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INTRODUCTION TO BUSINESS

Business
If a man remains busy with an activity which is production oriented is called Business. Production means creation of utility. In a word business is a creation of utility. Man can’t produce anything. Man can only procure resources from nature and can change its shape, place and time.

Utility: Utility means capacity to satisfy human need or want. Something which has got the capacity to satisfy human need or want, we say that it has got utility.

Business organization: All organizations all over the world are engaged in either producing a product or rendering a service or generating an idea. These organizations are popularly known as Business organization.

NEED: Need refers to those goods and services which are essential for our living. We can’t survive without them. Our existence will be at stake (threatened) without them. Example:
1. Food
2. Shelter
3. Clothing
4. Medical care
5. Education and Training.

WANT: Want refers to those goods and services which are not essential for our living but we require them for a better living. They make our life easy and enjoyable. Example:
1. Mobile
2. Computer
3. Electricity
4. Television etc.
Need is limited but want is unlimited. Need can’t be created; it already exists but want may be created.

Definitions of Business
• We all are involved in business in some-way or other. • Business is something with which we live.
• Business needs people, people also need business.
• Business needs people in the form of owner, manager, employee ands customer. • People form the core of business.

OWNER: Owner is a person who owns the business, he usually provides the capital. He sets the objectives, makes decisions. His decision is final in regard to his business. He takes the risk and enjoys the rewards that the business provides.

MANAGER: Manager is a person who is responsible for the operation of a business. Managers may be of two types:
1. Owner Manager
2. Professional Manager.

Owner Manager: An owner when manages his business himself is an owner manager. He is a self employed person.

Professional Manager: He is employed by the owner. He is made responsible for the operation of the whole business as per the desire of his employer that is the owner.

Some dissimilarities between the owner and the professional manager are given below: 1. An owner manager is a self-employed person on the other hand a professional manager is employed by the owner. 2. Owner sets the objectives of his business. Professional managers walk to achieve those objectives. 3. A professional manager is constantly evaluated by the owner. If he can achieve the objectives set by the owner, then the owner welcomes him. Unfortunately if a professional manager fails to do so. The owner manager simply says good bye to him. In other words, he is hired by the owner and he may also be fired by the owner if he so desires. In fact a professional manager is always dictated by the owner. His boundary operation is decided by the owner.

There are also some similarities between a professional manager and an owner manager which are given below: 1. Both types of managers want to achieve profit, growth. They work for their survival and in the presented context, they are also aware about their social responsibilities.

Profit: The difference between business income (revenue) and business expenses (cost) is called profit. Profit = Revenue - Cost
Business Profit = Selling – all costs of making and selling a product including taxes. Profit may be of two types such as:
1. Business profit
2. Economic profit

Economic profit: Economic profit is what remains after expenses and opportunity costs when they are deducted from the income. Economic profit = Selling – (Expenses + Taxes + Opportunity cost)

Opportunity Cost: Opportunity cost...
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