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An attempt to understand Basic Concepts of Business - Management

Objectives

Objectives of this content are :- Creating an easy reference to fundamental concepts of business. Learning how & when Management comes to play its role in Business.

Introduction to Business

Concept of Business

The activities performed relating to purchase or production of good &/or service with a view to sell them at a profit constitute Business.
Literally & broadly speaking Business means “state of being busy”. Hence reading, writing, playing etc are all business activities. But this definition is not acceptable in case of Business organization.A political leader remains busy through out the day in various matters but that doesn’t mean he is a Business man.
So the term Business is associated with some purposeful activities. But all purposeful activities can’t be called business in return.So those activities will be called Business whose primary objective is to earn profit. So we can therefore say Business refers to those activities which have inherited risks, uncertainty & for which profit can be earned.

Nature of Business

• Procurement of necessary articles from natural resources.
• Transformation of those articles with the help of labour & machine.
• Transporting good from one place to another.
• Storing, preserving & insurance of good.
• Sending good to customers through distribution & exchange.

Scope of Business

The Scope of Business can be anticipated from it’s definition. We’ve learnt activities related to production, purchase & exchange of good/service for the purpose of earning money are termed as Business. From this two aspects of Business are reflected.

1. Economic aspect :- Creation of utility viz. time utility, place utility, service utility etc.
2. Functional aspect :- Business procures natural resources, process them to produce good needed for human use & supplies them through purchase & sell leading to both profit & human satisfaction.

Functions of Business

Primary / Basic Functions

Production

• Important function of business
• Conversion of natural resources / raw materials to usable good by mechanical process.
• Production can be of two types- good & service.
• Production function indicates change in nature / function of the products. Viz. mineral oil changes it’s form to petrol or diesel when processed.

Purchase

• Integral part of business
• Every organization needs to purchase good or service for it’s operation.
• Every organization have their purchase manager who helps the organization in purchasing right good at right time & at right quantity.

Sale

• Selling activity is one of the basic functions of business.
• Good are produced in this commercial world for sale.
• Business man should always try to increase the sale of his products/ service for which he should have fair idea of commodity market & demand of good.

Secondary / Auxiliary Functions

Financing

• Without finance no work can be accomplished.
• Procurement of necessary capital is indispensable for
• performing the function of business
• Capital is of two types, viz. Fixed Capital- meant for acquiring fix assets. Working Capital- meant for day to day expenditure.

Accounting

• Accounting is necessary for the transparency of business.
• There are various accounting standards as per guidelines provided various accounting body.
• A clear idea of income/expenditure, profit/loss can be formed from Accounting.

Office Function

Office function involves various administrative jobs, viz. communication customers, suppliers & government department or other related in terms of correspondence of e-mails, letters, arranging conferences etc.

Personal relations

• This section deals with employee relations, settlement of industrial dispute, Performance of labour- welfare activities etc
• Moreover recruitment, training, placements all comes under this category.

Storing

• Business organization producing perishable good have suitable system inbuilt in their organization.
• Moreover raw materials, equipments etc. needs to be stored for flow of production.
• Sometimes storage is required for storing manufactured good as lags exist between production & selling.
• Disputed or defected good are also need to be stored for repair.

Advertisement

• Indispensable part of business. Customer gets to know about the– price, places from where to buy etc.

Transport

• Transport plays crucial role in business world.
• Primarily raw materials are transported from the places to unit. Then the produced good are transported to to places where it is sold.

Market research & development

In order to perform the sale of good smoothly, the function of market research appears to be an important function. It includes to be conversant with the changing habits, taste & fashion of customers & production of new good thereby.

Management

Modern business not only requires high degree of technical & professional ability but also managerial abilities to tackle different kind of problems.Management is the process of taking managerial decision & putting them into action. It determines th eobjective of the organization & takes steps to achieve them.

Management deals with five factors of production viz. MEN, MACHINE, MONEY, MATERIALS & METHODS.The success of management depends on how nicely these limited factors have been used. The optimum use of these resources defines company's prosperity.

Definition

Some well known definitions of management are John. F. Mee, " Management may be defined as the art of securing maximum prosperity with a minimum of efforts so as to secure maximum prosperity & happiness for both employer & employee and give the public the best possible service." Henry Fayol, " To manage is to forecast and plan, to organize, to command, to coordinate and to control." S. George, " Management consists of getting things done through others.Manager is the one who accomplishes the objectives by directing the efforts of others."

Work in progress, expect frequent changes. Help and feedback is welcome. See discussion page.