The document provides an overview of business organization and forms of business. It defines business and discusses key concepts like production, exchange, and profit motive. The main forms of business organization discussed are sole proprietorship, Hindu Undivided Family (HUF), partnership, corporation, and cooperative. Each form is described in 1-2 sentences highlighting their key characteristics and ownership structure. The document also lists common functional areas of business like sales, marketing, finance, and production.

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BUSINESS
ORGANISATION
UNIT-1
INTRODUCTION TO
BUSINESS

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Term ‘business’ means to be ‘busy’ or ‘occupied’.
In practice, business includes certain economic activities in which
people are busy or engaged. Such activities relate to production,
distribution, trading or exchange of goods and services to satisfy
the needs of people so as to earn income or profit.
Meaning of Business
1. Business is an economic activity that involves the
exchange, purchase, sale or production of goods and
services with a motive to earn profits and satisfy the
needs of customers.

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Continuation…
2. Business refers to an organized activity of
engaging in any industrial, commercial or
professional activity. A business may be carried on
for profit or maybe a non-profit organization.
Definition of Business
Prof. Owen defines,
“A Business is an enterprise engaged in the production and
distribution of goods for sale in the market or rendering of services
for a price”

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Businessman
Businessman is a person
who performs the activities
of the business.
Features of Business
1. Dealings in goods and services: Business deals with goods and services. Goods are
divided into consumer goods like bread, butter, shoes, shirt etc. and producer goods
like machinery, tools, equipment etc. It also deals with services like transport,
banking, insurance etc.
2. Production and exchange: Business is carried out only when goods and services
are produced and exchanged for money. If goods are produced for self-
consumption, such an activity is not treated as business. Buyer and seller are the two
parties involved in a business activity.

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Continuation…
3. Continuity and regularity in dealings: An activity is said to be a business when it maintains
continuity and regularity. For example—if a persons sells his house, it is not said to be a
business because continuity is not there in dealings. If he repeatedly buy houses and sell them to
others, such activity is treated as business.
4. Profit motive: The main and the foremost motive of business is to earn profit. Profits are
very important so as to enable the business to survive, grow, expand and get recognition.
5. Element of risk: Risk is said to be the possibility of incurring loss. Risks are of two types—
one whose probability can be calculated and insured. E.g.—fire, theft etc. and the other whose
probability cannot be calculated and which cannot be insured. e.g.—fall in demand, changing
fashions etc.
Objectives of Business
A. Economic objectives
•Earning of profits.
•Exploring new markets and creating more customers.
•Growth and expansion of business operations of the firm.
•Making innovations and improvements in goods and services.

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Continuation…
B. Social objectives
•Supply of quality goods to the community.
•Providing goods at reasonable prices.
•Ensure fair returns to investors.
•Avoidance of profiteering and unfair practices.
•Providing more employment opportunities to the people in the country.
Continuation…
C. Human objectives
•Fair deal to employees in terms of wages and incentives.
•Provide job satisfaction.
•Providing better working conditions and environment to the employees.
•Provide the employees more growth opportunities.

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Social Responsibility of
Business
Introduction
Social responsibility means that individuals and
companies must act in the best interests of their
environment and society as a whole. As it applies to
business, social responsibility is known as corporate
/ Business social responsibility (CSR)

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Meaning of CSR
Corporate/Business Social Responsibility is a business model used by
companies to enhance society and the environment through concerted
efforts. It is a great way for business organizations’ to build morale in the
workplace and build a good image in the market.
Some of the companies strongly committed to CSR are IKEA, Bosch,
Apple, Ben and Jerry’s, Starbucks and Adidas.
CSR Applicability in India
The provisions of CSR applies to every company fulfilling any of the
following conditions in the preceding financial year:
•Net worth of more than Rs.500 crore
•Turnover of more than Rs.1000 crore
•Net profit of more than Rs.5 crore
The Board of Directors of every company for which the CSR provisions apply
must ensure that the company spends in every financial year at least 2% of its
average net profits made during the immediately preceding three financial
years as per its CSR policy. If the company has not completed three financial
years since its incorporation, it must spend 2% of its average net profits made
during the immediately preceding financial years as per its CSR policy.

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Need of
Corporate
Social
Responsibility

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Need of CSR
1. Changing Expectations of Society: Today’s world has changed a
lot compared to the past years. Now, society expects different
things from a business besides the supply of goods and services.
As society provides companies with different resources like labour,
natural resources, etc., it expects something good in return for their
welfare.
2. Reputation: Companies spend a lot of money on brand building
and a good image in society. To do so, an organization can also
perform socially responsible practices that will it result in
profitability, increased sales, sustainable growth, a good image and
attraction of talent.
Continue….
3. Avoidance of Government Interference: Government has enacted
various laws, putting moral and legal pressure on the companies to
perform socially responsible activities. If the company fails or avoids
these practices, the government will interfere in the business.
Therefore, to avoid such interference by the government, companies
need to perform their social responsibilities.
4. Long-term Self-interest: Practicing socially responsible practices
not only helps society, but also proves to be beneficial for the
companies in the long run. It means that if a company has an image
in the market as a brand or firm that serves society besides earning a
profit, it will build the company’s image and will be good for its self-
interest.

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Continue….
5. Contribution to Social Problems: Businesses create some of the
social problems, like pollution, inequality, discrimination, unsafe
workplace, etc. Therefore, it is those firms’ duty and obligation to
perform socially responsible activities to solve these social
problems and make society better and safe.
6. Better Environment for Business: Businesses use natural
resources for their daily activities of the business and usually
degrade the environment in the process. Therefore, business
organizations need to avoid environmental degradation caused by
them. It not only benefits society, but also gives firms a chance to
grow their business in a healthy and safe environment.

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Essentials of Successful Business
Continue….
1. Establishment Of Clear-cut Objectives
Clearly defined objective helps to provide guidelines for future business activities.
Long-term and short-term objectives should be established in order to achieve goals.
2. Proper Planning And Clear Policy
Proper planning helps the businessman to decide what to do and how to do different
business activities. Correct and clear policy helps to perform work with minimum risk
and maximum profit.

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Continue….
3. Sound Organization And Effective Management
This is another essential requisite for business success. Proper organizational structure
and quality management helps in planning, coordinating, motivating, directing and
decision making. It helps proper utilization of resources and to achieve organizational
goals.
4. Dynamic Leadership
Dynamic leadership is another key factor for business success. Leader or manager with
vision, courage, foresightedness, and motivating skills is needed to operate business
successfully.
5. Pleasant Personality
Manager should be physically and mentally sound to handle business activities
smoothly. Manager or businessman with good communication skills, intelligence,
experience, and good commanding is needed for business success.
Continue….
6. Adequate Capital/ Proper Financial Planning
A proper financial planning is needed to arrange adequate long-term and
short-term capital to operate business. Suitable source of capital should be
identified to run business smoothly.
7. Proper Location And Layout
Proper location and layout helps to reduce production and operation cost
and increase efficiency of the business. Suitable location and proper layout
helps to maximize profit.

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Continue….
8. Employees Morale
Encouraged and motivated employees play very important role in business. Success or
failure of business depends on the morale of employees. Therefore, staffs should be
motivated, encouraged, and properly trained to achieve organizational goals and objectives.
9. Modern Technology
Successful business organizations use modern technology to provide new and easy methods
in production and distribution. It helps to boost business and earn more profit.
10. Research And Innovation
It is another important requisite of business. Research and innovation helps to satisfy
customers by offering better products and services according to their needs, taste, and
preference.
Functional Areas of Business

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Functional Departments/Areas of
an Organization
• Sales
• Marketing
• Finance and accounting
• Customer service
• Human resource
• Research and development
• Production
• Distribution
Continue….
1.Sales: The sales department is responsible for selling the company's products or services to customers. This
includes salespeople, account managers, and sales support staff.
2.Marketing: The marketing department focuses on promoting the organization's products or services. It
involves activities such as advertising, market research, branding, and public relations.
3.Finance and Accounting: This department manages the organization's financial resources, including
budgeting, financial reporting, payroll, and accounts payable/receivable. It also ensures compliance with tax
regulations and financial planning.
4.Customer Service: Customer service is crucial for maintaining good relations with customers. It handles
inquiries, resolves issues, and provides post-sales support.
5.Human Resources: HR is responsible for managing the organization's workforce. This includes
recruitment, training, performance evaluations, benefits administration, and ensuring compliance with labor
laws and regulations.

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Continue….
6. Research and Development (R&D): R&D is involved in developing and
improving products or services. It includes activities like innovation, product
design, and technological research.
7. Production: The production department is responsible for manufacturing
the products or delivering the services that the organization offers. It oversees
processes, quality control, and efficiency in production.
8. Distribution: This department is in charge of getting the finished products
to customers or retailers. It manages logistics, transportation, and inventory
management.
Continue….
In larger organizations or those in specific industries, you may also find additional departments or functional
areas like:
9. Information Technology (IT): Manages the organization's technology infrastructure, including networks,
software systems, and cybersecurity.
10. Legal: Handles legal matters such as contracts, intellectual property, and compliance with laws and
regulations.
11. Procurement: Responsible for sourcing and acquiring the necessary materials and resources for the
organization.
12. Public Relations (PR): Manages the organization's image and relationships with the public and media.
13. Quality Assurance: Ensures the quality of products or services through testing and quality control
procedures.
14. Environmental and Sustainability: Focuses on environmental impact and sustainability efforts, ensuring
the organization complies with environmental regulations and best practices.

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Business Organization
Meaning of Business Organisation
A business organization is a formal structure
established to carry out commercial, industrial, or
professional activities. These organizations are created
with specific goals and objectives in mind, and they
serve as the framework for conducting business
operations. Business organizations come in various
forms, each with its own characteristics, advantages,
and disadvantages.

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Forms of Business Organization
1. Sole Proprietorship
2. Hindu Undivided Family
3. Partnership
4. Corporation
5. Cooperative (Co-op)
1. Sole Proprietorship
•Owned and operated by a single individual.
•Simple and easy to establish.
•The owner has full control but is personally
liable for business debts.

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2. Hindu Undivided Family

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• It is composed of ‘Karta‘, the
eldest member, commonly
known as the head of the
family. He operates the
business of HUF. The
descendants of the male
members of the family are
known as Coparceners, while
the wife of Karta and sons’
wives are called Members.
• Coparcenar is the one who
acquires the right to ancestral
property by inheritance. Only a
coparcener can demand the
division of HUF.

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3. Partnership
•Two or more individuals or entities (partners) run the
business together.
•Partners share profits, losses, and responsibilities.
•Types of partnerships include general partnerships (equal
liability) and limited partnerships (limited liability for some
partners).

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4. Corporation
•A separate legal entity from its owners (shareholders).
•Provides limited liability protection for shareholders,
meaning their personal assets are generally not at risk.
•More complex to set up and maintain, with formalities like
shareholder meetings and board of directors.

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5. Cooperative (Co-op)
•Owned and operated by its members
who share profits and decision-making.
•Common in agriculture, retail, and
various other sectors.

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