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 DEFINITIONS OF BUSINESS

Stephenson defines business as, "the regular production or purchase and sale
of goods undertaken with an objective of earning profit and acquiring wealth through
the satisfaction of human wants."

 NATURE AND CHARACTERISTICS OF BUSINESS

1. Business is an economic process of exchange of goods and services

2. for the purpose of earning money.

3. The process of business includes production, marketing and services. Earning of

profit is the first and foremost objective of business

4. Business creates utilities.

5. The process of business consists of risk and uncertainty.

6. Business is responsible towards the society and has to fulfill the interests of its
different stakeholders.

 Objectives of Business

1. Economic Objectives

Economic objectives stand for generating profit by way of attracting customers,

introducing new products and services, reducing wastages and running the business
in a cost effective manner.

2. Social Objectives

The platform of business is the society and its activities are designed to address
the needs of the society. The scarce resources of the society are employed by
business for the well being of the people. A business cannot survive long if its
operations are against the interests of the society. Production and supply of best
quality goods and services, eco friendly and lawful operations, good customer
relationships, fair trade practices etc show the social responsibility of a business.

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3. Human Objectives

Human objectives attempt to ensure the satisfaction of employees in the business.

It includes financial, physical and mental welfare of the workforce, Financial
soundness of the employees can be ensured by providing adequate wages,
incentives and other allowances to them. Safe work environment and good human
relations strengthen the physical and mental satisfaction of the workforce.,

4. National Objectives

Business plays an important role in the economic development of a country. A

business functions under the legal framework of the national government, so its
activities ultimately contribute to the achievement of national goals. The national
objectives of business include production and distribution of goods and services
according to national interests, charging fair prices, generation of employment and
payment of taxes to the government.

5. Global Objectives

Many business houses aim at extending their operations from the home market
to foreign markets. Global markets enable business to expand the volume of sales,
acquire resources, technology and information and minimise risk from competitors.

 SCOPE OF BUSINESS

Business is universal and everywhere. It has a vast scope which encompasses

diverse economic activities. In a simple and narrow perspective, the scope of business
covers the following

1. Industry

Industry refers to business activities related with the extraction, processing and
production of products. The products which are produced by an industry may either
be used by the ultimate consumer or by another industry for further production. The
goods produced by an industry for the use of consumers are termed as consumer
goods. For example, clothes and footwears. If the goods are used for further

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production of wealth they are called capital goods. For example, machines and
equipments.

2. Commerce

Another significant aspect of business is Commerce. It is concerned with the

buying and selling of goods. It includes all the activities which are connected to the
transfer of goods from the place of production to the ultimate consumers. The whole
ranges of commercial activities are classified as under;

 Functions of Business

1. Acquisition of Raw Materials

Business gathers raw materials required for the production of finished goods.
Right quality and quantity of raw materials at right cost and right time determine the
success of business. Identifying the best source of raw materials is a difficult task. For
this, a business has to explore and analyse different alternatives.

2. Production

Production is the process of creating, expanding, manufacturing or improving

goods and services. There are many inputs required for production such as raw
materials, production process, manpower and technology. Setting up of an
appropriate system of production is the core function of business.

3. Marketing

Marketing is the process of planning, pricing, promoting, selling and distributing

ideas, goods and services. Formulating appropriate marketing strategies determines
the success and survival of business.

4. Management of Resources

Management is the process of achieving established goals by planning,

organising, directing, controlling and evaluating the resources owned and utilised by

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the business, If the management fails, the business has to incur heavy operational
costs, wastages and losses.

5. Management of Finance

It is the process of managing the funds of business. This function is performed

to formulate financial decisions in relation to the sources and application of funds of
the business.

6. Bookkeeping and Accounting

It is the recording of financial transactions, preparing of financial statements and

maintenance of documents and records for reporting and decision making.
Accounting gives valuable financial information for the business as well as the
stakeholders.

7. Management of Human Resources

Human beings are the most valuable resources of a business, Day-to- day
business functions such as managing cash flow, making business transactions,
communicating through all forms of media, and dealing with customers could not be
completed without human resources. Recruitment and selection, training and
development, compensation and motivation of people are the crucial functions of a
business in connection with management of human resources.

8. Management of Information

Collection, processing, storage and retrieval of information as and when required

are the significant aspects of business. Business organisations consider information
as a valuable resource highly essential for its day-to- day operations. It is being
increasingly recognised that the modern business cannot be managed without the
assistance of efficient information function.

9. Management of Changes

The environment of business is not constant., It is subject to changes of different

types. New products, advancement of technology, changes in production process,
changes in the tastes and habits of people, economic, social and political changes
are some of the examples. A business has to be prepared to meet all the changes in
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its environment. Effective management of changes is considered as a crucial function
of business.

10. Research and Development

Sustained growth, profit and existence are the major concerns of a business.
For this, a business has to manage competition with better products and strategies.
Research and development function facilitates adequate and timely modification and
innovation of products and strategies for the long term existence of business.

 Role of Business in the Development of a Nation

1. Increases GDP 5. Payment of taxes

2. Generation of income 6. Creation of utility and economic value

3. Self-employment 7. Utilization of natural resource

4. Creation of job 8. Manpower development

 Forms of Business Organizations

1. Sole Proprietorship

2. Hindu Undivided Family (HUF) or Joint HinduFamily

3. Partnership 4. Joint Stock Company 5. Co – operative Society

 Factors in Global Business Environment

Global business environment is totally different from the home (domestic) business
environment. The economic factors, social factors, technological factors, legal factors
and political factors are not same as the home environment of a business. The
following are some of the important factors influencing business operations in a global
business environment;

1. Economic systems: The business has to clearly understand the economic system
of a nation within which it operates. There are many economic systems such as

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capitalism, socialism, communism and mixed economy. The operations of business
in an economy depend on the system of economy of a nation.

2. Political systems: The political system of a nation formulates the economic

policies. Therefore understanding the nature of political system of different nations is
highly important in a global business environment.

3. Social systems: Tradition, culture, language, religion, social norms of different

nations are not same. Operating in a global business environment requires a dep
understanding of the different social systems to manufacture and market products
and services best suited for each society.

4. Technological advancements: Technological advancements and innovations

are important factors influencing business operations in global business environment.
Business organisations have to update their processes and programmes in
accordance with the changes in technology to survive in a global business
environment.

5. Intense competition: Global business environment is comprised of large number

of competitive forces. Facing and managing competition is the highest challenge of
business organisations in a global business environment. Each organisation has to
identify and improve its competitive strengths for survival.

 IMPORTANCE OF ENVIRONMENT IN BUSINESS

A business is considered as a subsystem drawing inputs of resource information and

values from the external environmental system. These thing transforms into outputs
in the form of products and services. The importance of environment in business can
be well understood by studying three aspects of relationships between business and
its environment. These relationships are described below;

1. Exchange of Information 2. Exchange of Resources

3. Exchange of Influence and Power

1. Exchange of Information

Organisations collect environmental information and use it for planning, decision

making and control. Organisations transmit information to several external agencies
like government, investors, trade unions and professional bodies.

2. Exchange of Resources

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Resources to a business, like materials, men, money and machines, are taken from
the environment. Output in the form of goods and services are supplied by the
business to the environment.

3. Exchange of Influence and Power

Environment poses both opportunities and threats. Environment has a considerable

stronghold over a business by virtue of its command over inputs. Government controls
the business through legitimate power. A business also influences the environment
through its command over internal resources and capacity to provide output.

 COMPONENTS/TYPES OF BUSINESS ENVIRONMENT

The environment of business may be categorised into two types;

I. Internal Environment and II. External Environment

I. Internal Environment

All the factors inside a business collectively develop internal business environment.
Most of them are controllable and the organisation can easily manage them. The
internal environment has a direct impact on the business. The important internal
factors which have a bearing on the strategy and other decisions of the organisation
are described below;

1. Values 2. Mission, vision, objectives and goals

3. Organisational structure 4. Human resources 5. Financial factors:

1. Corporate values

Values provide a framework for the operations of the business. Core values are
selected and set by the management of the organisation to differentiate it from other
organisations. Values have significant influence in setting the internal environment of
the organisation.

2. Vision, mission, objectives and goals

Vision, mission, objectives and goals are the internal issues of a business. They differ
from one organisation to another. The nature of vision, mission, objectives and goals
decide the direction of a business. They have a critical role in designing the internal
environment of an organisation.

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3. Organisational structure

Organisational structure gives a clear picture of the allocation of responsibilities and

functions of different branches departments and levels of the organisation. It is a major
pillar of the internal environment of an organisation.

4. Human resources

Another critical element of the internal environment is the workforce. The human
resources activate all the non-human resources in the organisation. The materials,
machines and money are controlled and managed by the human resources.

5. Financial factors

The financial resources of the company, financial policies, allocation and utilisation of
financial resources are the decisive forces of the internal environment of an
organisation.

II. External Environment

According to James Stoner, external environment can be defined as "all elements

outside an organisation that are relevant to its operation." External environment
comprises conditions, entities, events, and factors that influence the activities and
choices of an organisation. It also determines the opportunities and risks of the
organisation. The external environment is divided into two parts;

1. Micro Environment and 2. Macro Environment

1. Micro Environment

The micro environment is comprised of factors in the immediate environment of the

organisation which directly influence its performance. It consists of forces that are
close to the organisation and affect its ability to serve its customers. The micro
environment is also known as task environment or operating environment. The micro
environment consists of factors that the firm regularly deals with. It includes all the
external stakeholders of the organisation. The micro environment is specific to
industries and is different for different industries. A firm has no absolute control over
micro environment but it can exercise some influences over micro environment
factors.

Components of Micro Environment

The major components of micro environment are as follows;

1) Suppliers 2) Creditors 3) Competitors 4) Customers 5) Public

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1) Suppliers

They are persons or institutions who supply the required raw materil and capital goods
to the business. They critically influence the availabil of raw materials and delivery
time. The pricing of a product is determinon the basis of the cost of the raw materials
delivered by the suppliers. T quality of the raw materials is a decisive factor of the
quality of the product offered by the company.

2) Creditors

Creditors include banks and other financial institutions which provide funds to the
business as loans. The production and distribution of the products and services of the
company may be delayed or stopped due to lack of adequate financial support from
the creditors. The interest charged by the creditors influence the cost of production
and price of the products.

3) Competitors

The variety of products, quality and quantity are influenced by the degree of
competition in the market. The production and marketing strategies of a company are
strongly influenced by the strategies formulated by the competitors.

4) Customers

A customer is a buyer, purchaser or user of the products and services of the business.
The interests of a customer in a business include nature of the product, quality, price,
customer relationships and services. Customer satisfaction determines the survival
of a company and its products.

5) Public

The public expects many benefits from the business such as employment,
environment friendly operations, shares etc. A better corporate image is possible only
if the company meets the expectations of the public. Better corporate image helps the
company to grow, sustain its profit and attain excellence.

2. Macro Environment

Macro environment refers to uncontrollable external factors that indirectly affect the
operations of an organisation. It is largely out of the control of the business, and often
requires changes in its operations, policies, programmes and strategies to adjust with
the changes in the macro environment. The macro environment influences the whole
spectrum of business, as opposed to the performance of a particular industry. The
macro
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Components of Macro Environment

The major components of macro environment are as follows:

1) Social environment 2) Legal environment

3) Economic environment 4) Political environment

5) Technological environment 6) Ecological Environment

 STAKEHOLDERS OF BUSINESS

Stakeholders are defined as "those groups without whose support the organisation
would cease to exist". Stakeholder of business means any group or individual who
can influence or who is influenced by any operation of the business. There are two
types of stakeholders internal and external;

1. Internal Stakeholders

They are persons inside the business who actively participate in its day today
operations and thereby affect and are affected by the business. They are owners,
managers and employees;

a) Owners: - A Person or group of persons who start a business and manage it for
achieving some economic gains. Owners may or may not take direct participation in
running the business. In certain cases, they may appoint managerial staff or handover
the responsibility of management of the business to some other persons on behalf of
them. The important interests of owners of a business include formulating policies,
directing, leading, following measures to improve the performance of business and
achieving monetary benefits (profits) out of it.
b) Managers: - They take the responsibility of managing the business as per the
interests of the owners. The stake of managers in a business includes improving the
performance of business (productivity and effectiveness), achieving the targets fixed
and growth of the business.

c) Employees: - An employee is any person hired by the owner to perform a

particular job. Employees contribute their labour and expertise to achieve the desired
output. The interests of employees include wages, salary, job security, relationships,
and other financial and non financial benefits from the business.

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2. External Stakeholders

They are parties outside the business who do not take part in the day today operations
of the business but affect and are affected by the operations of the business. They are
shareholders, customers, creditors, suppliers, Government and society

a) Shareholders: - Person or company who owns one or more shares of a company.

They collectively own the company. The interests of the shareholders include profit in
the form of dividend, examining the performance of the business and its direction.

b) Customers: - A customer is a buyer, purchaser or user of the products and

services of the business. The interests of a customer in a business include nature of
the product, quality, price, customer relationships and services.

c) Creditors: - A creditor is a person, institution, company or government who

provide funds to the business as loan. The stakes of a creditor includes, credit
worthiness of the business i.e., repayment capacity, terms of loan such as rate of
interest and security.

d) Suppliers: - They are persons or institutions who supply the required raw
materials and capital goods to the business. The interests of the supplier are
purchasing power and credit worthiness of the business.

e) Government: - The Government acts as regulatory mechanism. It will enact rules

and laws for running the business in accordance with interests of the nation. The stake
of Government in a business includes taxes, legislation grants, subsidies and financial
aid.

f) Society: - Society refers the community in which a business exists. The society
also expects many benefits from the business such as employment, environment
friendly operations, shares etc.

 LIBERALISATION, PRIVATISATION AND GLOBALIZATION ( LPG )

After Independence, India adopted a system of mixed economy which focus

on the control of strategic industries such as coal mining; steel and power. The major
goals before the Government were eradication of poverty, infrastructure development,
reducing inequalities in income and wealth of people and concentration of economic
power. For this the Government formulated policies for the promotion of public sector
and controlling the private sector. The private sectors were permitted only to operate
in certain selected industries.

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Government invested large amount of money in public sector and the idea
was to ensure a balanced regional development, avoiding of monopolies and welfare
of the nation as a whole. This economic policy of the Government continued up to the
end of 1980's. But the beginning of 1990's was a turning point in the economic history
of the country. The country switched over to new pathway of economic thinking that
was nothing but Liberalization, Globalization and Privatization simply referred to as
LPG. The new economic policy was announced by the then Finance Minister Dr.
Manmohan Singh in the Parliament in 1991.

OBJECTIVES OF LPG

Liberalization, Privatization and Globalization aim at giving certain benefits to the

country. The following are the important objectives of LPG;

1. To increase national and per capital income

2. To make the nation self-sufficient in all fields

3. To completely eradicate the problem of unemployment in the country 4. To

eradicate poverty and improve the standard of living of the people

5. To achieve balanced economic development and attain equality of income and

wealth among people
6. To reduce the exploitation of people and resources of the country.

 FEATURES OF GLOBALISATION

Globalisation is a process of interaction and integration among the people,

companies and governments of different nations. It is a process driven by international
trade and investment and aided by information technology. This process greatly
affects the environment, political system, economies and societies all over the world.
The following are the important features of globalisation;

1. Globalisation is an amalgamation of economies and societies through cross country

flows of goods, services, information, ideas, technologies and capital.

2. It develops extensive worldwide economic relationships between nations

3. It is liberalisation of international trade

4. There are huge cross-border movements of people as a result of globalisation

5. It is a process that aims at joining together different world markets into a single
global market.
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 MEASURES OF GLOBALISATION IN INDIA

The major steps taken by the Government of India in respect of globalisation

are as follows;

1. Devaluation:- This was the first step in favour of globalisation taken by the
government. The government announced devaluation of Indian currency by 18-19
percent against major currencies in the international foreign exchange market.

2. Allowing Foreign Direct Investment (FDI):- The government followed a policy of

liberalisation in allowing foreign direct investment in the country. Allowing FDI inflows
was a major step of globalisation. The important sectors opened for FDI are Insurance
(up to 26%), development of townships (up to 100%); defense industry (up to 26%),
tea plantation (up to 100%), private sector banking (100%) etc.

3. The removal of quantitative restrictions on imports:- Quantity limits imposed

on imports were withdrawn so as to increase imports from other countries. encourage
imports and exports.

4. The reduction of customs tariff:- Customs tariffs were reduced to

5. NRI Scheme:- The facilities which were offered to foreign investors were also given
to Non Resident Indians. Government has extended some concessions for NRIs and
overseas corporate bodies having more than 60% stake by NRIs.

 RECENT ECONOMIC INITIATIVES

THE NATIONAL INSTITUTION FOR TRANSFORMING INDIA (NITI AAYOG)

The National Institution for Transforming India, also called NITI Aayog was set up
through a resolution of the Union Cabinet on January 1, 2015. The Government of
India constituted the NITI Aayog to replace the Planning Commission instituted in
1950. The NITI Aayog was established to provide both directional and policy inputs to
the Central and State Governments. The Aayog will design strategic and long term
policies and programmes for the Government of India.

It also provides relevant technical advice to the Centre and States. NITI Aayog
acts as the ultimate platform of the Government of India to bring States to act together
in national interest, and to foster co-operative federalism. NITI Aayog would serve as
an advanced resource centre with the necessary resources, knowledge and skills,

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that will promote research and innovation, provide strategic policy vision for the
government, and deal with contingent issues.

AIMS AND OBJECTIVES OF NITI AYOG

The aims and objectives of NITI Aayog are as follows;

1. NITI Aayog is essentially an advisory body that seeks to provide critical directional
and strategic inputs across spectrum of key elements of policy to the centre as well
as states.

2. It also seeks to put an end to the slow and tardy implementation of the policy by
fostering inter-ministry, inter-state and centre-state coordination.

3. Strong states make a strong nation, is the core idea; and the Ayog will foster co-
operative federalism by evolving a shared vision of national development priorities.

4. It has been envisaged to follow the bottom-top development approach whereby,

it would develop mechanisms to formulate credible plans to the village level and
aggregate these progressively at higher levels of government. It would also pay
attention to the weaker sections of the society that may not have benefitted from
economic progress.

5. It would create a knowledge, innovation and entrepreneurial support system via

a community of national and international experts, practitioners and partners. It would
serve as a platform for resolution of inter-sectoral and inter- departmental issues in
order to accelerate the implementation of the development agenda..

8. It will also monitor and evaluate the implementation of programmes. and focus on
technology upgradation and capacity building.

FUNCTIONS OF NITI AAYOG

The functions of NITI Aayog are as follows;

1. To evolve a shared vision of national development with the active involvement of

States.

2. To foster co-operative federalism through structured support initiatives and

mechanisms with the States on a continuous basis. 3. To develop mechanisms to
formulate credible plans at the village level and combine these progressively at higher
levels of government

4. To ensure that the interests of national security are incorporated in economic

strategy and policy.
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5. To pay special attention to the weaker sections of the society.

6. To design strategic and long term policy and programme frameworks and initiatives,
and monitor their progress for adequate corrections

7. To provide advice and encourage partnerships between key stakeholders and

national and international like-minded parties, as well as educational and policy
research institutions.

8. To create a knowledge, innovation and entrepreneurial support system through a

collaborative community of national and international experts, practitioners and other
partners.

9. To offer a platform for resolution of inter-sectoral and inter- exdepartmental issues

in order to accelerate the implementation of the The development agenda.

10. To maintain a state-of-the-art Resource Centre, be a repository of research on

good governance and best practices.

11. To actively monitor and evaluate the implementation of programmes and

initiatives, including the identification of the needed resources so as to strengthen the
probability of success and scope of delivery

12. To focus on technology upgradation and capacity building for implementation of

programmes and initiatives

13. To undertake other activities as may be necessary in order to further the execution
of the national development agenda, and the objectives mentioned above.

 MAKE IN INDIA INITIATIVE

The Make in India initiative was launched by the Prime Minister of India in September
2014 as part of a wider set of nation-building initiatives. It was devised to transform
India into a global design and manufacturing hub by encouraging both multinational
as well as domestic companies to manufacture their products within the country. The
initiative is lead by the Department of Industrial Policy and Promotion (DIPP). It aims
to raise the contribution of the manufacturing sector to 25% of the Gross Domestic
Product (GDP) by the year 2025 from its current 16%. Make in India seeks to facilitate
job creation, foster innovation, enhance skill development and protect intellectual
property. The initiative targets 25 sectors of the economy which range from
automobile to Information Technology (IT) & Business Process Management (BPM).

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PILLARS OF MAKE IN INDIA

The Make in India initiative is built on four pillars which are as follows;

1. New Processes: The government is introducing several reforms to create

possibilities for getting Foreign Direct Investment (FDI) and foster business
partnerships.

2. New Infrastructure: The Government will develop the necessary infrastructure for
the Make in India initiative. Along with the development of infrastructure, the training
for the skilled workforce for the targeted sectors will be provided.

3. New Sectors: Make in India has identified 25 sectors for promotion

4. New Mindset: The Government of India will shift to the role of a facilitator from the
role of a regulator. The Government will focus on acting as a partner in the economic
development of the country alongside the corporate sector.

 ROLE OF PUBLIC SECTOR IN INDIA

The public sector has made valuable contributions in shaping the economy of the
country in its present form. After independence, public sector acted as a mechanism
to promote economic development by providing basic infrastructural facilities highly
essential for the growth of the economy. The following are some of the major
contributions of public sector during the post colonial period;

1. Resolving deficiencies:- At the time of independence, the country experienced

many serious deficiencies in the industrial structure like lack of adequate infrastructure
facilities (roads, power, communication, etc.) and capital goods (machinery, tools,
equipment, and buildings). Public sector largely helped the economy to make good
these deficiencies to a great extent by developing the adequate infrastructure and the
production of capital goods.

2. Balanced regional development:- Public sector always tries to achieve

balanced regional development and distribution of economic activity by way of starting
its operations in less developed areas. It formulates programmes for the development
of backward areas and the conservation of national resources.

3. Employment opportunities:- Two-thirds of the total employments in the country

are generated by the public sector. Public sector provides large number of
employment opportunities to the countrymen and improves their income and standard

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of living. It also protects the employment of large number of people by the take over
of many sick business units.

4. Contribution to the Government:- Public Sector is making large financial

contributions to the Government, taxes, duties etc. This enables the Government to
implement more development projects and welfare measures for the people.

5. Development of the society:- The infrastructure development made by the

public sector provides valuable contributions in improving the living conditions of the
society.

6. Research and Development:- Public Sector has shown commendable progress

in the area of research and development of technology and production processes.
The sophisticated research and development enabled public sector to considerably
reduce its dependence on foreign technology, programmes and processes.

7. Social welfare:- Public sector by reducing the concentration of economic power

in few hands and thereby helps in creating a socialistic pattern of society.

 ROLE OF PRIVATE SECTOR IN INDIA

After independence, the Indian economy was governed by the public sector.
As a result, the growth of the private sector in India is comparatively slower than the
public sector. Lack of finance, capital goods, management expertise and technology
slowed down the growth of private sector in the country. Similarly the Licensing
system adopted by the Government after independence adversely affected the growth
prospects of private sector.

After independence, a firm has to spend enormous time and comply with a
series of formalities in order to start its operations. But this situation has changed with
the beginning of the new economic policy of Liberalisation, Privatisation and
Globalisation. The nation witnessed a huge growth of the private sector focusing on
market needs, quality, service and customer relationship. The private sector has
offered many valuable contributions towards the economic development of the
country.

The following are some of the important contributions of private sector for the
economic development of the country;

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1. Improved standard of living:- Private sector continuously searches profitable
business opportunities. The starting of new business means creation of more jobs.
More jobs result in increased income and purchasing power of people which in turn
improves their standard of

2. Easy availability of goods and services:- Private sector starts their operations
on the basis of market needs and tries to satisfy those needs in the best possible
manner. This helps people easily acquire goods and services as per their demand.

3. Competitive prices for essential goods:- The objectives of increasing the sales
volume, maximisation of profits and market survival resulted in competition between
private enterprises. This helps people acquir goods and services at reasonable or low
prices.

4. Better value for human capital:- The growth of private sector widened the choice
of employers for the employees. Whatever be the size, nature and functions of the
enterprise it requires competent and has skilled employees to perform its operations.
This has increased the value of human resources in the country.

5. Employment generation:- In the present economic scenario of the country both

public and private sector undertakings operate shoulder to shoulder. Like public sector
private sector also offers vast employment opportunities to the people thereby
improving the per capita income and living conditions. Offers fair prices to farmers for
their products:- The growth of private sector facilitated farmers to bargain and achieve
best price for their farm products.

7. Development of more markets:- The profit motive of private sector resulted in

the exploration (identification) more markets at national and international level. More
markets means more employment and more taxes to government.

8. Innovation:- In search of profits, private sector seriously involves in research and

development for designing new products, technology, production processes,
management ideas etc. This improves the standard of living of people in the country.

9. Improved social life:- Private sector by generating employment and. offering

quality products and services at fair prices helps people lead a better social life.

10. Poverty alleviation:- Creation of jobs by the private sector assists the country
in reducing poverty and improving the financial condition of the people to a great
extent.

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11. Better education:- The growth of public sector increased the demand for
professionalised, skilled and technically competent human resources. This resulted
in the development of more educational institutions and programmes.

 BUSINESS PROCESS OUTSOURCING (BPO)

In Business Process Outsourcing an organisation seeks the help of external agency

or service provider to perform any of its processes or functions. This is usually
practiced by many organisations to reduce the cost of operation and time. Sometimes
it is necessary to contract with outside agency to perform a process or function if the
organisation is not having the sufficient expertise or competent people to perform that
function. an an

Features of BPO

The important features of BPO are;

1. It is a process of contracting of specific operations and functions of business

organisations to an outside agency or service provider

2. It reduces the operation cost and time of a business organisation

3. It enables business organisations to focus on important functions (core areas) by

outsourcing functions that are comparatively less important

Objectives of BPO

The major objectives of BPO are;

1. To improve the efficiency of the organisation to attain greater productivity

2. To reduce cost of operation of the business

3. To reduce the strength of the workforce

4. To improve the quality of business operations by entrusting it to expert agencies

5. To focus on core areas such as developing of new products, modification of existing

products etc. by delegating a part of the businesses functions to outside agencies.

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 What do you mean by E-Commerce?

E commerce or electronic commerce is the trading of goods and services on the

internet. It is your bustling city center or brick-and-mortar shop translated into zeroes
and ones on the internet superhighway.

 E-COMMERCE AND E-BUSINESS

People interchangeably use e-commerce and e-business. But they are not one and
the same. The major areas of differences between e-commerce and e-business are
described below;

E-Commerce E-Business

1. It is trading of goods and services It is automation of business operations

over internet. or different business processes.

2. It is a component of e-business. It is a broader concept and the

supersystem which comprises e-
commerce activities.
3. It deals with monetary transac- It deals with monetary as well as other
tions. functions of business.
4. The major focus of e-commerce It focuses on both internal aspects of
is external elements of business business as well as the external
such as customers, suppliers, elements.
government etc.

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 E-COMMERCE

E-Commerce (electronic commerce or EC) is the buying and selling of goods and
services, or the transmitting of funds or data, over an electronic network, basically the
internet. These business transactions occur either as business-to-business, business-
to-consumer, consumer-to-consumer or consumer-to-business. E-commerce makes
possible round the clock (24 hours) business. The business and the customers are
equally benefited through e-commerce. There is no time limit for business operations
and the customers can easily get the goods and services as and when needed.

 FUNCTIONS OF E-COMMERCE

The important functions of e-commerce are as follows;

1. Advertising and Shopping: E-commerce sets an electronic platfor for the

communication and trading of products and services.

2. Medium of negotiation: E-commerce acts as a medium of negotiation for the

buyers and sellers. It facilitates the mediation of price, quantity quality, delivery terms
and after sales services.

3. Payment settlement: E-commerce offers the facility of electronic payment

settlements for business transactions.

4. Information: It gives valuable trade related information to the clients electronically.

Customers can easily obtain the progress of their deals and make trade enquiries.

5. Communication: Effective communication with the employees, customers and

trade partners is the key aspect of e-commerce. Internal as well as the external parties
of business get speedy and reliable information of the business through e-commerce.

6. Inventory management: E-commerce provides an automated system for

inventory management. It generates timely reports for the effective maintenance of
inventory.

7. Process management: E-commerce automates the process of business which

reduces the cost of business operations, saves time and improves efficiency.

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8. Data base management: Another major aspect of e-commerce is the effective
collection, processing and maintenance of relevant business data. This gives valuable
inputs for decision making in business.

 SCOPE OF E-COMMERCE

E-commerce covers the following areas;

1. EDI: It stands for Electronic Data Interchange. EDI is an electronic way of

transferring business documents in an organisation internally between its various
departments or externally with suppliers, customers or any subsidiaries etc. In EDI,
paper documents are replaced with electronic documents like word documents,
spreadsheets etc.

2. Online Shopping: The process of buying and selling over internet.

3. Production Process: procurement, ordering and replenishment of stocks;

processing of payments; electronic links with suppliers; and production control
processes.

4. Internal business processes: It includes employee services, training, internal

information-sharing, video-conferencing, and recruiting. Electronic applications
enhance information flow between production and sales forces to improve sales force
productivity.

5. M-commerce: Commercial transactions take place over mobile phones.

6. E-Payment: The method of payment electronically instead of cash and cheque.

7. Drone Delivery System: It is an unmanned arial vehicle (UAV) to deliver goods

to consumers.

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 M-COMMERCE

M-commerce or mobile commerce is the subset of e-commerce which deals with

business transactions over mobile phones, smart phones, tablet PC and other
wireless handheld devices. The wireless devices allow users to always access
internet and perform online commercial transactions anywhere at any point of time. It
does not require a place to plug in the device. M-commerce is the advanced version
of e-commerce. It replaces the need for a desktop computer and modem for
performing commercial transactions. People can easily buy and sell products over
internet simply by owning a mobile phone that supports internet access.

ADVANTAGES

The important advantages of m-commerce are as follows;

1. Mass coverage: Mobile phone is the intimate companion of modem man.

Commercial activities over mobile phones will get an extensive reach. High volume
of sales can be accomplished by companies by means of m-commerce.

2. Universality: The use of wireless device enables the user to receive information
and conduct transactions anywhere, at anytime.

3. Saves time and money: Consumers need to visit stores for purchases. A mobile
commerce app removes the need of buyer personally visiting to a physical shop which
saves their time and money.

4. Quicker access: connecting through a mobile is faster than connectionsusing wire

line modems.

5. Easy shopping: M-commerce offers tension free shopping to consumers via

mobile phones. Consumers need to have special skills to transact over mobile
phones. They can place orders and buy goods and services in a relaxed manner
without moving to any place.

6. Customised services: The service provider has access to data about the
preferences and status of the user which facilitates better, personalised service. It

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tracks the exact geographical location of the phone and helping users to navigate
directions, closest taxi service. hotels, and restaurants at the touch of a button.

 CHALLENGES/LIMITATIONS (M- M-COMMERCE)

The following are the major challenges of m-commerce;

1. Device constraints: Small screen size, absence of keyboards, low memory, poor
resolutions and weak processors are some of the major device related problems
which reduce the attraction of m-commerce transactions.

2. Connectivity problems: Poor internet connectivity and low speed are the major
problems of m-commerce.

3. Bandwidth: Mobile devices support only limited bandwidth. This prevents the
usage of large data.

4. Expensive process: Developing mobile commerce app is more expensive than e-

commerce software.

 Explain E-Business

Electronic Business (E-Business) is the administration of conducting any

business using the internet, extranet, web, and intranet. This would include buying
and selling of goods or services using commercial transactions conducted
electronically along with providing customer or technical support with the help of the
internet. E-business is similar to E-commerce but it is more than just a simple act of
buying and selling services or goods online. In fact, it is the method of utilizing digital
information and advanced communication technologies to streamline different
business processes from the initial to the implementation phase. E-business includes
a lot of business processes including online order processing, CRM (Customer
Relationship Management), supply chain management, and many more. E-commerce
is a part of e-business, so let me give you a comprehensive detail about what is e-
business.

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 Types of e-Commerce

Now there are actually many types of e-Businesses. It all depends on who the final
consumer is. Some of the types of e-commerce are as follows :

Business-to-Business (B2B)

Transactions that take place between two organizations come under Business to
business. Producers and traditional commerce wholesalers typically operate with this
type of electronic commerce. Also. it greatly improves the efficiency of companies.

Business-to-Consumer (B2C)

When a consumer buys products from a seller then it is business to consumer

transaction. People shopping from Flipkart, Amazon, etc is an example of business to
consumer transaction. In such a transaction the final consumer himself is directly
buying from the seller.

Consumer-to-Consumer (C2C)

A consumer selling product or service to another consumer is a consumer to consumer

transaction. For example, people put up ads on OLX of the products that they want to
sell. C2C type of transactions generally occurs for second-hand products. The website
is only the facilitator not the provider of the goods or the service.

Consumer-to-Business (C2B)

In C2B there is a complete reversal of the traditional sense of exchanging goods. This
type of e-commerce is very common in crowdsourcing based projects. A large number
of individuals make their services or products available for purchase for companies
seeking precisely these types of services or products.

Consumer-to-Administration (C2A)

The Consumer-to-Administration model encompasses all electronic transactions

conducted between individuals and public administration. Some examples of
applications include

· Education – disseminating information, distance learning, etc.

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· Social Security – through the distribution of information, making payments,
etc.
· Taxes – filing tax returns, payments, etc.
· Health – appointments, information about illnesses, payment of health
services, etc.

Business-to-Administration (B2A)

This part of e-commerce encompasses all transactions conducted online by companies

and public administration or the government and its varies agencies. Also, these types
of services have increased considerably in recent years with investments made in e-
government.

 The different types of Mobile Commerce are-

1. Browsing for stuff online on your mobile – This type deals with surfing for stuff
online like looking for Groceries, Daily essentials, and electronics. We’re talking about
dedicated apps, optimized websites, or even social media platforms like Facebook or
Instagram that allow in-app purchases or linking to online stores.

2. Purchasing app-delivery stuff (Food delivery or e-commerce apps) – This type

deals with the services related to ordering things like food, cab pickup, and others.

3. Mobile banking – Mobile banking is the method that involves accessing the features
of the bank using online methods. The transactions are made from specific apps
designed by apps, though some financial services companies are now experimenting
with chatbots or messaging apps to deliver customer service.

4. Mobile App payments(Google Pay or PayPal) – This type primarily focuses on

making payment transactions through apps. The user is required to register their credit
or debit card and then use it whenever they want.

5. Purchasing or renting digital content (Netflix, Spotify, etc) on a mobile device –

This involves buying or renting online services like Music Streaming, Video Streaming,
or commodity-based on a rent basis.

6. Mobile person-to-person payments(Venmo or Xoom) – This type involves

sending money from one person to another, be it for buying stuff or sending it to
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someone in need. This type of transaction can be made by sending money to
someone’s number or to their bank account directly.

 E-PAYMENT SYSTEMS

E-commerce facilitates the acceptance of electronic payment for online

transactions. Electronic payment means paperless monetary transactions Electronic
payment or e payment is defined as a system of paying for or services electronically,
instead of using cash or check goods

E-commerce websites offer different types of e-payment systems for their

customers to make safe and convenient settlement of payments. An electronic
payment system usually consists of a digital financial instrument such as encrypted
credit card numbers, electronic cheques or digital cash authorised and issued by
banks

ADVANTAGES

The following are the major benefits of e-payment;

1. High speed: Electronic payment system is very fast. It takes few minutes for
money transfer between two accounts.

2. Reduced operational and processing cost: E-payment system needs less

operational and processing costs compared to the traditional payment system.

3. Easy: Payment can be made at any time, anywhere. The only facility required is
internet accessibility.

4. Reduces the problems of bad debts and overdue payments: E- payment

system fastens the collection of payment and reduces the problems of bad debts and
delayed payments.

5. Visibility of payment status: The buyer as well as the seller can easily
understand the status of payment in an e-payment system.

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6. Easy monitoring of cash transactions: The government and other enforcement
agencies can easily monitor cash transactions in the economy in a system of e-
payment. This helps to reduce the circulation of black money and tax evasion.

7. Transparency: E-payment brings more transparency in financial dealings in a

country.

LIMITATIONS

The major limitations of e-payment are as follows;

1. Security threats and hacking: E-payment systems are subject to many security
threats and hacking. In e-payment, bank account details, credit/ debit card number
and other important information of the user are exposed over the internet. In the case
of any cyber attacks, hackers may make use of these information for fraudulent
activities.

2. Restrictions: E-payment transactions are subject to time and amount restrictions.

For withdrawal or fund transfer, banks usually impose limits on the amount or the
number of daily transactions. This causes many inconveniences to the users in e-
payment deals.

3. Chances of forgery: In e-payment transactions, identity verification of the parties

involved is not strictly possible as in the case of physical payment system. This gives
rise to the chances of forgery in electronic payment.

4. Service charges: Payment gateways and e-payment processors charge service

fees for e-payment transactions. 5. Technical problems: Poor internet connectivity,
low speed etc. reduce the efficiency of e-payment systems.

 Types of E-payment system

Credit Card

The most popular form of payment for e-commerce transactions is through credit
cards. It is simple to use; the customer has to just enter their credit card number and
date of expiry in the appropriate area on the seller’s web page. To improve the security

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system, increased security measures, such as the use of a card verification number
(CVN), have been introduced to on-line credit card payments. The CVN system helps
detect fraud by comparing the CVN number with the cardholder's information

Debit Card

Debit cards are the second largest e-commerce payment medium in India. Customers
who want to spend online within their financial limits prefer to pay with their Debit
cards. With the debit card, the customer can only pay for purchased goods with the
money that is already there in his/her bank account as opposed to the credit card
where the amounts that the buyer spends are billed to him/her and payments are
made at the end of the billing period.

Smart Card

It is a plastic card embedded with a microprocessor that has the customer’s personal
information stored in it and can be loaded with funds to make online transactions and
instant payment of bills. The money that is loaded in the smart card reduces as per
the usage by the customer and has to be reloaded from his/her bank account.

types of electronic payment system

E-Wallet is a prepaid account that allows the customer to store multiple credit cards,
debit card and bank account numbers in a secure environment. This eliminates the
need to key in account information every time while making payments. Once the
customer has registered and created E-Wallet profile, he/she can make payments
faster.

Netbanking

This is another popular way of making e-commerce payments. It is a simple way of

paying for online purchases directly from the customer’s bank. It uses a similar
method to the debit card of paying money that is already there in the customer’s bank.
Net banking does not require the user to have a card for payment purposes but the
user needs to register with his/her bank for the net banking facility. While completing
the purchase the customer just needs to put in their net banking id and pin.

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Mobile Payment

One of the latest ways of making online payments are through mobile phones.
Instead of using a credit card or cash, all the customer has to do is send a payment
request to his/her service provider via text message; the customer’s mobile account
or credit card is charged for the purchase. To set up the mobile payment system, the
customer just has to download a software from his/her service provider’s website
and then link the credit card or mobile billing information to the software.

 Business Ethics:

Business Ethics as a branch of study deals with the principles, values and standards
that describe right conduct in business. Business Ethics is a system of moral
principles applied in the commercial world. Business ethics provide guidelines for
acceptable behavior by organizations in both their strategy formulations and day to
day operations.

OBJECTIVES OF BUSINESS ETHICS

1. To inculcate moral values in business operations

2. To facilitate business concerns establish right goals, selecting right ways. making
right decisions and doing right actions so as to ensure honesty and fairness in their
operations.

3. To prevent business houses from achieving the goals of the shareholders by

sacrificing the interests of other stakeholders.
4. To safeguard the interest of investors who want to invest money in a business
5. To avoid discrimination, harassment and ill-treatment of the workforce 6. To avoid
the over exploitation and misuse of natural resources
7. To make business organisations more responsible towards society and
environment.
8. To maintain discipline in the work environment of a business organisation
9. To maintain good relationships between employees and between employees and
management of a business

10. To avoid unhealthy competition, unfair pricing and to protect the interest of the
consumers.
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 IMPORTANCE OF BUSINESS ETHICS

In an industry, a firm which observes ethics in its operations inspires other firms to
pursue ethics. A business with moral values and principles enjoys a distinguished
place and name in an industry. People always prefer products and services of
business houses having a legacy of quality and trust. Quality and trustworthiness are
the results of right business behaviours and actions. The following points highlight the
importance of ethics in business;

1. Strong support from the employees

Employees are considered as the backbone of a business. All the resources of a

business like money, materials and machines are inactive if a business finds it difficult
to obtain support from the employees. Support from the employees is possible only
through better relations. Corporate governance facilitates the management to fulfill its
moral obligations towards the employees by way of fair wages, safe working
conditions and welfare measures thus resulting in better employee management
relationships.

2. Easy mobilisation of finance

A business which strongly pursues ethical standards can easily raise money from the
public for its expansion and diversification projects. Usually people prefer to invest
their money in firms which protect their interests.

3. Strong customer support

Customers get best quality products and services from a business which adopts an
ethical code in its operations because inferior goods and poor after sales are against
the moral values endorsed by a business. Ethical standards usually set guidelines for
addressing the needs of the customers in order to give them maximum satisfaction.
This helps a business to ensure strong support from the customers.

4. Reduced litigations

Litigation means legal proceedings against a business. A business in ethical path

reduces the chances of court cases and legal actions because it attempts to perform
all business activities in a moral and ethical perspective. The needs of all the

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stakeholders are addressed in a fair manner without any discrimination and vested
interests.

5. Low rate of complaints

A code of ethics in business set standards for meeting the needs of different
stakeholders. The demands of all the stakeholders are addressed in such a manner
that gives justice to all. This reduces complaints and disputes in business.

6. Good governance

Business ethics creates a framework for clearly distinguish between good and bad,
right and wrong, justice and injustice, virtue and vice in business. It establishes a
system of good governance by giving due importance to moral values and principles
in its operations. Justice to all and appeasement (special treatment) of none is the
salient feature of good governance.

7. Environment friendly products

A business with ethical grounds will conduct a detailed analysis of the impact of its
operations on the environment. It makes a classification of the business activities into
harmful and harmless on the basis of its effect on nature. An ethical business would
always prefer to choose manufacture products that cause no harm to the environment.

8. Fair use of natural resources

A common feature of resources is that they are scarce. Also there are certain natural
resources which are non-renewable in nature (Fossil fuel is an example).
Overexploitation and wastage of natural resources would create serious problems to
human life on this earth. A business which is committed to ethics strictly adopts
measures to ensure a fair use of natural resources.

9. Avoids unhealthy competition

Competition in business means contest between two or more firms in an industry to

increase their sales volume and profit. Competition is good up to a certain extent because
it may give consumers better quality products at reasonable prices. But uncontrolled
competition may result in the misuse money, time and other resources. In order to beat
competitors, a firm may offer goods at the cheapest price by sacrificing the quality and

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quantity which damages the interests of the consumers. A firm having ethical insight
would control competition from going beyond the acceptable level.

10. Inculcates moral values in business

Business ethics implants moral values in business operations and creates awareness
among the management and the employees about their moral obligations. Ethical
awareness reminds business organisations about their widespread responsibilities
towards different stakeholders.

11. Better business relations

A code of ethics clearly defines dos and don'ts, rights and wrongs and moral obligations
of a business. This reduces conflicts, rivalry and differences of opinion within and outside
the business. Ethical standards help a business organisation to maintain a cordial
relationship with shareholders, employees, customers, suppliers, creditors, society,
government and other firms in the industry,

 Arguments in favour of Business Ethics

• Provides tools to decide whether a particular activity should be performed or not.

• Helps in ethical decision making

• Creates framework (standards) for doing right actions

• Implant moral values – functional areas of business

• Facilitate good governance in organisation

• Ensure Equity in business – avoid discrimination\

 Arguments against Business Ethics

• Ethics and moral values have no role in business activities Business activities are
regulated by law

• Moral obligations are fulfilled through compliance with legal formalities

• Moral values and principles are meant for personal life and not applicable in business

• Ethics and business are conflicting areas – cannot be mixed with one another

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 Social Responsibility

• Social responsibility means the obligation of business to perform their activities in a

manner that meets the ethical, legal and commercial expectations of the society.

OBJECTIVES

The major objectives of social responsibility are as follows;

1. To carry on business activities in an ethical way and in the interests of the whole
society.

2. To favourably address social needs and expectations.

3. To act/give more than the legal requirements.

4. To observe equity while meeting the requirements of shareholders and other

stakeholders of business.

5. To enforce responsibility of an organisation towards environment, consumers,

employees, and all other members of the society.

 ELEMENTS/TYPES OF SOCIAL RESPONSIBILITY OF BUSINESS

Basically there are four elements of social responsibility of business They are;

1. Economic Responsibility 2. Legal Responsibility 3. Ethical Responsibility and

4. Social welfare

1. Economic Responsibility: A business has economic responsibilities to its

different stakeholders. It has to give profit for the owners (shareholders), fair
remuneration to the employees, valuable products and services to customers, interest
to the creditors, taxes to the government and thereby economic progress to the whole
society. The first and foremost moral obligation of a business is to fulfill its economic
responsibilities to the different stakeholders.

2. Legal Responsibility: It is the responsibility to respect and comply with the law
of the land. A business has to follow the rules and regulations framed by the nation in
a strict and disciplined manner.

3. Ethical Responsibility: It is the responsibility of a business to observe ethical

standards and moral code of conduct while performing its operations. Ethical
responsibility demands a business to practice right/ good behaviours and avoid
wrong/unfair practices.
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4. Social welfare: It is the responsibility of a business to take effort to serve the
society in which it exists. The business has to encourage its employees to contribute
to the welfare of the society as much as they can. The business has to participate in
the charitable activities in the society and assist projects that improve the quality of
life of the community.

 SOCIAL RESPONSIBILITY TOWARDS DIFFERENT STAKEHOLDERS

The social responsibility of business towards different stakeholders is described

below;

1. Responsibility towards Shareholders

The important responsibilities of a business towards its shareholders are as follows;

1) Reasonable dividends: It is the responsibility of a company to pay reasonable

dividends to the shareholders in time.

2) Efficient administration: It is the responsibility of the company to ensure

effective use of money invested by the shareholders through an efficient and clear
management.

3) True and fair information: A business has to give the shareholders a true and
fair view of its operations. The information provided to the shareholders must be
accurate, clear and complete in all respects.

2. Responsibility towards Employees

The important responsibilities of a business towards its employees are as follows;

1) Fair remuneration

2) Safe and secure work environment

3) Opportunities for career advancement

4) Proper settlement of grievances

5) Cordial relations

6) Adequate welfare facilities etc

3. Responsibility towards Consumers

The important responsibilities of a business towards consumers are as follows;

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1) Satisfaction of needs: The product must satisfy the needs of the customers
in the best possible manner.

2) Best quality: Quality is the fitness for the use of a product. It is themost
important feature of a product which includes the purity, utility and durability. The
product and services offered by a firm must meet the quality expectations of the
customers.

3) Fair Price: The price of a product must be reasonable and affordable to the
customers. It is the responsibility of a business to charge price in accordance with the
cost, utility and quality of the product. If the quality and utility of a product is low
compared to its price, then it is against the interest of the customers.

4) Better relations and services: It is the responsibility of a business to maintain

cordial relations with the customers and offer better sales and after sales services to
them.

4. Responsibility towards Creditors

The important responsibilities of a business towards creditors are as follows;

1) Giving adequate securities for loan

2) Giving collateral securities if needed

3) Giving adequate guarantees for repayment of principal and interest 4)

Payment of interest at the agreed rate in time

5) Repayment of the principal in time.

5. Responsibility towards Suppliers

Suppliers are persons or institutions who supply the required raw materials and capital
goods to the business. The interests of the supplier are purchasing power and credit
worthiness of the business. The important responsibilities of a business towards
suppliers are as follows;

1) Fulfill the terms and conditions of purchase

2) Give adequate details and documents required by the supplier. For example,
tax registration number, written orders, bank details, transportation, letter of credit,
bills of exchange, credit notes etc.

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3) Give cheques or demand drafts if necessary

4) Settle the payment in time

6. Responsibility towards Government

The Government acts as the regulatory mechanism. It will enact rules and laws for
running the business in accordance with interests of the nation. The stake of
Government in a business includes taxes and levies, subsidies and financial aid. The
important responsibilities of a business towards the government are as follows;

1) Comply with the rules and regulations.

2) Obtain licenses and registrations required in business operations.

3) Furnish reports, statements and documents required by the government.

4) Payment of taxes, duties and fees in time.

7. Responsibility towards Society

Society refers the community in which a business exits. The society also expects
many benefits from the business such as employment, environment friendly
operations, shares etc. The important responsibilities of a business towards the
society are as follows;

1) Fair use of societal resources.

2) Generate employment opportunities for the members in the society.

3) Engage in environment friendly operations

4) Keep the environment healthy and clean

5) Contribute to the welfare and progress of the society.

 ARGUMENTS IN FAVOUR OF SOCIAL RESPONSIBILITY

The important arguments in favour of social responsibility follows; are as

1. The increased rate of industrialisation, emergence of new economic policies of

globalisation, liberalisation and privatisation, tough market conditions and cut throat
competition led to many unfair business practices and social problems. Therefore
business organisations have a social responsibility to resolve these problems.
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2. It is advisable for business organisations to follow social responsibility so as to
minimise government regulations and interferences.

3. Big organisations employ huge amount of money and large number of people.
Therefore they have the moral obligation to utilise at least some of the resources to
meet social needs.

4. Business organisations utilise scarce natural resources of the society. So they have
the moral obligation to reimburse the society equivalent amount of services and
benefits.

5. Social responsibility is essential for the long term survival of a business organisation
because people will discard organisations which are functioning against the interests
of the society.

6. Social responsibility is necessary to attain a unique image for the firm in the industry

7. Social responsibility increases the sales and customer base of a firm. People
always like to deal with organisations which are loyal to the society.

 ARGUMENTS AGAINST SOCIAL RESPONSIBILITY

The following are the major arguments against social responsibility;

1. Moral and social issues are irrelevant in business. The sole objective of business
is profit making.

2. Organisations focusing on social responsibility cannot face market competitions

and attain financial progress. They may be forced to adopt strategies which are
against social interests to beat competitors and maximising profit.

3. Business organisations are incapable and are not well equipped to address social
needs. They are only prepared (capable) to do economic activities of production and
distribution of goods and services and earn money there from.

4. Society is not the stakeholder of a business and so spending money for addressing
the needs of the society is an unwarranted expense. It is a waste the money, time and
energy.

5. Social welfare is the duty of the government. Business has nothing to do with it.

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 CORPORATE GOVERNANCE

A business that pays no attention to moral values and principles in its operations is
considered as a poor business. Corporate governance recognises the importance of
ethics and social responsibility in the management of a business. It is based on the
principle that business is accountable for its actions and therefore every business is
required to establish certain guidelines, principles and moral standards to govern its
operations. It provides a structure through which the objectives of a company are set and
how they are achieved and monitored.

The role of corporate governance is setting right goals, selecting right paths, making right
decisions and doing right actions so as to ensure honesty and fairness in business
operations. Corporate governance defines relationships between a company's
management, its board, shareholders and other stakeholders. Corporate governance is
a set of processes, practices, policies and laws affecting the way a business is directed,
managed or controlled. It is a structure of rules, relationships, systems, programmes and
processes within the business and by which authority is exercised and controlled in the
organisation.

OBJECTIVES

Corporate governance aims to attain the following objectives;

1. Monitoring the performance:- Corporate governance sets guidelines for monitoring

the performance of the organisation. It addresses the need of the organisations to act in
the best interest of the firm's core stakeholders. It guarantees that the owners or the
shareholders receive a fair return on their investment through good performance.

2. Conformance:- Corporate governance insists for compliance with legal

requirements, industrial standards, and accountability to relevant stakeholders. It is to
meet the requirements of the law, regulations, published standards and community
expectations of honesty, accountability and openness.

3. Inculcate moral values:- All corporate activities go through a variety of moral issues.
The functioning of an organisation on the basis of moral values depends on the
effectiveness of its moral reasoning. Absence of moral reasoning leads to unethical
management and corporate practices. Companies should review their activities to check
its agreement with accepted moral principles. Corporate governance attempts to implant
moral values in a corporate setting.

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4. Ensure fairness in operations:- Corporate governance facilitates companies to
establish right goals, selecting right ways, making right decisions and doing right actions
so as to ensure honesty and fairness in their operations.

5. Equitable treatment of shareholders:- Corporate governance aims at ensuring a

fair and equitable treatment of shareholders without any discrimination. In some
organisations, a particular group of shareholders enjoy more power and benefits due to
their

 What is Sole Proprietorship?

A Sole proprietorship can be explained as a kind of business or an organization that

is owned, controlled and operated by a single individual who is the sole beneficiary
of all profits or loss, and responsible for all risks. It is a popular kind of business,
especially suitable for small business at least for its initial years of operation. This
type of businesses is usually a specialized service such as hair salons, beauty
parlours, or small retail shops.

Definition of Sole Proprietorship:

· It is that type of business organization which is owned, managed and
controlled by a single owner.
· The word “sole” means “only” and “proprietor” notes to “owner”.
· A sole proprietor is the beneficiary of all profits.
· All risks are to be borne by the sole proprietor.
· The sole proprietor has unconditional and full control over its business.

Features of Sole Proprietorship:

(1) Formation and Closure
· This type of business organization is formed by the owner himself.
· No legal conventions are obliged to start the sole proprietorship form of
organization.
· In some instances, the legal formalities are required or the owner should have
a particular license or a certificate to run the business.
· The owner can close the business at his own discretion.
(2) Liability
· In the sole proprietorship business, the sole owner has unlimited liability.
· In this case, the owner is himself liable to pay all the liabilities. If he takes a
loan for its business then he will be liable for all the debts.
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· Hence, he is personally liable for all the debt which can be recovered by his
personal estate when funds are insufficient.
(3) Sole Risk Bearer and Profit Recipient
· A sole proprietor is only the one who bears all risks which are related to its
business.
· All the profits or losses which are earned from the business are to be enjoyed
by the sole owner.
(4) Control
· As all the rights and responsibilities lie with the sole proprietor that is why he
controls all the business activities.
· No one can interfere in the business activities of a sole proprietor.
· Hence, only the sole proprietor can modify his plans accordingly.
(5) No Separate Entity
· According to the accounting system, the owner and the business are
considered as two separate entities.
· But the law does not make any distinction between the sole trader and its
business.
· Hence, without the sole trader, the business has no identity because he is the
only person who performs all the business activities.
(6) Lack of Business Continuity
· Death, imprisonment, physical ailment, insanity or bankruptcy of the sole
proprietor will directly affect the business or it may cause shutting down of the
business.
· In the case of the beneficiary, successor or legal heir of sole proprietor, he can
run the business on behalf of the proprietor.

 Pure research Vs. Applied research

Pure Research Applied Research

1. It intends to generate the basic It intends to resolve a problem in a

theory behind a phenomenon field of study.

2. It focuses on a phenomenon or It seeks theoretical back up from

problem in discipline. different disciplines to solve a
particular problem.
3. It generalises the outcome of

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research. It concentrates on a single problem
and devoid of any generalisations.
4. It attempts to identify and study
the causes and effects of a problem It seeks to find out the means to alter
or phenomenon. or modify things.

5. It uses technical terms and It expresses the outcome

language to explain the outcome of
research.

 Difference Between Research Method and Research Methodology

BASIS OF
RESEARCH METHOD RESEARCH METHODOLOGY
COMPARISON

Meaning Research Method implies Research methodology signifies

the methods employed by way to efficiently solving
the researcher to conduct research problems.
research.

What is it? Behavior and instrument Science of understanding, how

used in the selection and research is performed
construction of the research methodically.
technique.

Encompasses Carrying out experiment, Study different techniques

test, surveys and so on. which can be utilized in the
performance of experiment,
test, surveys etc.

Comprise of Different investigation Entire strategy towards

techniques. achievement of objective.

Objective To discover solution to To apply correct procedures so

research problem. as to determine solutions.

 BUSINESS RESEARCH
•According to Clifford Woody “Research comprises of defining and redefining
problems, formulating hypothesis, colleting, organizing and evaluating data, making
deductions and research conclusions and at last carefully testing conclusions to
determine whether they fit the formulating of hypothesis”.

ELEMENTS OF BUSINESS RESEARCH

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1. Identification of the business problem: The mangers or executives of a
business have to identify the crucial problems in their areas. These problems may
include decrease in sales, identification new market segments for the product,
development of a new product measures to reduce cost of production etc.
respective
2. Defining of the problem: The problem must be clearly defined for a clear
understanding. This is essential for formulating the appropriate course of action for
finding out the necessary solution.
3. Formulation of a research design: The research design gives a clear
framework for conducting a systematic research for arriving at solution for the
problem faced by the business.
4. Collection of data: Adequate data pertaining to the problem must be collected
for examining the causes and consequences of the problem and to find out the
solution.
5. Analysis of the data: The collected data must be analysed properly to extract
valuable inputs for decision making.
6. Arriving at solution for the problem: The outcome of research leads to the
solution for the problem confronted by the business.
 Types of Research
• Pure Research • Applied Research • Exploratory Research
• Descriptive Research • Empirical Research • Analytical Research
 Significance of Business Research
1.Good competition strategies 2. Solution for business problems
3.Gain new business knowledge 4. Good decision making
5.Best quality products and services 6. Suitable market and customers
7.Selection of best employees. 8. Efficient management of funds
9.Expansion of markets 10. Customer satisfaction

1. What is meant by GDP? Gross domestic product (GDP) is the standard measure
of the value added created through the production of goods and services in a country
during a certain period.

2. What is meant by HUF?" Hindu Undivided Family (HUF)

Under Hindu Law, an HUF is a family which consists of all persons lineally descended
from a common ancestor and includes their wives and unmarried daughters. An HUF
cannot be created under a contract, it is created automatically in a Hindu Family.
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3. What is meant by PSE? Public sector undertakings in India - a.k.a Public Sector
Enterprises in India.

4. What are SLEPT factors? SLEPT stands for social, legal, environmental,
political, and technological. Each of these categories includes important external
factors that will impact the strategic direction of a company.

What is LPP? Linear Programming Problems (LPP): Linear programming or linear

optimization is a process which takes into consideration certain linear relationships to
obtain the best possible solution to a mathematical model.

What is meant by LPG? LPG reforms are also known as liberalisation, privatisation
and globalisation reforms. They have transformed the way India as an economy works
and opened the country up to the world for trade and commerce.

What is meant by GDR? A Global Depository Receipt (GDR), also known as

international depository receipt (IDR), is a certificate issued by a depository bank,
which purchases shares of foreign companies and deposits it on the account.

What is meant by BPO? Business process outsourcing (BPO) is the delegation of

one or more IT-intensive business processes to an external provider that, in turn,
owns, administrates and manages the selected processes based on defined and
measurable performance metrics.

What is meant by NITI Ayog. NITI Aayog, National Institution for Transforming India,
Government of India
B2B: Business to Business. Business between companies.
B2C: Business to Consumer. Businesses that have individual consumers as a
customers.
B2B2C: Business to Business to Consumer. A close relation to B2B, B2B2C
companies integrate the products/services of other companies, within their own ones.
To understand more on how a B2B2C e-commerce model would work,
B2G: Business To Government. Companies with activity focused on their customers
being governments.
B2I: Business To Investor. Businesses that provide services to investors.
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B2E: Business To Employee. Strategy that tries to demonstrate to current and
potential employees that the company being promoted is the best working
environment.
C2C: Consumer To Consumer. Relations between consumers, facilitating
transactions between individuals.
C2B: Consumer To Business. The individual, as a consumer, creates value for the
company. Thus, users provide service to companies.

 Explain the objectives of LPG.

Objectives of LPG Reforms

· Change the Indian economy from the Soviet model to a market economy with
less government control and more economic activity
· Resolve the balance of payments crisis and increase India's foreign exchange
reserves
· Encourage economic growth and economic expansion into the global trade
markets
· Allow the international flow of goods, services, and capital
· Encourage increased participation of private entities in various sectors of the
economy

 Will outsourcing improve performance?

Outsourcing allows you to control costs, which is the largest reason that companies
use it. You can pay for services as you need them and avoid making major
investments in infrastructure, software, and personnel. Further, you’re able to
increase the efficiency of your business by getting expert help without having to hire
experts full-time. Whenever you have a job that doesn’t fit nicely into a current
employee’s duties, it’s worthwhile to outsource to a professional rather than hire and
train a new employee.

Outsourcing helps increase productivity in many ways, both directly and indirectly.
Simply put, it allows employees to focus on what they do best. In the long run,
outsourcing also helps increase efficiency, and job satisfaction for employees.

By outsourcing some projects, in-house employees have more time to focus on

strategic initiatives. They can focus on the core business tasks such as product
development, nurturing relationships, and other duties that require tacit knowledge
over implicit knowledge.
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