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BUSINESS ORGANIZATION AND

MANAGEMENT

1>DEFINE THE TERM BUSINESS.WHAT ARE

THE MAIN OBJECTIVE OF BUSINESS?

BUSINESS : Business is an 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.
OBJECTIVE OF BUSINESS : The primary
objective of business is to earn profit .
Although profit plays important role as a
Criterion of success ,business may not exist
for long with the sole objective of earning
profit .Therefore while profit is necessary
for the business to stay in business, there
are other objective of business for its
survival and growth.
The objective are as follows
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A.ECONOMIC OBJECTIVE :Basically, being
an economic activity , primary objective of
business are economic.Some of the main
objective are:
1.Profit Earning : The main objective of any
business is to earn profit.just as a plant
cannot survive with out water similarly a
business cannot sustain without profit.
Profit is necessary for growing and
expanding business activities.

2.Creation of Customers: In the words of
Peter of Drucker, “There is only one valid
definition of business purpose – to create a
customer”. “Profits are not generated out
of thin air. They are result of the hard work
of the Businessman to satisfy the needs of
the customers. The creation of goods and
satisfaction of the needs of the customer is
a crucial purpose of the business.

3.Creation of Utilities: Goods and services
offered by a business enterprise can be
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purchased only if they posses some utility.

Thus creation of utilities is another
economic activities of business. A business
enterprise creates time, place and form
utilities which meet the needs of the
society.

4.Technical Innovation and Growth :
Technical innovation and growth is another
economic objective of business . Changes
in the economic and business world are so
fast and complex that a business enterprise
cannot survive – unless it pays due
attention to innovation and growth.
B.SOCIAL OBJECTIVE: Business, being a
part of society, has obligations towards the
society also. Some major objectives are as
follows :
1. Supply of Goods or Services : It is the
social responsibility of any business
enterprise to supply goods or services of
right quality at right time , at the right
place and at a reasonable price .
2. Avoid Profiteering and Antisocial
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Practice : Another social objective of

business is that it should avoid profiteering
and antisocial practices , such as ,
hoarding , black marketing , smuggling ,
tax – evasion etc.
3. Welfare of Worker : The business
enterprise should look after the welfare of
its workers and they should be properly
rewarded . The workers should be given
incentive ,wages , and necessary facilities ,
such as housing , medical care , education ,
good working conditions , freedom from
environmental pollution etc.
4. Customer Satisfaction : Since the
business is meant for consumers , it is the
social responsibility of the business to
provide them full satisfaction . Consumers ‘
satisfaction is the key to success of any
business enterprise.
5.Proper return to investors : Since
investers provide necessaory capital to the
business enterprise , it is the social
objective of any business enterprise to
provide them necessary return ( profit ) on
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the capital provided by them.

2.WHAT DO YOU MEAN BY BUSINESS
ORGANIZATION?DESCRIBE THE MAIN
FUNCTIONAL AREAS OF BUSINESS?

Business Organization :-We know that
'Business is an activity that involves the
exchange, purchase, sale or production of
goods and services with a motive to earn
profits But The term business organization
describes how businesses are structured
and how their structure helps them meet
their goals. In general, businesses are
designed to focus on either generating
profit or improving society. When a
business focuses on generating profits, it is
known as a for-profit organization. When
an organization focuses on improving the
social good through the arts, education,
health care, or some other area, it is known
as a nonprofit (or not-for-profit)
organization and is not typically referred to
as a business.
Function of business:-There are several
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functions that are performed by a business

enterprise . However , there are two basic
functions : namely production and the
other is marketing . It would be better to
clarify he.re that these functions cannot be
performed without the help of other
functions such as planning , financing ,
staffing , purchasing and controlling , etc.
Some of the important functions are
discussed below :

1. Production Function :Manufacturing
involves the process through which raw
material are converted into the finished
products. It is concerned with product
planning and layout,
In a nutshell , the production department
performs the following functions

( a ) Production Planning

( b ) Purchasing and Storage of raw
material

( c ) Material Handling
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(d) Product Designing

(e) Plant Layout

( f) Research and development , etc.

2. Marketing Function : Another function
of business is marketing of product .
Marketing function involves the
distribution of goods and services . It
involves development and use of
appropriate marketing mix consisting of
product , price , physical distribution and
promotion . Generally , marketing
department is established to perform as
below :

( a ) Product designing according to
changes .

(b) Packaging the product

(c )Branding and lavelling.

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(d) Pricing the product .

(e)Deciding distribution channel .

( f ) Advertising and personal selling etc.



3. Finance Function : Finance is the lifeline
of a business . Finance is needed for fixed
capital and working capital . In a healthy
enterprise , there should be a regular flow
of funds . all these tasks , a finance
department is established , which performs
the following functions :

( a ) Financial planning , i.e. , estimation of
financial requirements .

( b ) Determination of sources of finance .

(e ) Deciding about capital structure .

( d ) Management of working capital .

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( e ) Deciding the dividend policy , etc.

4. Personnel Function : It is concerned with
the selection , training , and maintenance
of workforce in the business enterprise .
The quality of manpower largely affects
the quality of product . This function
involves :

( a ) Manpower planning .

( b ) Recruitment and selection .

c ) Orientation and training of workers .

( d ) Appraisals and promotions .

( e ) Labour welfare services .

( f ) Industrial relations , etc
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CHAPTER 2 :-SOCIAL RESPONSIBILITY OF

BUSINESS, ETHICS AND HUMAN VALUES

Q1-WHAT DO YOU KNOW ABOUT SOCIAL
RESPONSIBILITIES OF BUSINESS?WHAT
ARE THE RESPONSIBILITIES OF BUSINESS
TOWARDS DIFFERENT INTEREST GROUP?

Social Responsibilities of business:The term

"Social Responsibilities of business" relates
to the Volutory efforts on the part of
businessman to contribute to the social
well being.
In simple words we can
say that social responsibilities is the
Obligation of businessman towards the
society. Business must review the impact of
their decision and actions on the other
sections of the society. Business cannot
exist in isolation. Businessman make use of
resources of society and earn from the
members of society so they must do
something for the society.
According to Koonz and O'Donnel, "Social
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responsibilities is the obligation of

everyone as he acts for owners interest to
assure that the rights and legitimate
interest of all others are not impinged.
Responsibility of business towards
different interest group :- Business
operates in the society. It comes in contact
with various group of the society such as
owner,workers,customers , suppliers and
government. it should fulfill its obligations
to each of these groups. The specific
responsibilities of business towards various
groups are discussed below :
1. Responsibility of business towards
itself:- The first responsibility of business is
itself.It includes the following functions
(i) The goals for which the business has
been established, must be achieved;
(ii) effective and able conduct of business.
(iii)To earn adequate profit to make
continuity in the business.
(iv) Goods services should be produced
according to requirement and interest of
the customers.
(v) There should be no exploitation due to
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monopoly powers.
2. Responsibilities towards shareholders,
owners or investor: The responsibility of
business to shareholders, owners or
investor maybe summed up as under:
(a)Safety of investment of capital should be
there .
(b)Fair return on capital should be given.
(c) Safety and growth of the assest of the
company .
(d)More participation in profits by issuing
bonus shares.
(e)Important informations must be
provided to the shareholders.
(f)No partyality towards shareholders.
3. Responsibility towards customers/
consumers: Customers want products of
high quality at lowest possible price . It is
the duty of management to perform the
following responsibilities towards
customer.
(a) Only quality goods should be produced
(b) Goods should be provided at cheaper
and fair prices.
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(c) A good distribution system should be

there to ensure regular suppliers.
(d) There should be no hoarding of goods.

4.RESPONSIBLITY TOWARDS EMPLOYEES

AND WORKERS : A business enterprise
should serve as an ideal employer. Its
should try to meet the following demands
of workers.,
(a) ful wages and full employment should
be provided to the workers.
(b) Good working condition must be
provided to the workers.
(c) Security of job to workers
(d) Job satisfaction among workers

Q.4 DEFINE BUSINESS ETHICS AND

EXPLAIN ITS SIGNIFICANCE.

Businese Ethics:- The term business ethics

refers to the system of moral principles and
rules of conduct applied to business. That
there should be business ethics means that
the business should be conducted
according to certain self-recognised moral
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standards.
Business being a social organ, shall not
conduct itself in a way detrimental to the
interest of society and the business sector
itself.

There is, However, no unanimity of opinion

on what constitutes business ethics. In this
connection, Peter Drucker very
appropriately remarks, "There neither is a
separate ethics of business, nor is needed, "
For " men and women do not acquirs
exemption from ordinary rules of personal
behavior because of their work or job.

SIGNIFICANCE :- Business ethics have

gained importance for the business
because of the following reasons
(a) Business is a part of the society. Social
Values Must become the guiding principles
for doing business.
(b) When a business fails to behave in
accordance with the society's expectations,
It may loose its image and its very right to
exist.
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(c) A businessman is extracted to serve as

trustee of various groups such as wokers,
customers, suppliers.
(d) Various laws reflects the ethics of the
society. If trade is not ethical it will
certainly affects the intervention of the
law.
(e) consumers are no longer at the mercy of
business firm.

Q5 "THE ONE MAN CONTROL IS THE BEST

IN THE WOLRD, IF THAT ONE MAN IS BIG
ENOUGH TO MANAGE EVERYTHING"
EXPLAIN

--->It is right to say that One man conrtrol is

best in the world if that one man is big
enough to manage everything Because of
the following reasons
ADVANTAGES

---> (1) Ease of Formation :- No legal

formalities are required to form and
operate the sole proprietorship.
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(2) Direct Incentive :- In a sole Proprietory

business there is direct relationship
between efforts and reward which serves
as a powerful incentive to the sole
proprietor to put in his best efforts.

(3) Quick Decision Making :- The sole

proprietor can take business decision
quickly. He can take full Advantages of
business opportunities as and when they
arise.

(4) Personal Relations:- The sole trader is

able to maintain personal relations with his
customer. he is able to know his customers
personally.

(5) Secrecy :- The sole proprietor need not

share the secrets of his business. He has
full control over his business.

(6) Freedom of Initiative :- Since sole

proprietor is in full control of his Enterprise
he can take full initrive to introduce any
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innovation or change .
opportunities

(7) Creation of Employment

Opportunities :- Sole proprietary business
uses labour intensive technique of
production, thereby creating larger
employment opportunities.

(8)Checks Concentration of Economic

Power :- Sole proprietorship helps in
checking concentration of economic
power.

(9) Easy Coordination :- A sole proprietor

can coordinate the various activities of his
enterprise easily as he can take decision
himself.

(10) Economy:- Sole proprietor can

eliminate wasteful expenditure. He knows
that it is own money which should be spent
wisely.

DISADVANTAGE
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In Sole proprietary business there are some

limitations also
Following are the disadvantages are sole
proprietoship as discussed below,
(i) Limited Resources : The financial
resources of a sole proprietor are limited.
He can't take risk of norrowing and
Investment in large amount ofoney in his
business.
(ii) Unlimited Liabilities : One of the
most sserious limitation in a sole
proprietary business is unlimited liability.
(iii)Limited Managerial Skill: Sole trader
has limited organising power and
managerial skill. No invididual can be
expert in all areas.
(iv) Small Size : A sole proprietary
business is small in size. So They cant go for
large scale in business.
(v) Instability: The sole proprietary
business may come to an end with the
death. Illness, or insolvency of the
proprietor.
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(vi) Too much Dependence on the

owner: In sole proprietary business there is
too much dependence on the sole
proprietor. in his Absence business may
suffer with loss.