Business and Ethics Week 1

BUSSINESS AND ETHICS
BUSINESS AND ETHICS

WEEK#1
Introduction to Business:-
Introduction to Business covers the scope and sequence of most introductory business
courses. The book provides detailed explanations in the context of core themes such as
customer satisfaction, ethics, entrepreneurship, global business, and managing change. A
business entity is an organization that uses economic resources or inputs to provide goods or
services to customers in exchange for money or other goods and services.
Business organizations come in different types and different forms of ownership.
Types of Business:
There are three major types of businesses:
1) Service Business;
A service type of business provides intangible products (products with no physical form).
Service type firms offer professional skills, expertise, advice, and other similar products.
Examples of service businesses are: salons, repair shops, schools, banks, accounting firms,
and law firms.
2) Merchandising Business;
This type of business buys products at wholesale price and sells the same at retail price. They
are known as "buy and sell" businesses. They make profit by selling the products at prices
higher than their purchase costs.
A merchandising business sells a product without changing its form. Examples are: grocery
stores, convenience stores, distributors, and other resellers.
3) Manufacturing Business;
Unlike a merchandising business, a manufacturing business buys products with the intention
of using them as materials in making a new product. Thus, there is a transformation of the
products purchased.
1|BUSSINESS AND ETHICS

A manufacturing business combines raw materials, labor, and factory overhead in its
production process. The manufactured goods will then be sold to customers.
Hybrid Business;
Hybrid businesses are companies that may be classified in more than one type of business. A
restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a
cold bottle of wine (merchandising), and fills customer orders (service).
Nonetheless, these companies may be classified according to their major business interest. In
that case, restaurants are more of the service type – they provide dining services.
Forms of Business Organization

These are the basic forms of business ownership:
1) Sole Proprietorship;
A sole proprietorship is a business owned by only one person. It is easy to set-up and is the
least costly among all forms of ownership.
The owner faces unlimited liability; meaning, the creditors of the business may go after the
personal assets of the owner if the business cannot pay them.
The sole proprietorship form is usually adopted by small business entities.
2) Partnership;
A partnership is a business owned by two or more persons who contribute resources into the
entity. The partners divide the profits of the business among themselves.
In general partnerships, all partners have unlimited liability. In limited partnerships, creditors
cannot go after the personal assets of the limited partners.
3) Corporation;
A corporation is a business organization that has a separate legal personality from its owners.
Ownership in a stock corporation is represented by shares of stock.
The owners (stockholders) enjoy limited liability but have limited involvement in the
company's operations. The board of directors, an elected group from the stockholders,
controls the activities of the corporation.
In addition to those basic forms of business ownership, these are some other types of
organizations that are common today:
Limited Liability Company;

Limited liability companies (LLCs) in the USA, are hybrid forms of business that have
characteristics of both a corporation and a partnership. An LLC is not incorporated; hence, it
is not considered a corporation.
Nonetheless, the owners enjoy limited liability like in a corporation. An LLC may elect to be
taxed as a sole proprietorship, a partnership, or a corporation.

Cooperative;
A cooperative is a business organization owned by a group of individuals and is operated for
their mutual benefit. The persons making up the group are called members. Cooperatives may
be incorporated or unincorporated.
Some examples of cooperatives are: water and electricity (utility) cooperatives, cooperative
banking, credit unions, and housing cooperatives.
Names And Details about Five Biggest Businesses in the world;

A company is any entity that engages in business. Companies can be structured in different
ways. For example, your company can be a sole proprietorship, a partnership, or a
corporation. Depending on which different type of company you're dealing with, it may be
owned by one person or a group of people. Value change is an adjustment made to a stock's
price to reflect the number of outstanding stock shares issued and currently held by investors.
A value change allows the group of stocks to be equally weighted and, therefore, more easily
evaluated.
Some of the Biggest Business companies and their net details are given below:
1) Apple; Apple is a technology industry it has brand value of $ 205.5 B. its 1yr value
change is 12%. Its brand revenue is $265.8 B.
2) Google; Google is a technology industry. It has a brand value of $ 167.7 B. Its 1 yr

change value is 27%. It has a brand revenue of $ 136.2B. its company advertising is $ 6.4 B.
3) Coca Cola; It’s a beverage (Soft drinks) industry. It has a barand value of $167.7 B. Its
1 yr change value is 11%. Its brand revenue is $ 23.8 B and its company advertising is $ 4.1
B.
4) Disney; It’s a leisure (Movie) Industry. It has a brand value of $ 53.1B and its 1 yr value
change is 10%. Its brand revenue is $ 33.8 B and company advertising is $ 2.8 B.
5) Toyota; Its an automotive Industry. Its brand value is $ 4.6 B and its 1 yr value change
is 0%. It has a brand revenue of $ 190.8 B and its company advertising is $ 4.6 B.
Course Objectives
1) Meaning of Business;
A business is an organization where people work together. In a business, people work to
make and sell products or services. A business can earn a profit for the products and services
it offers. The word business comes from the word busy, and means doing things.It works on
regular basis. Business means continuous production and distribution of goods and services
with the aim of earning profit under uncertain market condition.
Small Business; A small business is an independently owned and operated company that
is limited in size and in revenue depending on the industry. A local bakery that employs 10
people is an example of a small business. A manufacturing facility that employees less than
500 people is an example of a small business.

Large Business; An economic group consisting of large profit-making corporations

especially with regard to their influence on social or political policy.
2) Business Studies;
Business Studies is an academic subject taught in schools and at university level in many
countries. Its study combines elements of accountancy, finance, marketing, organizational
studies and economics. Business Studies is a broad subject in the Social Sciences, allowing
the indepth study of a range of specialties such as accountancy, finance, organisation, human
resources management and marketing.
Accountancy; Accountancy is the practice of recording, classifying, and reporting on

business transactions for a business. It provides feedback to management regarding the
financial results and status of an organization. The key accountancy tasks are noted below.
Finance: Finance is defined as the management of money and includes activities like
investing, borrowing, lending, budgeting, saving, and forecasting. ... Corporate finance also
includes the tools and analysis utilized to prioritize and distribute financial resources.
Marketing; Marketing is the process of interesting potential customers and clients in your
products and/or services. The key word in this marketing definition is "process"; marketing
involves researching, promoting, selling, and distributing your products or services.
Organizational Studies; Organizational studies is "the examination of how individuals

construct organizational structures, processes, and practices and how these, in turn, shape
social relations and create institutions that ultimately influence people”. The Organizational
Studies (OS) program fosters a broad vision of organizations and their critical role in society.
The program's basis in three core disciplines (Psychology, Sociology, and Economics) equips
students with multiple perspectives on leadership and organizations.
Economics: Economics is the study of how society uses its limited resources. Economics is
a social science that deals with the production, distribution, and consumption of goods and
services. Macroeconomics - the branch of economics that studies the overall working of a
national economy. According to Robbin “Economics is the science which studies human
behavior as a relationship between given ends and scarce means which have alternative uses”.
3) Reasons to study Business studies;

The world of business has changed and today, globalization is the new normal. Sushi-burritos
are a thing, apps can bring you hundreds of languages at the touch of your fingertips, and
cryptocurrency is giving money a run for its money. Whether you are planning to enter
fashion or finance, or something in-between, here are six key reasons why you should study
business and how it can open a world of possibilities for you
“To get the grade you’ll have to analyse cases and master the art of making your point.”
1) Develop crucial communication skills;

Writing a convincing report or presenting a winning pitch–and even drafting the right email–
requires having excellent communication skills. Whilst studying business you will work

alongside students from around the world on a range of challenging projects. Your views and
experiences will be different, and may even clash. To get the grade you’ll have to analyze
cases, diplomatically respond to conflicting opinions, and master the art of making your
point.
2) Marketing 101: Know your audience;

Teachers share ideas to inspire students, politicians run campaigns to win support, a job
applicant has to sell their skill set to get the position. Making your idea (or application) stand
out is no easy task, but taking classes in marketing can teach you to understand your audience
and how you can creatively appeal to them. This will serve you particularly well when trying
to get buy-in from your peers, colleagues, or investors.
“Going to the right business school will develop your entrepreneurial skills and enable you
to test launch your ideas.”
3) Accounting and budgeting: Don’t fall short;

Many great businesses fail to succeed due to poor financial management. Don’t let financial
concepts scare you off from starting your own venture. Studying business will run you
through the basics of accounting so you are confident and equipped to drive your business
performance forward.
4) Unlock the entrepreneur inside you: Leave your mark on the world;
More and more, students go to business school to learn how to launch their dream business.
Being your own boss has many perks, but becoming a successful entrepreneur demands
creativity, innovation, and a strong execution strategy. Going to the right business school will
develop your entrepreneurial skills and enable you to test launch your ideas. Who knows you
may even meet your future business partner in class.
“Studying a business degree can strengthen your project management capabilities.”
5) Investment & finance: Learn what makes the world go round;

For a lot of big purchases–buying a house, car, or business school degree–you may look to
financial loans as an option. How do you decide when it is safe to borrow? Or similarly, you
may reach a point in your life when you want to invest in stocks, bonds, or real estate. What
should you invest in and what factors should you consider? Choosing a business degree will
give you a good understanding of basic economic principles, how markets are affected by
world events, and how to assess a firms’ financial health. Combined, this can help you make
better-informed investment decisions and ultimately, how to achieve a higher ROI.
6) Project management: A skill for every sector;

Are you tasked with having to manage operational logistics or complex projects? Whether
you work in the music industry, military, or not-for-profit sector studying a business degree
can strengthen your project management capabilities. Through working on live business
challenges, you’ll learn to solve problems and prioritize resources through taking an
analytical, cost-effective approach. You’ll also use project management tools to map
responsibilities and ensure you meet deadlines.

Why study business? To be relevantly connected. To be part of the global generation. Most of
all, to set yourself up for any future imaginable.
3 reason why studying of business studies is important;
1) It teaches us effective business skills i.e. how to earn, manage and invest resources
2) It provides us with basic understanding of various activities of business
3) It teaches us how we can be our own boss
4) It enables to know more about office procedures and practices such as interpersonal
communication , public relation, record keeping etc.
Ways to make money;

Salary; A fixed regular payment, typically paid on a monthly basis but often expressed as
an annual sum, made by an employer to an employee, especially a professional or white-
collar worker. The essential difference between a salary and wages is that a salaried person is
paid a fixed amount per pay period and a wage earner is paid by the hour. Someone who is
paid a salary is paid a fixed amount in each pay period, with the total of these fixed payments
over a full year summing to the amount of the salary. For example Becky's salary as a
pharmacist qualified her to purchase her own home. The definition of a salary is a regular
fixed payment that a person earns for performing work during a specific period of time. An
example of salary is the fixed salary of $100,000 a year paid to a doctor
Wages; A fixed regular payment earned for work or services, typically paid on a daily or
weekly basis. A wage is monetary compensation (or remuneration, personnel expenses, labor)
paid by an employer to an employee in exchange for work done.Wages are part of the
expenses that are involved in running a business. The essential difference between a salary
and wages is that a salaried person is paid a fixed amount per pay period and a wage earner is
paid by the hour. Someone who is paid wages receives a pay rate per hour, multiplied by the
number of hours worked. This person is considered to be a non-exempt employee. Wage is
money paid to a worker for work performed, or the price you pay for doing something wrong
or unwise. If you make $10 per hour at work, this is an example of your wage. If the
consequences of a lie is punishment, this is an example of a time when the wages of lies are
punishment.
Commission; Commission is the amount of money an employee earns when they sell
something: In addition to his salary, he gets a 1% commission on each sale. A commission is
a sum of money that is paid to an employee upon completion of a task, usually the task of
selling a certain amount of goods or services. It can be paid as a percentage of the sale or as a
flat dollar amount based on sales volume, A commission may be paid in addition to a salary
or instead of a salary.A commission is generally a percentage of the sales price of an item.
For example, if a salesperson receives a 10% commission on their sales and sells $1500
worth of merchandise, they would earn $150 in commissions. commission is a sending or
mission (to do or accomplish something) while salary is a fixed amount of money paid to a
worker, usually measured on a monthly or annual basis, not hourly, as wages implies a degree
of professionalism and/or autonomy.

Bonus; A sum of money added to a person's wages as a reward for good performance. A
bonus payment is usually made to employees in addition to their base salary as part of their
wages or salary. ... Thus bonus payments can act as incentives for managers attracting their
attention and their personal interest towards what is seen as gainful for their companies'
economic success. Bonus pay is also used to improve employee morale, motivation, and
productivity. When you tie bonuses to performance, it can encourage employees to reach
their goals, which in turn helps the company reach its goals. Employees are devastated when
they don't receive a promised salary bonus. Bonus in businsess is a monetary payment made
to an employee over and above their standard salary or compensation package. Bonuses are
one of the ways employers reward their employees for a job well done. And offering regular,
significant bonuses is a way to keep your best people from looking elsewhere for a job.
Industry
A group of bussinesses that all produce similar products is called an industry. For example
auto mobile manufacturers and automobile part manufacturers are are auto mobile industry.
An industry is a group of companies that are related based on their primary business
activities. In modern economies, there are dozens of industry classifications, which are
typically grouped into larger categories called sectors.
Individual companies are generally classified into an industry based on their largest sources
of revenue. For example, while an automobile manufacturer might have a financing division
that contributes 10% to the firm's overall revenues, the company would be classified in the
automaker industry by most classification systems. There are four types of industry. These
are primary, secondary, tertiary and quaternary
Primary Industry; Industry, such as mining, agriculture, or forestry, that is concerned

with obtaining or providing natural raw materials for conversion into commodities and
products for the consumer. Examples include mining, quarrying, farming, fishing and
forestry, all of which produce raw materials that can be processed in to a finished product.
People working in these industries are described as being in the primary sector. Secondary
industries are the manufacturing and assembly industries.
Secondary Industry; Industry that converts the raw materials provided by primary
industry into commodities and products for the consumer; manufacturing industry. Secondary
industries are those that take the raw materials produced by the primarysector and process
them into manufactured goods andproducts. Examples of secondary industries include heavy
manufacturing, light manufacturing, food processing, oil refining and energy production.
Tertiary Industry; The tertiary industry is the segment of the economy that provides
services to its consumers, including a wide range of businesses such as financial institutions,
schools and restaurants. It is also known as the tertiary sector or service industry/sector. The
tertiary industry is one of three industry types in a developed economy, the other two being
the primary, or raw materials, and secondary, or goods production, industries. As an economy
becomes more developed, it shifts its focus from primary to secondary and tertiary industries.
Sales, repair services, banking, and insurance are all part of the tertiary industry. People who
work in the tertiary sector include workers in the tourism and hospitality industry, doctors,

couriers, and business consultants. Some tertiary industries have close ties with the primary
and secondary industries.
Quaternary Industry; The use of modern technology in research and development to train
and provide information to other industries. The sector of industry that involves the
intellectual services: research, development, and information. It is considered the fourth basic
industry. Some industries in the quaternary sector are consultancy, financial planning,
designing, information technologies, research and development (R&D) and generation of
information. Primary resources, manufacturing, agriculture and construction are losing
significant ground, automation and innovation has transformed the entire world. The engines
of growth are dependent on the Quaternary sector, knowledge-based part of the
economy.Why the quaternary industry is important for economic growth
How an Industry Works;

Similar businesses are grouped into industries based on the primary product produced or sold,
creating industry groups that can be used to isolate businesses from those who participate in
different activities. Investors and economists often study industries to better understand the
factors and limitations of corporate profit growth. Companies operating in the same industry
can also be compared to each other to evaluate the relative attractiveness of a company within
that industry.
Special Considerations;
Stocks within the same industry often rise and fall as a group, because the same
macroeconomic factors affect all members. These can include changes in market sentiment
on the part of investors, such as those based on a response to a particular event or piece of
news, as well as changes directed specifically towards the specific industry, such as new
regulations or increased raw material costs.
However, events relating to just one particular business can cause the associated stock to rise
or fall separately from others within the industry. This can be the result of events including,
but not limited to, a differentiating product release, a corporate scandal in the news or a
change in leadership structures.
Key Takeaways;
1) Similar companies are grouped together into industries, and there are a number of different
industries, such as department stores and shoemakers.
2) Industry grouping is based on the primary product that a company makes are sells.
Meanwhile, industries are grouped together into sectors.
3) The North American Industry Classification System is the standard classification system
used by government agencies to organize companies into sectors or industries.
Industries vs. Sectors;

While both sectors and industries are classification systems used to group like business
operations, sectors are broader than industries. For example, consumer goods is a sector in
the North American Industry Classification System (NAICS), and within that sector are

industries, such as rubber and plastic footwear and department stores. Nike Inc. and the
Target Corporation are members of the same consumer goods sector, but each would be listed
in a different industry based on the specifics of the products they produce or sell. Nike is
classified within the rubber and plastics footwear industry (NAICS Code 3021), while Target
is classified within the department stores industry (NAICS Code 45211).
The North American Industry Classification System (NAICS), developed by the United
States, Canada, and Mexico, is the standard upon which government agencies classify
businesses when compiling statistical data. In the NAICS hierarchy, companies that use
similar production processes are categorized in the same industry. Global Industry
Classification Standard (GICS) is also a commonly referenced classification system.
Influences of Business:-
Marketing
External
Objective
Factors
and strategy
Internal and
External
Influences
Accounting Human
and finance Resources
Production
and
Operations
management
1) Marketing;
Market Analysis;
MA market analysis is a quantitative and qualitative assessment of a market. It looks into
the size of the market both in volume and in value, the various customer segments and
buying patterns, the competition, and the economic environment in terms of barriers to
entry and regulationarket Analysis;

Market Analysis
Market Size
Market Segments
Marketing Strategy
Objectives of Business
Niche versus Mass Marketing
Marketing Portfolio
Market Research
Primary and Secondary
The Marketing Mix

Price
Place
Promotion
Product
.
Market size;
The number of individuals in a certain market who are potential buyers and/or sellers of a
product or service. Companies are interested in knowing the market size before launching a
new product or service in an area. market size in terms of a pyramid that includes three
layers: Total Market, Served Market, and Target Market.
Total market is referred to as the area of coverage for which there is a demand for given
product. All the companies try to have their presence in the entire market to capture
maximum market share. Total Quality Management. Served Market,a company's served
available market is the portion of the total available market that their product or service fills.
The total available market is the total of all unit sales of all competing products. Target
marketing involves breaking a market into segments and then concentrating your marketing
efforts on one or a few key segments consisting of the customers whose needs and desires
most closely match your product or service offerings.
Market segments;
Market segmentation is the process of dividing a market of potential customers into groups,
or segments, based on different characteristics. The segments created are composed of
consumers who will respond similarly to marketing strategies and who share traits such as
similar interests, needs, or locations.
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There are four types of Market Segmentation

1) Demographic segmentation.
2) Psychographic segmentation
3) Behavioral segmentation.
4) Geographic segmentation.
1) Demographic segmentation;
Demographic segmentation is defined as a market segmentation method based on variables
such as age, gender, income etc. Demographic attributes like age, sex, gender, religion, and
educational qualification, play an important role in research.
2) Psychographic segmentation;
Psychographic segmentation has been used in marketing research as a form of market
segmentation which divides consumers into sub-groups based on shared psychological
characteristics, including subconscious or conscious beliefs, motivations, and priorities to
explain and predict consumer behavior.
3) Behavioral segmentation;
Behavioral segmentation is defined as the process of dividing the total market into smaller
homogeneous groups based on customer buying behavior. Behavioral segmentation is done
by organizations on the basis of buying patterns of customers like usage frequency, brand
loyalty, benefits needed, during any occasion etc.
4) Geographic segmentation.;
Geographic segmentation is a common strategy when you serve customers in a particular
area, or when your broad target audience has different preferences based on where they are
located.This marketing approach is common for small businesses that serve a wide
demographic customer base in a local or regional territory.
Marketing Strategies;
A marketing strategy refers to a business' overall game plan for reaching prospective
consumers and turning them into customers of the products or services the business provides.
A marketing strategy contains the company’s value proposition, key brand messaging, data
on target customer demographics, and other high-level elements.
Marketing Strategy vs. Marketing Plan

The marketing strategy informs the marketing plan, which is a document that details the
specific types of marketing activities a company conducts and contains timetables for rolling
out various marketing initiatives.
Marketing strategies should ideally have longer lifespans than individual marketing plans
because they contain value propositions and other key elements of a company’s brand, which
generally hold consistent over the long haul. In other words, marketing strategies cover big-
picture messaging, while marketing plans delineate the logistical details of specific
campaigns.
Academics continue to debate the precise meaning of marketing strategy, therefore multiple
definitions exist. The following quotes help crystallize the nuances of (modern) marketing
strategy:
"The sole purpose of marketing is to sell more to more people, more often and at higher
prices." (Sergio Zyman, marketing executive and former Coca-Cola and JC Penney
marketer)
"Marketing is no longer about the stuff that you make, but about the stories you tell." (Seth
Godin, former business executive and entrepreneur)
"The aim of marketing is to know and understand the customer so well the product or service
fits him and sells itself." (Peter Drucker, credited as founding modern management)
“Marketing’s job is never done. It’s about perpetual motion. We must continue to innovate
every day.” (former vice chair and chief marketing officer, GE)
"Take two ideas and put them together to make one new idea. After all, what is a Snuggie but
the mutation of a blanket and a robe?" (Jim Kukral, speaker and author of "Attention!")
The Creation of Marketing Strategy;

A carefully-cultivated marketing strategy should be fundamentally rooted in a company’s
value proposition, which summarizes the competitive advantage a company holds over rival
businesses. For example, Walmart is widely known as a discount retailer with “everyday low
prices,” whose business operations and marketing efforts revolve around that ideal.
Whether it's a print ad design, mass customization, or a social media campaign, a marketing
asset can be judged based on how effectively it communicates a company's core value
proposition. Market research can be helpful in charting the efficacy of a given campaign, and
can help identify untapped audiences, in order to achieve bottom-line goals and increase
sales.
Objectives of Business;
The business objective is a goal, i.e. where the business wants to reach in the future. For
example, a business wants to set up its franchise in another state in the next 3 years or it
wants to increase its workforce in the coming months.
Business needs objectives, without objectives the business is like a car without headlights
driving blind. Objectives of business are the purpose for which the business is established and
performed. We can call objectives the cornerstone of every business.
Objectives are needed in every area where performance and results directly affect the survival
and prosperity of a business. The right choice of objectives is critical for the success of the
business. The objectives of a business can be classified into two main categories, which are
1)Economic objectives
2)Social objectives
Economic Objectives of Business;

We learned in the previous topic that business is an economic activity. Hence, its purpose is
to show economic results. Let’s understand the economic objectives of the business. They are
as follows:
1) Profit Earning;
Business is a set of activities undertaken with the prospect of sale for the purpose of earning a
profit. Profit is the extra income over the expenses. The main objective of any business is to
earn a profit. Just as a plant cannot survive without water, similarly a business cannot sustain
without profit.
Profit is necessary for growing and expanding business activities. Profit guarantee a
consistent stream of capital for the modernization and augmentation of business activities in
the future. Profits likewise show the scale of stability, efficiency, and advancement of the
business organization.
2) Market Share / Creation of Customers;

In the words 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 the result of the hard work of
the businessman to satisfy the needs of the customers.
In the long run, the survival of the business completely depends upon the market share
captured by the business. The creation of good and satisfaction of the needs of the customer
is a crucial purpose of the business. So to generate profit and demand, the business must
supply premium quality and give value for money products.
3) Innovation & Utilization of Resources;

Innovation normally means to change processes or creating more effective processes,
products and ideas. Nowadays, business is ever-changing and dynamic. To keep up with the
growing competition a businessman has to introduce efficient design, latest trends, upgraded
machinery, new techniques, etc.
Large corporations invest a humongous amount of capital in their Research & Development
department to boost innovation. Whereas, on the parallel lines, utilization of resources is a
proper use of workforce, raw material, capital and technology used in the business. A
business has limited resources and that’s why its main objective is to put these resources to
correct divisions.
4) Increasing Productivity;
Productivity is a scale to measure the efficiency of the business activity. It is usually the last
objective but just as important because productivity is measured by the output given by the
activities. It is the end result of any business activity. Each business must go for more
prominent productivity – to guarantee its survival and development. This goal can be
accomplished by decreasing wastages and making proficient utilization of machines and
supplies, HR, cash and so forth.
Social Objectives of Business

According to Dayton Hudson “The business of business is serving society, not just making
money.” Business is one of the pillars on which the society stands. Therefore, it is a part of
the society. In fact, it cannot thrive without the resources from the society. The business
earns its income from the sale of products and services to the society. It is mandatory on the
part of the business to take care of the social factors. The necessary social objectives of a
business are as follows:
1) Providing Goods & Services at Reasonable Prices;

Business exists in the first place to satisfy the needs of the society. It’s the first and major
social objective of the business. Products and services ought to be of better quality and these
ought to be provided at sensible costs. It is additionally the social commitment of business to
keep away from misbehaviors like boarding, Black promoting and manipulative advertising.
2) Employment Generation;
One of the major problem today’s generation facing is unemployment. Business generates
employment. Therefore, it is the social objective of a business to give chances to beneficial
employment to individuals of the society. In a nation like India, unemployment has turned
into a critical issue.
3) Fair Remuneration to Employees;

The business does not run on its own but the people are responsible for the success and
failure of the business. The people on the inside of the business are more valuable i.e.
employees. They are an asset of the business and make a ground-breaking contribution to the
business. They must be given reasonable pay for their work.
Notwithstanding wages and salary, a significant piece of profits ought to be distributed
among them in acknowledgment of their commitments. Such sharing of benefits will expand
the inspiration and proficiency of employees.
4) Community Service;
Business must give back something to the society. As a result, the Library, dispensary,
educational foundations and so on which a business can make and help in the advancement of
society are created. Business enterprises can build schools, colleges, libraries, hospitals,
sports bodies and research institutions. They can help non-government organizations (NGOs)
like CRY, Help Age, and others which render services to weaker sections of society.
Niche vs Mass Marketing;

Niche marketing refers to specialized products or services that answer to the need of a
relatively limited target ( compared to mass marketing). Moreover, consumers of niche
produits relate to each other (by their hobbies, financial means, location... Or else)
Mass marketing is more focused on the consumer need to fulfill than the consumer type to
target. The target is often wider and less precise.
To make it very simple : a pen is a mass marketing product, while a pen especially designed
for left-handed belongs to niche marketing.
Mass marketing and niche marketing have too much difference. Both of these terms cannot
be categorized in one term. The most common difference is the size of the market that is
targeted by each term.
Niche marketing:
A niche marketer targets on the smaller groups of people. This person has not the capability
of dealing with a larger group of people. He deals with one person at a time.
Mass marketing:
Mass marketing is opposite to the niche marketing. In this term, one person deals with the
larger group of the people. He deals with a group of parents of people. If mass marketer deals
with group of parents, niche marketer will target single parent. This is the main difference
between these both terms.
In mass marketing, as we know that one has to deal with a group of people, it is some kind
of difficult process. If he has to show his handmade and natural product, he would go for the
group of parents. Then he is supposed to make segments and categories of these parents. In
first segment, the first category will be of married parents, in second there will be unmarried
parents then single parents and after that truly newly married parents. When the list of parents
will be categorized, he will make segments of each parent according to their age. Third step
comes to categories them according to their financial status. After this whole long and
tiresome process, this kind of marketer will go to do his task that he has to do.
On other hand, niche marketer is quite simple and easy. In this term, marketer deals only
with one person at a time. He does not need to make segments or categories. He can go
anywhere and in any market to achieve what he wants. He does not need to pass from any
kind of long term process to tell the healing techniques of his product.
Another noteworthy and great difference between both of these terms is that in mass
marketing, a person uses expensive ways and forms to reach to the media. Agencies and
marketers spend a big amount to give ad on television, radio and other sources like that.
While in niche marketing, a marketer uses snail mail or electronic mail to get his aim.
Markerting Portfolio;
A market portfolio is a theoretical bundle of investments that includes every type of asset
available in the investment universe, with each asset weighted in proportion to its total
presence in the market. The expected return of a market portfolio is identical to the expected
return of the market as a whole.
The Basics of Market Portfolio: A market portfolio, by nature of being completely

diversified, is subject only to systematic risk, or risk that affects the market as a whole, and
not to unsystematic risk, which is the risk inherent to a particular asset class.
As a simple example of a theoretical market portfolio, assume three companies exist in the
stock market: Company A, Company B, and Company C. The market capitalization of
Company A is $2 billion, the market capitalization of Company B is $5 billion, and the

market capitalization of Company C is $13 billion. Thus, the total market capitalization
comes to $20 billion. The market portfolio consists of each of these companies, which are
weighed in the portfolio as follows:
Company A portfolio weight = $2 billion / $20 billion = 10%
Company B portfolio weight = $5 billion / $20 billion = 25%
Company C portfolio weight = $13 billion / $20 billion = 65%
Key Takeaways;
1) A market portfolio is a theoretical, diversified group of every type of investment in the
world, with each asset weighted in proportion to its total presence in the market.
2) Market portfolios are a key part of the capital asset pricing model, a commonly used
foundation for choosing which investments to add to a diversified portfolio.
3) Roll's Critique is an economic theory that suggests that it is impossible to create a truly
diversified market portfolio—and that the concept is a purely theoretical one.
Market Research
The process of gathering, analyzing and interpreting information about a market, about a
product or service to be offered for sale in that market, and about the past, present and
potential customers for the product or service; research into the characteristics, spending
habits, location and needs of your business's target market, the industry as a whole, and the
particular competitors you face.
Accurate and thorough information is the foundation of all successful business ventures
because it provides a wealth of information about prospective and existing customers, the
competition, and the industry in general. It allows business owners to determine the
feasibility of a business before committing substantial resources to the venture.
Market research provides relevant data to help solve marketing challenges that a business will
most likely face--an integral part of the business planning process. In fact, strategies such as
market segmentation (identifying specific groups within a market) and product differentiation
(creating an identity for a product or service that separates it from those of the competitors)
are impossible to develop without market research.
Market research involves two types of data:
Primary information.
This is research you compile yourself or hire someone to gather for you. Data collected from
its source and generally gathered by a business for its own specific purposes. Primary market
research tends to take the raw data such as information collected through focus groups or
surveys, and interpret the data for a variety of business purposes.
When conducting primary research, you can gather two basic types of information:
exploratory or specific. Exploratory research is open-ended, helps you define a specific
problem, and usually involves detailed, unstructured interviews in which lengthy answers are
solicited from a small group of respondents. Specific research, on the other hand, is precise in
scope and is used to solve a problem that exploratory research has identified. Interviews are
structured and formal in approach. Of the two, specific research is the more expensive.
Secondary information.
This type of research is already compiled and organized for you. Examples of secondary
information include reports and studies by government agencies, trade associations or other
businesses within your industry. Most of the research you gather will most likely be
secondary. Market research that's already compiled and organized for you. Examples of
secondary information include reports and studies by government agencies, trade associations
or other businesses within your industry.
Secondary research uses outside information assembled by government agencies, industry
and trade associations, labor unions, media sources, chambers of
commerce, and so on. It's usually published in pamphlets, newsletters, trade publications,
magazines, and newspapers. Secondary sources include the following:
Public sources These are usually free, often offer a lot of good information, and include
government departments, business departments of public libraries, and so on.
Commercial sources. These are valuable, but usually involve cost factors such as
subscription and association fees. Commercial sources include research and trade
associations, such as Dun & Bradstreet and Robert Morris & Associates, banks and other
financial institutions, and publicly traded corporations.
Educational institutions. These are frequently overlooked as valuable information

sources even though more research is conducted in colleges, universities, and technical
institutes than virtually any sector of the business community.
Marketing mix;
The marketing mix is a foundation model for businesses. The marketing mix has been
defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in
the target market". Thus the marketing mix refers to four broad levels of marketing decision,
namely: product, price, place, and promotion.
Price; The amount of money charged for a product or service, or the sum of the values that
consumers exchange for the beneﬁts of having or using the product or service
Place; Place in the Marketing Mix. As we've mentioned, place is the element of the
marketing mix that ensures that the product is distributed and made conveniently available
for the consumer - at the right location at the right time.This is why it is so important the
product makes it to the right place at the right time.
Promotion; In marketing, promotion refers to any type of marketing communication used

to inform or persuade target audiences of the relative merits of a product, service, brand or
issue.It is one of the basic elements of the market mix, which includes the four Ps, i.e.,
product, price, place, and promotion.
Product; The marketing mix is a tool that is made up of four unique but interconnected and
interdependent variables. These are called the 4P's and are product, price, promotion, and
place. These four components help determine a clear and effective strategy to bring a product
to market.
2) Objectives and strategies;
Legal Structure
Sole Proprietor
Partnership
Corporation
Business Objectives
Mission Statements
Starting Business
Stakeholders
Customers
Suppliers
Employees
Communities
SWOT Analysis
Strengths, Weaknesses, Opportunities, and Threats
Legal structure;
These are the basic forms of business ownership:
1) Sole Proprietorship;
A sole proprietorship is a business owned by only one person. It is easy to set-up and is the
least costly among all forms of ownership.
The owner faces unlimited liability; meaning, the creditors of the business may go after the
personal assets of the owner if the business cannot pay them.
The sole proprietorship form is usually adopted by small business entities.
2) Partnership;
A partnership is a business owned by two or more persons who contribute resources into the
entity. The partners divide the profits of the business among themselves.
In general partnerships, all partners have unlimited liability. In limited partnerships, creditors
cannot go after the personal assets of the limited partners.
3) Corporation;
A corporation is a business organization that has a separate legal personality from its owners.
Ownership in a stock corporation is represented by shares of stock.
The owners (stockholders) enjoy limited liability but have limited involvement in the
company's operations. The board of directors, an elected group from the stockholders,
controls the activities of the corporation.
Business Objectives;
Mission Statement;
A mission statement defines what an organization is, why it exists, its reason for being. At a
minimum, your mission statement should define who your primary customers are, identify
the products and services you produce, and describe the geographical location in which you
operate.
If you don't have a mission statement, create one by writing down in one sentence what the
purpose of your business is. Ask two or three of the key people in your company to do the
same thing. Then discuss the statements and come up with one sentence everyone agrees
with. Once you have finalized your mission statement, communicate it to everyone in the
company.
It's more important to communicate the mission statement to employees than to customers.
Your mission statement doesn't have to be clever or catchy--just accurate.
If you already have a mission statement, you will need to periodically review and possibly
revise it to make sure it accurately reflects your goals as your company and the business and
economic climates evolve. To do this, simply ask yourself if the statement still correctly
describes what you're doing.
If your review results in a revision of the statement, be sure everyone in the company is
aware of the change. Make a big deal out of it. After all, a change in your mission probably
means your company is growing-and that's a big deal.
Once you have designed a niche for your business, you're ready to create a mission statement.
A key tool that can be as important as your business plan, a mission statement captures, in a
few succinct sentences, the essence of your business's goals and the philosophies underlying
them. Equally important, the mission statement signals what your business is all about to your
customers, employees, suppliers and the community.
The mission statement reflects every facet of your business: the range and nature of the
products you offer, pricing, quality, service, marketplace position, growth potential, use of
technology, and your relationships with your customers, employees, suppliers, competitors
and the community.
Stakeholders; In business, a stakeholder is any individual, group, or party that has an

interest in an organization and the outcomes of its actions. Common examples of stakeholders
include employees, customers, shareholders, suppliers, communities, and governments.

Different stakeholders have different interests, and companies often face tradeoffs when
trying to please all of them.
Types of Stakeholders
This guide will analyze the most common types of stakeholders and look at the unique need
that each of them typically has. The goal is to put you in the shoes of each type of stakeholder
and see things from their point of view.
1) Customers;
Stake: Product/service quality and value
Many would argue that businesses exist to serve their customers. Customers are actually
stakeholders of a business in that they are impacted by the quality of service and its value.
For example, passengers traveling on an airplane literally have their lives in the company’s
hands while flying with the airline.
2) Employees;
Stake: Employment income and safety
Employees have a direct stake in the company in that they earn an income to support
themselves, as well as other benefits (both monetary and non-monetary). Depending on the
nature of the business, employees may also have a health and safety interest (for example,
transportation, mining, oil and gas, construction, etc.).
3) Investors;
Stake: Financial returns
Investors include both shareholders and debtholders. Shareholders invest capital in the
business and expect to earn a certain rate of return on that capital. Investors are commonly
concerned with the concept of shareholder value. Lumped in with this group are all other
providers of capital, such as lenders and different classes of shareholders.
4) Suppliers and Vendors;

Stake: Revenues and safety
Suppliers and vendors sell goods and/or services to the business and rely on it for revenue
generation and on-going business. In many industries, the suppliers also have their health and
safety on the line, as they may be directly involved in the company’s operations.
5) Communities;
Stake: Health, safety, economic development
Communities are major stakeholders in large businesses. They are impacted by a wide range
of things, including job creation, economic development, health, and safety. When a big
company enters or exits a small community, they will immediately feel the impact on
employment, incomes, and spending in the area. In some industries, there is a potential health
impact, as companies may alter the environment.
6) Governments;
Stake: Taxes and GDP
Governments can also be considered a major stakeholder in a business as they collect taxes
from the company (corporate income), as well as from all the people it employs (payroll
taxes) and other spending the company incurs (goods and services taxes). Governments
benefit from the overall Gross Domestic Product (GDP) that companies contribute to.
Stakeholder vs Shareholder
This is an important distinction to make. A stakeholder is anyone who has any type of stake
in a business, while a shareholder is someone who owns shares (stock) in a business and thus
has an equity interest.
SWOT Analysis;
SWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or
organization identify strengths, weaknesses, opportunities, and threats related to business
competition or project planning.[1] It is intended to specify the objectives of the business
venture or project and identify the internal and external factors that are favorable and
unfavorable to achieving those objectives. Users of a SWOT analysis often ask and answer
questions to generate meaningful information for each category to make the tool useful and
identify their competitive advantage. SWOT has been described as the tried-and-true tool of
strategic analysis,[2] but has also been criticized for its limitations (see § Limitations).
Strengths and weakness are frequently internally-related, while opportunities and threats
commonly focus on the external environment. The name is an acronym for the four
parameters the technique examines:
Strengths: characteristics of the business or project that give it an advantage over others.
Weaknesses: characteristics of the business that place the business or project at a
disadvantage relative to others.
Opportunities: elements in the environment that the business or project could exploit to its
advantage.
Threats: elements in the environment that could cause trouble for the business or project
Strengths and weaknesses (internal factors within an organization)
Human resources — staff, volunteers, board members, target population
Physical resources — your location, building, equipment
Financial — grants, funding agencies, other sources of income
Activities and processes — programs you run, systems you employ
Past experiences — building blocks for learning and success, your reputation in the
community
Opportunities and threats (external factors stemming from community or societal forces)
Future trends in your field or the culture
The economy — local, national, or international
Funding sources — foundations, donors, legislatures
Demographics — changes in the age, race, gender, culture of those you serve or in your area
The physical environment —is your building in a growing part of town? Is the bus company
cutting routes?
Legislation — do new federal requirements make your job harder...or easier?
Local, national, or international events
Although the SWOT analysis was originally designed as an organizational method for
business and industries, it has been replicated in various community work as a tool for
identifying external and internal support to combat internal and external opposition.[10] The
SWOT analysis is necessary to provide direction to the next stages of the change process.It
has been used by community organizers and community members to further social justice in
the context of Social Work practice.
3) Human Resources;
Management Structure and Organizational

Design
Top Managers, Middle Managers, Front Line Managers
Operatives
Leadership and Management Styles
Autocratic, Democratic, Laissez-Faire
Management by Objectives (MBO)
Management Structure and Organizational Design;

Top managers; These managers are responsible for controlling and overseeing the entire
organization. They develop goals, strategic plans, company policies, and make decisions on
the direction of the business. In addition, top-level managers play a significant role in the
mobilization of outside resources
Middle manager; A middle manager is a link between the senior management and the
lower (junior) levels of the organization.Moreover, the middle manager is a channel of
communication within the organization, as they pass on major decisions of executives and the
main goals of an organization to lower levels of employees.
Frontline Managers; Frontline managers are the managerial foot soldiers, responsible
for many of an organization's critical day-to-day operations. They supervise other
contributors, yet they are usually the least experienced tier of managers in a company, often
newly promoted into their first leadership role.
Operatives; The operative functions are those tasks or duties which are specifically
entrusted to the human resource or personnel department. These are concerned with
employment, development, compensation, integration and maintenance of personnel of the
organisation.
Leadership and middle management styles;
Autocratic Leaders; Autocratic describes a way of ruling, but not in a nice way. An
autocratic leader is one who rules with an iron fist; in other word someone with the behavior
of a dictator. Autocratic rulers don't tend to be popular. They use fear and control to gain total
power over their people.
Democratic Leaders; The democratic leadership style consists of the leader sharing the
decision-making abilities with group members by promoting the interests of the group
members and by practicing social equality.Democratic leadership works best in situations
where group members are skilled and eager to share their knowledge.
Laissez-Faire; Laissez-faire leadership, also known as delegative leadership, is a type of

leadership style in which leaders are hands-off and allow group members to make the
decisions. Researchers have found that this is generally the leadership style that leads to the
lowest productivity among group members.
Managements by Objectives (MBO);

Management by Objectives (MBO) is a personnel management technique where managers
and employees work together to set, record and monitor goals for a specific period of time.
Organizational goals and planning flow top-down through the organization and are translated
into personal goals for organizational members
Key Concepts
The core concept of MBO is planning, which means that an organization and its members are
not merely reacting to events and problems but are instead being proactive. MBO requires
that employees set measurable personal goals based upon the organizational goals. For
example, a goal for a civil engineer may be to complete the infrastructure of a housing
division within the next twelve months. The personal goal aligns with the organizational goal
of completing the subdivision.
MBO is a supervised and managed activity so that all of the individual goals can be
coordinated to work towards the overall organizational goal. You can think of an individual
personal goal as one piece of a puzzle that must fit together with all of the other pieces to
form the complete puzzle: the organizational goal. Goals are set down in writing annually and
are continually monitored by managers to check progress. Rewards are based upon goal
achievement.
Advantages of Management by Objectives

1 . Since Management by objectives (MBO) is a result-oriented process and focuses on
setting and controlling goals, if encourages managers to do detailed planning.
2. Both the manager and the subordinates know what is expected of them and hence there is
no role ambiguity or confusion.
3. The managers are required to establish measurable targets and standards of performance
and priorities for these targets. In addition, the responsibilities and authority of the personnel
is clearly established.
4. It makes individuals more aware of the company goals. Most often the subordinates are
concerned with their own objectives and the environment surrounding them. But with MBO,
the subordinates feel proud of being involved in the organizational goals. This improves their
morale and commitment.
5. Management by objectives (MBO) often highlights the area in which the employees need
further training, leading to career development.
6. The system of periodic evaluation lets the subordinates know how well they are doing.
Since MBO puts strong emphasis on quantifiable objectives,the measurement and appraisal
can be more objective, specific and equitable.
7. It improves communication between management and subordinates.
Disadvantages of Management by Objectives

1. MBO can only succeed if it has the complete support of the top management.
2. Management by Objectives (MBO) may be resented by subordinates. They may be under
pressure to get along with the management when setting goals and objectives and these goals
may be set unrealistically high. This may lower their morale and they may become suspicious
about the philosophy behind MBO.
They may seriously believe that MBO is just another of the management’s ploys to make the
subordinates work harder and become more dedicated and involved. The emphasis in the
MBO system is on quantifying the goals and objectives. It does not leave any ground for
subjective goals. Some areas are difficult to quantify and even more difficult to evaluate.
3. There is considerable paperwork involved and it takes too much of the manager’s time.
Too many meetings and too many reports add to the manager’s responsibility and burden.
Some managers may resist the program because of this increased paperwork.
4. The emphasis is more on short-term goals. Since the goals are mostly quantitative in
nature, it is difficult to do long-range planning because all the variables affecting the process
of planning cannot be accurately forecast due to the constantly changing socio-economic and
technological environment which affect the stability of goals.
5. Most managers may not be sufficiently skilled in interpersonal interaction such as coaching
and counseling, which is extensively required.
6. The integration of MBO system with other systems such as forecasting and budgeting etc.,
is very poor. This makes the overall functioning of all systems mare difficult.
7. Group goal achievement is more difficult. When the goals of one deportment depend on
the goals of another department, cohesion is more difficult to obtain. For example, the
production department cannot produce a set quota if it is not sufficiently supplied with raw
materials and personnel.
4) Production/Operation Management
Efficiency and Effectiveness

Stock and Quality Control
Capacity Utilization
Production Methods
Economies of Scale
Efficiency and Effectiveness;

Difference Between Efficiency and Effectiveness
Efficiency means whatever you produce or perform; it should be done in a perfect way.
Although, Effectiveness has a broader approach, which means the extent to which the actual
results have been achieved to fulfill the desired outcome i.e. doing accurate things. These are
the metric used to gauge the performance of an employee in an organization.
Efficiency and Effectiveness are the two words which are most commonly juxtaposed by the
people; they are used in place of each other, however they are different. While efficiency is
the state of attaining the maximum productivity, with least effort spent, effectiveness is the
extent to which something is successful in providing the desired result.
Take a read of the article to understand the difference between efficiency and effectiveness in
management.
Content: Efficiency Vs Effectiveness
1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion
Comparison Chart
BASIS FOR
EFFICIENCY EFFECTIVENESS
COMPARISON
Meaning The virtue of being The magnitude of nearness of the actual

efficient is known as result with the intended result, is known as
efficiency. effectiveness.
What is it? Work is to be done in a Doing accurate work.

correct manner.
Emphasis on Inputs and Outputs Means and Ends
Time Horizon Short Run Long Run
Approach Introverted Extroverted
Ascertainment Strategy Implementation Strategy Formulation
Orientation Operations Strategies
Definition of Effectiveness
Effectiveness refers to the extent to which something has been done, to achieve the targeted
outcome. It means the degree of closeness of the achieved objective with the predetermined
goal to examine the potency of the whole entity.
Effectiveness has an outward look i.e. it discloses the relationship of the business
organisation with the macro environment of business. It focuses on reaching the competitive
position in the market.
Effectiveness is result oriented that shows how excellently an activity has been performed
that led to the achievement of the intended outcome which is either accurate or next to
perfect.
Key Differences Between Efficiency and Effectiveness
The points, given below describe the substantial differences between efficiency and
effectiveness:
1. The ability to produce maximum output with limited resources is known as
Efficiency. The level of the nearness of the actual result with planned result
is Effectiveness.
2. Efficiency is ‘to do the things perfect’ while Effectiveness is ‘to do perfect things’.
3. Efficiency has a short run perspective. Conversely, the long run is the point of view of
Effectiveness.
4. Efficiency is yield-oriented. Unlike Effectiveness, which is result oriented.

5. Efficiency is to be maintained at the time of strategy implementation, whereas
strategy formulation requires Effectiveness.
6. Efficiency is measured in operations of the organisation, but Effectiveness of
strategies is measured which are made by the organisation.
7. Efficiency is the outcome of actual output upon given the number of inputs. On the
other hand, Effectiveness has a relationship with means and ends.
Conclusion
Efficiency and Effectiveness both have a prominent place in the business environment which
must be maintained by the organisation because its success lies on them. Efficiency has an
introspective approach, i.e. it measures the performance of operations, processes, workers,
cost, time, etc. inside the organisation. It has a clear focus on reducing the expenditure or
wastage or eliminating unnecessary costs to achieve the output with a stated number of
inputs.
In the case of Effectiveness, it has an extroverted approach, that highlights the relationship of
the business organisation with the rest of the world to attain a competitive position in the
market, i.e. it helps the organisation to judge the potency of the whole organisation by
making strategies and choosing the best means for the attainment result.
Production Methods;
Production methods fall into three main categories: job (one-off production), batch (multiple
items, one step at a time for all items), and flow (multiple items, all steps in process at once
for separate items)
Job Production
Job Production is used when a product is produced with the labor of one or few workers and
is rarely used for bulk and large scale production. It is mainly used for one-off products or
prototypes (hence also known as Prototype Production), as it is inefficient; however, quality
is greatly enhanced with job production compared to other methods. Individual wedding
cakes and made-to-measure suits are examples of job production. New small firms often use
job production before they get a chance or have the means to expand. Job Production is
highly motivating for workers because it gives the workers an opportunity to produce the
whole product and take pride in it.
Batch Production
Batch production is the method used to produce or process any product of the in groups or
batches where the products in the batch go through the whole production process together.
An example would be when a bakery produces each different type of bread separately and
each product(in this case, bread) is not produced continuously. Batch production is used in
many different ways and is most suited to when there is a need for a quality/quantity balance.
This technique is probably
the most commonly used method for organizing manufacture and promotes specialist labor,
as very often batch production involves a small number of persons. Batch production occurs
when many similar items are produced together. Each batch goes through one stage of the
production before moving onto next stage.
Flow Production
Flow production (Process Production) is also a very common method of production. Flow
production is when the product is built up through many segregated stages; the product is
built upon at each stage and then passed directly to the next stage where it is built upon again.
The production method is financially the most efficient and effective because there is less of
a need for skilled workers.
Lean Production
Contrary to job production, the method Boutique Manufacturing is suitable for the production
of very small to small batches, i.e. orders of a few units up to several dozens of similar or
equal goods. The workflow organization of a Boutique Manufacturing entity can be a mixture
of both jobbing and batch production but involves higher standardization than job production.
Boutique Manufacturing is often organized with single workplaces or production cells
carrying out a number of subsequent production steps until completion of certain components
or even the whole product; large assembly lines are generally not used. The flexibility and
variety of products able to be produced in the entity therefore are much higher than with the
more standardized method of batch production.
Economies scales;
What Are Economies of Scale
Economies of scale are cost advantages reaped by companies when production becomes
efficient. Companies can achieve economies of scale by increasing production and lowering
costs. This happens because costs are spread over a larger number of goods. Costs can be
both fixed and variable.
The size of the business generally matters when it comes to economies of scale. The larger
the business, the more the cost savings.
Economies of scale can be both internal and external. Internal economies of scale are based
on management decisions, while external ones have to do with outside factors
Understanding Economies of Scale

Economies of scale are an important concept for any business in any industry and represent
the cost-savings and competitive advantages larger businesses have over smaller ones.
Most consumers don't understand why a smaller business charges more for a similar product
sold by a larger company. That's because the cost per unit depends on how much the
company produces. Larger companies are able to produce more by spreading the cost of
production over a larger amount of goods. An industry may also be able to dictate the cost of
a product if there are a number of different companies producing similar goods within that
industry.
There are several reasons why economies of scale give rise to lower per-unit costs. First,
specialization of labor and more integrated technology boost production volumes. Second,
lower per-unit costs can come from bulk orders from suppliers, larger advertising buys, or
lower cost of capital. Third, spreading internal function costs across more units produced and
sold helps to reduce costs.
Internal functions include accounting, information technology, and marketing. The first two
reasons are also considered operational efficiencies and synergies. The second two reasons
are cited as benefits of mergers and acquisitions.
Internal Versus External Economies of Scale

As mentioned above, there are two different types of economies of scale. Internal economies
are borne from within the company. External ones are based on external factors.
Internal economies of scale happen when a company cuts costs internally, so they're unique
to that particular firm. This may be the result of the sheer size of a company or because of
decisions from the firm's management. Larger companies may be able to achieve internal
economies of scale—lowering their costs and raising their production levels—because they
can buy resources in bulk, have a patent or special technology, or because they can access
more capital.
External economies of scale, on the other hand, are achieved because of external factors, or
factors that affect an entire industry. That means no one company controls costs on its own.
These occur when there is a highly-skilled labor pool, subsidies and/or tax reductions, and
partnerships and joint ventures—anything that can cut down on costs to many companies in a
specific industry
Key Takeaways;
Economies of scale are cost advantages companies experience when production becomes
efficient, as costs can be spread over a larger amount of goods.
A business's size is related to whether it can achieve an economy of scale—larger companies
will have more cost savings and higher production levels.
Economies of scale can be both internal and external. Internal economies are caused by
factors within a single company while external factors affect the entire industry.
Limits to Economies of Scale

Management technique and technology have been focusing on limits to economies of scale
for decades.
Set-up costs are lower due to more flexible technology. Equipment is priced more closely to
match production capacity, enabling smaller producers such as steel mini-mills and craft
brewers to compete more easily.
Outsourcing functional services make costs more similar across businesses of various sizes.
These functional services include accounting, human resources, marketing, treasury, legal,
and information technology.
Micro-manufacturing, hyper-local manufacturing, and additive manufacturing (3D printing)

can lower both set-up and production costs. Global trade and logistics have contributed to
lower costs, regardless of the size of an individual plant.
In aggregate, the average cost of trade-able goods has been falling in industrial countries
since about 1995.
Examples of Economies of Scale

In a hospital, it is still a 20-minute visit with a doctor, but all the business overhead costs of
the hospital system are spread across more doctor visits and the person assisting the doctor is
no longer a degreed nurse, but a technician or nursing aide.
Job shops produce products in groups such as shirts with your company logo. A significant
element of the cost is the set-up. In job shops, larger production runs lower unit costs because
the set-up costs of designing the logo and creating the silk-screen pattern are spread across
more shirts.
In an assembly factory, per-unit costs are reduced by more seamless technology with robots.

Business and Ethics Week 1

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Business and Ethics Week 1

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BUSSINESS AND ETHICS

BUSINESS AND ETHICS

1|BUSSINESS AND ETHICS

Forms of Business Organization

Limited Liability Company;

2|BUSSINESS AND ETHICS

Names And Details about Five Biggest Businesses in the world;

2) Google; Google is a technology industry. It has a brand value of $ 167.7 B. Its 1 yr

3|BUSSINESS AND ETHICS

Large Business; An economic group consisting of large profit-making corporations

Accountancy; Accountancy is the practice of recording, classifying, and reporting on

Organizational Studies; Organizational studies is "the examination of how individuals

3) Reasons to study Business studies;

1) Develop crucial communication skills;

4|BUSSINESS AND ETHICS

2) Marketing 101: Know your audience;

3) Accounting and budgeting: Don’t fall short;

5) Investment & finance: Learn what makes the world go round;

6) Project management: A skill for every sector;

5|BUSSINESS AND ETHICS

Ways to make money;

6|BUSSINESS AND ETHICS

Primary Industry; Industry, such as mining, agriculture, or forestry, that is concerned

7|BUSSINESS AND ETHICS

How an Industry Works;

Industries vs. Sectors;

8|BUSSINESS AND ETHICS

9|BUSSINESS AND ETHICS

The Marketing Mix

There are four types of Market Segmentation

Marketing Strategy vs. Marketing Plan

The Creation of Marketing Strategy;

Economic Objectives of Business;

2) Market Share / Creation of Customers;

3) Innovation & Utilization of Resources;

Social Objectives of Business

1) Providing Goods & Services at Reasonable Prices;

3) Fair Remuneration to Employees;

Niche vs Mass Marketing;

The Basics of Market Portfolio: A market portfolio, by nature of being completely

Company A is $2 billion, the market capitalization of Company B is $5 billion, and the

Educational institutions. These are frequently overlooked as valuable information

Promotion; In marketing, promotion refers to any type of marketing communication used

2) Objectives and strategies;

Stakeholders; In business, a stakeholder is any individual, group, or party that has an

include employees, customers, shareholders, suppliers, communities, and governments.

4) Suppliers and Vendors;

Management Structure and Organizational

Leadership and Management Styles

Autocratic, Democratic, Laissez-Faire

Management by Objectives (MBO)

Management Structure and Organizational Design;

Leadership and middle management styles;

Laissez-Faire; Laissez-faire leadership, also known as delegative leadership, is a type of

Managements by Objectives (MBO);

Advantages of Management by Objectives

Disadvantages of Management by Objectives

Efficiency and Effectiveness

Efficiency and Effectiveness;

Meaning The virtue of being The magnitude of nearness of the actual

What is it? Work is to be done in a Doing accurate work.

Emphasis on Inputs and Outputs Means and Ends

Time Horizon Short Run Long Run