Chapter 01 : Background of Business

Chapter 01

Background of Business

What is a business,

Any economic activity related to production and distribution of goods and services to satisfy human needs and wants are known as a business

The main objective of the business is,

1. Earing profit

2. Increase the customer satisfaction

 

Sub objectives of the business are,

1. Increase the quality of the goods and services

2. Generating employment opportunities

3. Employee welfare

 

Human needs and wants

Needs

Need are the requirement that must be essential for existence

 

Characteristics of Needs

1. Being common

2. Being essential

3. Being Limited

4. Cannot be created

 

Wants

Wants are the different ways that satisfy human needs.

 

Characteristics of wants

 

1. Being Complex

2. Being Diverse

3. Being Unlimited

4. Not essential

5. Can be create

 

Manufacturing Business

1. Commodity Manufacturing Business

2. Service providing Business

 

Commodity manufacturing business

Tangible and physical existences things are known as commodity and the producing Commodity things that fulfill human needs and wants are known as Commodity Manufacturing Business

 

Example for Commodity Manufacturing Business

1. Automobile

2. Furniture

3. Mobile Phones

4. Processed foods          etc.

 Services providing Business

Any activity or process rendered to consumers by a business in order to fulfill needs and wants are known as service providing business

Example for  Services providing Business

1. Insurence Institutions

2. Banking Institutions

3. Beauty Salons

4. Educational Institutions

Factors of Production

1.Land

2.Labor

3.Capital 

4.Entrepreneurship

Land

All the natural resources that are available consider as Land

 

Example for the Land:

 1.Minerals

2.Forest

3.Soil

 

Labor

The mental and physical contribution in the business can be considered as Labor

 

Example of mental labor

1.Managers
2.Accountants

 

Example of Physical Labor

1.Workers in Mines

2.Sanatory Laborers

 

Capital

Anything produced by man in order facilitate manufacturing process is known as capital

 

Example of Capital

1. Machinery

2.Buildings

3.Motor Vehicles

4.Money

 

Entrepreneurship

Taking a risk creates innovations and takes decisions with regard to the business considered as Entrepreneurship

 

Stakeholders

Stakeholders are people who are interest in the business activities

 

Stakeholders

1.Owner
2.Manager
3.Customer
4.Suppliers
5.Competitors
6.Financial Institutions
7.Employees
8.Government
9.Community 

10.Future Investors

 

Detail about stakeholders

 

01. Owner: The owner is the person who provides resources to the business

02. Managers: The business operations are conducted and the decisions of the owner are implemented by Managers

03. Customer: Customers are the persons who buy goods and services from the business

04. Suppliers: Suppliers are the persons who provide raw materials to the business

05. Competitors: Competitors are the other business producing or selling similar goods or services to a business in operation.

06. Employee: Individuals performing the operations of a business are known as employee

07. Financial Institutions: Financial institutions are the institutions providing required loans, consultancy services

08. Government: The government propagates policies required to achieve economic growth of the country

09. Community: Includes the population living outside of the business in the society

10. Future investors: Individuals and institutions willing to invest in the business

The objectives of the stakeholders

1.Owner :