognized by employees & managers.
External communication-
Communication with those outside the organization is known as external communication.
a) Outward- the messages which go out of the organization to customers, suppliers, banks,
insurance companies, govt. departments, mass media & the general public. They may be in the
form of letters, faxes, banners, reports, telegrams, advertisements, press handouts, speeches,
visits, trade fairs, etc.
b) Inward – messages that are received from outside by the company. An organization may receive
letters, faxes, telegrams, telephone calls, personal visits, magazines, etc. these may be from
customers, suppliers, other organization, govt. departments, etc.
II internal communication-
The communication within the organization, among its members is internal communication
Channels of Communication
Downward Upward
a) Formal channel – the communication when takes place within the official i.e. the lines of
communication is approved by senior management. This is the channel which carries the
official messages in the organization.
Under a formal channel-
There are efforts made by each & every individual at various levels.
The most important aspect of formal channel is that no level of the organization is
overlooked or bypassed. The information passes through an already fixed, systematic
channel.
It is the process or sharing official information with others who need to know it, which
is according to the prescribed patterns depicted in an organization’s chart.
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Company newsletters, employee handbook, company magazines, formal meetings, letters, bulletins,
memos, faxes, all-employees mailing, etc.
Meaning –
The informal channel of communication may be defined as passing information outside the official
channels, for e.g.:- employees chatting in the canteen or pub. It can affect the future of the business,
particularly if the formal system has broken down.
Grapevine is an informal channel of communication.
Primarily a channel of horizontal communication, it can flow even vertically and
diagonally.
Of four types:
Single strand: flow like a chain
Gossip: one person tells everybody else
Probability (random): information may move from anybody to
anybody.
Cluster: moves through selected groups
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Importance :
Emotional relief,
Harmony in organization
Supplement to other channels,
A fast channel,
Provides feedback
Demerits:
distortion of information
may transmit incomplete information
travels with destructiveness
Barriers to Communication
Introduction – No matter how good the communication system in an organization is,
unfortunately barriers can and do often occur. This may be caused by a number of factors which can
usually be summarized being as due to physical barrier, languages, organizational, emotional, personal
barriers.
A communication becomes successful only if the receiver understands what the sender is trying to
convey. When your message is not clearly understood, you should understand that your message is facing
a barrier.
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• Offensive style
• Time & distance
• Noise
• Improper Time
• Physical Distance
• Information Overload
2) Language barrier –
The barrier created due to the improper use of language, words, phrases, etc.
Variety of Meaning: For example: a person may be present at function and receive a present and present
some thoughts on budget.
3) Cultural barrier –
• Values & norms
• Social relationship
• Concept of time
• Concept of space
• Thinking process
• Non verbal communication
• Perception
• Use of voice
• Specialist language
• Appearance (we react unconsciously to the biological appearance color & texture of skin, color of
eyes, Body structure, way of dressing etc.)
Organizational barrier - The factors internal to the organization which adversely affect the flow of
communication are called organizational barriers.
This includes –
• Organization policy
• Rules and regulations
• Status difference
• Complex organizational structure
• Facilities
• Wrong choice of channel
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This includes-
• Selective listening,
• Premature evaluation,
• Psychological & emotional barriers,
• Emotional attitude,
• Inferring.
• Barriers due to resistance to change,
• Lack of trust & confidence,
• Lack of ability to communicate,
• Inattention,
• Difference in speed of talking & listening.
• Defensiveness: (fear of boss)
• Status block
• Self centered attitude
• Attitudinal clash with sender
• Group identification (belonging to a group like family, locality, city, our religion group, age group,
nationality, economic group) we tend to reject an idea which goes against the interest of the
group.
Introduction
“Reading maketh a full man, writing an exact man, conference a ready man”.
Business communication is both written as well as oral. But written communication is very important
aspect of business communication. When exchange of opinion is in written form, rather than by spoken
words it is written communication. It is important to fix accountability and responsibility of people in
organization. This requires much of paper work as it becomes the permanent means of communication. It
helps in building goodwill of an organization.
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6. It helps the customers to form a strong impression about the company if the letters are efficiently
drafted.
7. It is a strong linking device between the organization and its customers.
8. A steady progress is surely based on effective written business communication.
Thus we can sum up by saying that written business communication plays an essential & effective role in
the growth & progress of an organization.
According to Gortside the 4 main reasons for writing business letters are: -
1. To provide a convenient and inexpensive means of communication without personal contact.
2. To give or seek information.
3. To furnish evidence if transactions entered into.
4. To provide a record for future reference.
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Business Letters
Routine Special
Enquires Circulars
Quotations Personnel
Orders Agencies
Payment Travel
(a) This is a widely accepted classification of business letters. However there might be letters like
application & letter to press, which do not figure in this classification.
(b) However as mentioned earlier the business letters may be classified on the bases of our approach-
direct, indirect or persuasive. All good newsletters, offers of appointment, enquiries, order,
promotion etc. fall in the category of direct approach letters.
On the other hand ‘bad news’ letter like adjustment, refusals, rejecting a job applicant falls
in the category of indirect approach letters. Offers of sales & services, job applications that have
been regarded similar to sales letters, fall in the category of persuasive letters. Thus approach to
the letter problem or situation is an important criterion for classification.
(c) Letters can be classified as Official letters, D.O.’s (demi-official letters), form letters and internal
letters. Official letters are those written to government or semi-government department/offices
& bodies. D.O’s or demi-official letters are those letters essentially official in purpose but addressed
to an official by name. Form letters are routine in nature and include acknowledgement, reminders
interviews, notices & appointments. Internal letters or memos are used in government offices as
well as business organization for external communication.
(d) On the basis of Subject the letter are classified as enquires, orders, credit information, complaint,
sales promotion, sales circulars, appointment of personal, agencies, collection of dues etc.
(e) Letter can be classified on the basis of correspondence of different departments of an
organization.
Personnel department- applications, call candidate for interviews, offers appointment
letters, giving charge sheet etc.
Purchase department – sends requests for quotations, invites tenders, places orders & sends
letters of complaints.
Sales department – sends circulars, advertisements etc.:-
For convenience we can divide various kinds of business letters on the basis of the purposes
for which the department of an organization send them example of some important kinds of
letter are:
(a) Enquiries, Orders, Complaints & Responses To Them
(b) Sales Letters, Circulars.
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2. Conversational Style: Modern Executives prefer friendly & conversational style as compared to
dull, stiff& skilled style of correspondence. He wants that a letter like face-to-face talking should
be interactive thus in this respect there is not much difference between a personal letter and an
effective business letter.
Some examples of conversational style are-
I hope you approve; please let me known soon; I sincerely appreciate etc.; instead of I hope this
cater to your requirement & approval or the undersigned wishes to inform that the
aforementioned contract is in hand etc.; a friendly & conversational style is preferable in business
letters.
3. Clarity of Goal: In correspondence one has to be clear both in thought and expression. The letter
reflects the writers mind. He should be clear about what information he is seeking or wishing to
convey.
4. Public Relations aspect: An image of the company is formed in the eyes of the people through
various sources .correspondence is major factor among them.
5. You – attitude: Writer’s interest in the receiver must be shown through effective business letters.
Thus everything has to be analysed form the readers’ point of view. This will help the writer to
obtain a favorable response. So the writer should focus from ‘I’ & ‘we’ to ‘you’& ‘your’. A genuine
concern for the receiver is expected on the writer part. Thus the attitude of you should be kept in
mind.
Example – ‘Your assignment is ready, ‘you’ will be happy to know’, etc.
6. Courtesy: Courtesy excludes the element of anger & preaching that is often disliked by people. A
courteous letter can be mutually beneficial if adopted.
7. Persuasion: Persuasion is the main function of business communication. Persuasive letters are
written under various circumstances and for various reasons.
8. Sincerity: The writers approach should be so sincere & convincing that the reader must be forced
to belief in what is written.
9. Positive language: Positive words stir up positive feeling. Positive words help to build up human
relations. On the other hand negative words have exactly opposite effect. Therefore it is advised
to use positive substitutes for words like, sorry, failure, loss, damage, refuse etc.
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10. Due emphasis: Emphasis should be made on all-important points the first sentence & the last
sentence normally carry more weight age. Short and crisp sentences should be used while
emphasising because they are more assertive & emphatic.
11. Coherence: There should be coherence between the points mentioned in the letter. Linking
devices should be used because in helps to give a logical progress to the thoughts of the writer.
12. Tasteful approach: The communicative letter should be tactfully planned. The letters containing
bad news should be written in such a way that it does not give a wrong impression to the reader.
Good news is always conveyed directly however a bad news is conveyed indirectly.
13. Ethical standard: we should not forget the business ethics while writing letters.
14. Care for culture: care should be taken while drafting a letter in international correspondence.
Words so as to offend the receiver should not be used. Slangs, idioms, phrases etc. should be
avoided.
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9. Starting Writer can begin the letter with the use of following sentences:
sentence We have the pleasure to inform you….
Many thanks for your letter……..
With reference to your letter dated……
We shall be highly obliged to you……..
We acknowledge receipt of your letter….
Pleaser refer to your letter……
Thank you for your letter……
I regret to inform you that….
10. Body part Body part is the soul of a letter. In the body, message can be passed in
following sequencer:
Reference to any correspondence,
Which has already taken place
Main message should be indicated.
State your expectation or intention.
11. Closing Following sentences may be used at the concluding part of a letter:
sentences We look forward to hearing form you……..
We would be grateful for an early reply….
We shall, of course, be happy to order……
On hearing form you, we shall……..
Hoping to hear from you soon ………
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12. Complimentary The complementary close is a polite way of ending letter. It is typed two
Close space below the closing sentence as shown herewith:
Your faithfully (if salutation starts with sir)
Yours faithfully (if salutation starts with sirs)
Your (may also be started in cases of close)
Yours sincerely relation.)
13. Signature
After complimentary close, the signature of writer Signature position
is needed. Between the gap of complimentary close in various cases:
and the name of the writer, the signature required.
Yours faithfully,
//Singnature//
company Shaharukh Khan
Managing director
Or
For Govind Khemka
//Singnature//
Managing Director
14. Identification To identify the typist of the letter, usually the identification mark may be put
Marks at the bottom line of letter.
If letter is typed by Ramgopal then RG mark can be given at the bottom line.
15. Enclosure Two spaces below the identification mark the number of enclosures should
be indicated as-
Encl. …………………………
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STRUCTURE OF A LETTER
1. Name And Address (Heading )
……………………………………
……………………………………
2. Date of the Letter………………
3. Your reference …………………
Our Reference ……………
4. Address-inside………………………
……………………… ………………………
5. Telephone /fax/e-mail numbers ………….
6. Attention to someone (if necessary) : Name
7. Subject of the letter : Usually Bold, Sometimes Underlined
8. Words of Honour/Salutation : Dear Sir/Madam
9. Starting Sentence…………………..
10. Body part ……………………………………………………………………………….
……………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………
11. Closing Sentence: This is usually one or two sentences summary of the main points of the letter
along with a ‘thank you’ or ‘see you soon’ statement included.
12. Complimentary Close: Your’s/ Your’s Sincerely/etc.
13. Signature of Sender: Sign.& Title Of Sender & Designation
14. Enclosures (If Any): Numbers and Subject
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UNIT-V
The Modern Means of Communication in India
The means of communication help us to send our messages and ideas from one place to another. In the
modern world the means of communication have become very important. In old days it was very difficult
to send our messages and receive messages from far off places. This sending and receiving of messages
and ideas is known as communication. In modern times we can communicate with far off places easily
and quickly. The means of transportation and the means of communication are closely related. They are
inter-dependant. The following are the main means of communication.
Email –
It’s difficult to imagine life without email now. Business people exchange ideas on it, friends keep in touch
by it and marketing teams thrive on it. It’s hard to believe it’s only been around since the 70s.
Conference call –
Thanks to the trusty telephone, it’s now even possible to have meeting over the phone. Telephone,
traditionally allowing only two people to chat, can now allow any number of people to talk as though they
were in a room together. Conference calls enable businesses to save time and money by cutting expensive
travel – and they’re much kinder to the environment.
Fax –
Though now largely redundant thanks to the efficiency of internet communication, fax machines were all
the rage when they became widely affordable in the 1980s and 90s, allowing the transmission of paper
documents over telephone wires. They’re still considered a safer option than the internet for the
transmission of sensitive material.
iPhone –
Apple’s stunning smart phone is the must-have gadget of this decade, and with its incredible range of
‘apps’, it seldom falls short of its glossy marketing. From apps which tell you the weather, to apps which
tell you what recipes you can make from the ingredients in your cupboard, the iPhone goes beyond being
a mere method of communication and practically runs your life for you.
Blackberyy –
A favourite of the modern businessperson, the Blackberry is the iPhone’s main rival, and it often seems
that the world is divided on the subject of which is best. The Blackberry is especially noted for its instant
email notifications, which allow businesspeople to stay on the ball at all times.
Facebook –
Social networking giant Facebook now has over 600 million users around the world, making it a first port
of call for staying in touch with friends both new and old. Organising events, sharing photos and instant
messaging have never been so easy.
Twitter
Micro blogging site Twitter has gone from strength to strength over the last couple of years, with many
people now so addicted to it that they use it for breaking news and communicating with friends as much
as for "Tweeting" about their everyday goings on.
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The letter
The letter hasn't completely died out yet, so it does still count as a modern method of communication.
Though the days when we receive letters from friends may now be few and far between, there are still
huge numbers of people who maintain that nothing beats the letter for the personal touch.
Telephone
Telephones may have been around a bit longer than email but they're still a world away from the days
when we were reliant on posting a letter. Whether on a landline or mobile phone, instant verbal
communication has become a mandatory part of the modern world.
Telex
The Telephone Department also has a 7"e/ex service through which typed messages can be sent very
quickly. This method is often used by offices, airlines, Government offices and newspaper offices.
Newspapers
Newspapers, magazines and books are a good means of mass-communication. This is a print medium
which travels far and wide. The newspapers have a very wide circulation and every literate person tries
to go through them. They bring us the latest news, rates of the commodities, advertisements, employment
news, matrimonial and many other information.
In addition to the above there are some other means of communication. Hoardings and Billboards are
used by the Government and the Advertisers to communicate the public.
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Cinema
Cinema is also a means f mass communication. Almost every town has a cinema hall. Besides recreation,
cinema is also of a great educational value. The Government has a number of mobile cinema vans. It
arranges cinema shows in the rural areas and shows a number of documentary films regarding its
policies and programmes. During the recent years television has gained more popularity over the cinema
as means of mass-communication. In addition to the above there are some other means of
communication. Hoardings and Bill-boards are sued by the Government and the Advertisers to
communicate the public.
The rise of electronic technology has meant that modern communications are a far cry from the days
when a letter would have been the only option. Rather .than waiting days or even weeks for news to
arrive, we're now able to access instant updates and talk with friends and colleagues immediately,
regardless of where in the world they are. Here are just a few of the possible options for modern
communication.
Satellites
In today's world of wireless communications, high definition television and global access to the Internet,
many people are unclear about the inherent advantages of satellite communications.
Why does the satellite industry continue to grow? When is satellite the best solution? Here is a quick look
at some: key advantages of satellite communications:
Cost Effectiveness
Global Availability
Superior Reliability
Superior Performance
Immediacy and Scalability
Versatility and More
Computer: The computer is a versatile electronic instrument which can combine various media
functions. The trend of technology is towards convergence of various technologies so that the computer
will become the single multi-task equipment for all kinds of transmission.
Computer technology is the fastest growing field; advances are made rapidly, and users can upgrade their
equipment and buy the latest software for more advanced tasks. Computer Software development is
rapidly making the computer take over more and more tasks and functions both in business and at home.
INTRODUCTION TO E-COMMERCE
Electronic commerce, commonly known as e-commerce or e-comm, refers to the buying and selling of
products or services over electronic systems such as the Internet and other computer networks.
Electronic commerce draws on such technologies as electronic funds transfer, supply chain management,
Internet marketing, online transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems. Modern electronic commerce typically
uses the World Wide Web at least at one point in the transaction's life-cycle; although it may encompass a
wider range of technologies such as e-mail, mobile devices and-telephones as well.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists
of the exchange of data to facilitate the financing and payment aspects of business transactions.
E-Commerce stands for Electronic commerce which involves buying and selling of products and
services on the Internet.
E-commerce includes retail shopping, banking, online stock trading, auctions, real estate
transactions, airline booking etc...
Typically a customer uses a web browser to access a web based virtual store through internet.
It involves searching and selecting products and services online.
Add the selected items to the shopping cart and making the payment online using credit- cards.
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History
Early development
Originally, electronic commerce was identified as the facilitation of commercial transactions-
electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer
(EFT). These were both introduced in the late 1970s, allowing businesses to- send' commercial
documents like purchase orders or invoices electronically. The growth and acceptance of credit cards,
automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic
commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA
and Travicom in the UK. Beginning in the 1990s, electronic commerce would include enterprise resource
planning systems (ERP), data mining and data warehousing in 1990, Tim Berners-Lee invented the World
Wide Web web browser and transformed an academic telecommunication network into a worldwide
everyman everyday communication system called internet/www. Commercial enterprise on the Internet
was strictly prohibited by NSF until 1995. Although the Internet became popular worldwide around 1994
with the adoption of Mosaic. web browser, it took about five years to introduce security protocols (i.e.
SSL encryption enabled on Netscape 1.0 Browser in late 1994) and DSL allowing continual connection to
the Internet. By the end of 2000, many European and American business companies offered their services
through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability
of purchasing various goods through the Internet using secure protocols and electronic payment services.
Elements of E-Commerce
Promote your Web site presence
Have an online catalog or store
Have the capability to receive payments
Be able to deliver the item
Provide after-the-sale support
TYPES OF E-COMMERCE
B2B-(Business- to- Business)
Companies do businesses with each other such as manufacturers selling to distributors and wholesalers
selling to retailers. Supply Chain management is done through this type of e-commerce.
C2C (Consumer-to-Consumer)'
Buying and selling takes places between customers. Example of consumer to consumer e-commerce is
online auctions. EBay is a popular auction site
Business applications
Some common applications related to electronic commerce are the following:
Document automation in supply chain and logistics
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B.Com. 1st Year Subject- Business Organization and Communication
Government Regulation
In the United States, some electronic commerce activities are regulated by the Federal Trade Commission
(FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy.
The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal
Trade Commission Act regulates all forms of advertising, including online advertising, and states that
advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which
prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in
corporate privacy statements, including promises about the security of consumers' personal information.
As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by
the FTC. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in
2008, amends the Controlled Substances Act to address online pharmacies.
Internationally there is the International Consumer Protection and Enforcement Network (ICPEN),
which was formed in 1991 from an informal network of government customer fair trade organisations.
The purpose was stated as being to find ways of co-operating on tackling consumer problems connected
with cross-border transactions in both goods and services, and to help ensure exchanges of information
among the participants for mutual benefit and understanding. From this came e-consumer, as an
initiative of ICPEN since April 2001. www.econsumer.gov is a portal to report complaints about online
and related transactions with foreign companies. There is also Asia Pacific Economic Cooperation (APEC)
was established in 1989 with the vision of achieving, stability, security and prosperity for the region
through free and open trade and investment. APEC has an Electronic Commerce Stearing Group as well as
working on common privacy regulations throughout the APEC region. In Australia, Trade is covered
under Australian Treasury Guidelines for electronic commerce, and the Australian Competition and
Consumer Commission regulates and offers advice on how to deal with businesses online, and offers
specific advice on what happens if things go wrong. Also Australian government ecommerce website
provides information on ecommerce in Australia.
Forms
Contemporary electronic commerce involves everything from ordering "digital" content for immediate,
online consumption, to ordering conventional goods and services, to "meta" services to facilitate other
types of electronic commerce. On the institutional level, big corporations and financial, institutions use
the internet to exchange financial data to facilitate domestic and international business. Data integrity
and security are very hot and pressing issues for electronic commerce.
Global trends
Business models across the world also continue to change drastically with the advent of e-Commerce and
this change is not just restricted to USA. Other countries are also contributing to the growth of e-
Commerce. For example, the United Kingdom has the biggest e-commerce market in the world when
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B.Com. 1st Year Subject- Business Organization and Communication
measured by the amount spent per capita, even higher than the USA. The internet economy in UK is likely
to grow by 10% between 2010 to 2015. This has led to changing dynamics for the advertising. Industry.
Amongst emerging economies, China's e-Commerce presence continues to expand. With 384 million
Internet users, China's online shopping sales rose to $36.6 billion in 2009 and one of the reasons behind
the Imp growth has been the improved trust level for shoppers. The Chinese retailers have been able to
help consumers feel more comfortable shopping online. E-Commerce is also expanding across the Middle
East. Having recorded the world's fastest growth in internet usage between 2000 and 2009, the region is
now home to more than 60 million internet users. Retail, travel and gaming are the region's top e-
Commerce segments, in spite of difficulties such as the lack of region-wide legal frameworks and
logistical problems in cross-border transportation. E-Commerce has become an important tool for
businesses worldwide not only to sell to customers but also to engage them.
Distribution channels
E-commerce has grown in importance as companies have adopted Pure-Click and Brick and Click channel
systems. We can distinguish between pure-click and brick and click channel system adopted by
companies.
Pure-Click companies are those that have launched a website without any previous existence as a
firm. It is imperative that such companies must set up and operate their e-commerce websites very
carefully. Customer service is of paramount importance.
Brick and Click companies are those existing companies that have added an online site for e--
commerce. Initially, Brick and Click companies were skeptical whether or not to add an online e-
commerce channel for fear that selling their products might produce channel conflict with their off-
line retailers, agents, or their own stores. However, they eventually added internet to their
distribution channel portfolio after seeing how much business their online competitors were
generating.
Advantages of e-Commerce
Seller
Being able to conduct business 24 x 7 x 365
Access the global marketplace
Speed of conducting business is high
Reduces cost
Employee and salesperson cost can be avoided
Rental cost can be avoided
Buyer
Customer can choose from a variety of suppliers without having to physically visit each shop
More convenient and saves time
Reduced cost of traveling
Disadvantages of e-commerce
Seller
Perishable goods cannot be sold on internet
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B.Com. 1st Year Subject- Business Organization and Communication
Buyer
Time taken for physical delivery of goods
Customer has to pay for shipment charges
Customers cannot feel the product physically.
Privacy, Security and Payment issues
Hesitation to give credit card details online
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