BOS Notes

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45
Subject: Business Organisation and System Class: FY BBA
Business Organisation & System

Unit I
Nature & evolution of business
Concept of business and its characteristics
activity which involves providing

goods or services in exchange for profits.
a business entity involved in a business activity.

A business is defined as an organization or enterprising entity engaged in commercial, industrial, or
professional activities.
Businesses can be for-profit entities or they can be non-profit organizations that operate to fulfill a
charitable mission or further a social cause.
Characteristics of a business
1. BUSINESSMAN:
For the establishment of business, there must be someone to take initiative the businessman
(entrepreneur) visualizes a business.
2. FINANCING:
s. It is required by all types of business
whether small or large.
Without basic finance they can't move or take any step forward.
3. MANAGEMENT
cannot be controlled, managed and run.

4. ECONOMIC ACTIVITIES:
economic motive are a part of a business. But production made for manufacturer own use is not include
in business.
5. PROFIT MOTIVE:
Profit is a driving force in any business activity. Businessman can seek profit from business and avoid
from loss.
6. ELEMENT OF RISK:
t able to control or
minimize the risk involved in business it suffers losses.
7. REGULARITY:
There must be a regular work of purchases and sales of goods or services. So, a single deal may generate
profit but can't be treated as a business.
8. CONSUMER'S SATISFACTION:
PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in
satisfaction of consumer is a main tool for earning more profit.

9. CREATION OF UTILITIES:
ate those commodities which can satisfy any human need.
Business creates utility which gives benefits to the entire society as well as the businessman.
10. ORGANIZATION:
is helpful in the
smooth running of business and achieving the objects.
11. UNCERTAINTY:
Business activity is undertaken to earn profit, yet there is no assurance that it will definitely earn profit.
12. COMPETITION:
There may be competitors in the market those are introducing same kind of products or services.
13. SALE OR
TRANSFERRING:
The sale of transferring of goods of services for money is necessary for business. If goods are produce
and keep with him, there will be no chance of making any transaction.
14. DEALING ON GOODS OR SERVICES:
Every business deals with the
sale, purchase, production and exchange of goods and services for some profit.
15. PRODUCING OR PURCHASING:
and then sale them or it deals in
purchasing the final goods and resell in same conditions.
16. EMPLOYMENT OPPORTUNITIES:
Business is a good source of employment for its owners or partners as well as for other people.
i.e. employees, agents, brokers, transporters, etc.
17. DECREASE IN INFLATION:
If there are more than one producers of the same product in the market, the prices of the commodities
will be reduced.
18. NATURE:
as some business produce the cosmetics and some
manufacture the furniture.
19. SYSTEMATICALLY:
-planned system a business can make progress. It means every business needs the
well-planned system.
-planned system a business can make progress.

Unit II
Forms of Business Organisations
WHAT IS A BUSINESS ORGANISATION?
The term "business organization" refers to how a business is structured. It refers to a commercial or
industrial enterprise and the people who constitute it.
WHAT IS THE RIGHT FORM OF OWNERSHIP ?

• There really is not one right form of ownership.
• The correct form depends of the type of company, the goals of the owners, and the plans of
what the company may become.
• Factors such as tax considerations, liability exposure, capital requirements and structure and
ownership control all play a role is determining which form is correct for a business.
TYPES OF BUSINESS ORGANISATIONS

• Private Sector
• Sole Proprietorship
• Joint Hindu Family Business
• Partnership Firm
• Joint Stock Company
1) Private Limited
2) Public Limited Company
3) Co-operative Society
Choosing a Form of Business

Organization
The choice of the form of business is governed by several interrelated and interdependent factors :-
• The nature of business is the most important factor
• Scale of operations i.e. volume of business ( large, medium, small) and size of the market area
(local, national, international)
• The degree of control desired by the owner(s)
• Amount of capital required for the establishment and operation of a business
• The volume of risks and liabilities as well as the willingness of the owners to bear it
• Comparative tax liability
• Choice of Suitable form of ownership – A Crucial Decision
• The form of ownership determines the - Division of Profits
• Extent of liability
• Extent of Risk
• Division of Power
• Control of Owner
When the ownership and management of a business are in control of one individual the form of
business is called sole proprietorship.
• The most common form of business organization.
• Owned by one person, who performs most roles and owns everything
• Very few legal requirements for setting it up.
• Owner gets all profits, takes all the losses → called unlimited liability
• Easiest and least expensive to set up
• Easiest for tax purposes → income recorded under personal income
• Oldest form of business organization
• The business enterprise is owned by one single individual (i.e. both profit and risk belong to him)
• Owner is the Manager
• Owner is the only source of Capital
• The proprietor and business enterprise are same in the eyes of the law.
• Liability of sole proprietor is unlimited
• Sole proprietorship business is free from many legal formalities subjected to the general law of
the land
• Proprietor makes all decisions pertaining to the business
• Limited scope of operations.
• Ease in formation
• Discretion in start and dissolution
• Flexibility
• Free from legal Formality
• Independence of proprietor
• Quick decisions
• Facilitate Coordination
• Personal contacts with customers
• Secrecy
• Perfect Control
• Economy in operation
• Ease to borrow funds
• Direct relation between effort and rewards
• Successors benefited by inherited business
• Social advantage
• Limited managerial capacity
• Hasty decisions
• Secrecy causes suspicion
• Owner has unlimited liability

• Limited financial resources
• Loss in absence
• Difficulty in attracting and retaining good employees
• High morality rate
• Lack of stability
• Unfit for medium and large businesses
• To understand this statement we can divide it into following two parts:-
• One man control is the best
• It is the best provided certain conditions are satisfied.
One man control is the best
• Ease in formation
• Discretion in start and end
• Flexibility
• Free from legal formalities
• Quick decisions
• Facilitate coordination
• Personal contacts with customers
• Secrecy
• Perfect control
One man control is the best
• Economy of operation
• Easy to borrow funds
• Direct relation between efforts and reward
• Successors benefited by inherited business
• Social advantages
• A Hindu Undivided Family (HUF) or Joint Hindu Family (JHF) consist of all persons who lineally
descended from a common ancestor and includes their wives and unmarried daughters (Hindu Law).
• When a joint Hindu family carries on a business, it is called a joint Hindu family firm.
• The members of such firm are not called partners, but known as coparceners.
• Comes into existence as per the Hindu
Inheritance Act of India
• This form of business found only in India
• All members of the Hindu Undivided Family(HUF) own the business jointly
• The affairs of the business are managed by head of the family called “Karta”. All other members
are called “Coparceners”
• Every coparcener has an assured share in profits

• The business has continued existence
• Decision making is quick as the powers are with the Karta

• No corporate tax
• People use it mostly for tax benefits these days
• Absolute power in the hands of Karta.
• Instability
• Limited Resources can be raised
• Scope for conflict
A Partnership consists of two or more individuals in business together

Meaning of Partnership
• A partnership is an association of two or more persons who agree to carry on business for
earning and sharing profit among them.
• According to Indian Partnership Act, “Partnership is the relation between persons who have
agreed to share the profits of a business carried on by all or any of them acting for all.”
• Minimum 2 number of partners and maximum 20 partners. All of must be competent to
contract.
• The relation between the partners is created in the form of a contract. Written contract is called
“Partnership Deed.”
• The firm means partners, the partners mean the firm
• The profit is divided in any as ratio as agreed
• No partner can sell/transfer his interest in the firm to anyone without the consent of other
partners
• The relation of partnership arises from a valid agreement.
• The liability of partners is unlimited.
• To constitute a partnership, there must be a relation of mutual agency between the partners.
• The relation of partnership is founded upon mutual trust and confidence. Therefore, every
partner is bound to be faithful to each other.
• A firm does not have separate legal existence from its partners. Firm is not a person in the eye
of law.
• The registration of partnership is not compulsory in India.
Test of Partnership
• There must be an agreement between two or more persons.
• There must be a business of partnership.
• The partners must have agreed to share the profits of the business.
• The business must be carried on by all or any one
ADVANTAGES OF PARTNERSHIP
• Easy Formation
• Larger Resources
• Greater Management Talent
• Flexibility of Operation
• Prompt Decision
• Balanced decisions
• Sharing of Risk and liability
• Personal care and supervision of business
• Secrecy
• Direct relation between work and reward
• More possibility of growth and expansion
• Protection of minority interest
• Easy dissolution
DISADVANTAGES OF PARTNERSHIPS
• Unlimited Liability
• Limited resources
• Limited managerial skill
• Fear of Dispute
• Instability
• Non- transferability of interest
• Lack of public interest
• Risk of mutual agency relations
• When the contract of partnership is made in writing, it takes the form of a document. Thus, the
document which contains the terms of contracts of partnership is called the deed of partnership.
• It must contain all the important terms of partnership agreed by the partners.
• Name of the firm

• Name of the partners
• Nature and place of business
• Date of commencement of partnership
• Duration of the partnership/ firm.
• Capital employed or to be employed by each partner.
• Profit and loss sharing ratio
• Interest on capital
• Limit of drawing and interest on it
• Interest on loans by and to partners
• Salary or commission, if payable, to the partners

• According to companies act 1956, “Company” means a company formed and registered under
this act or an existing company formed and registered under any of the previous companies law.
• According to Prof. Haney, “ A company is an artificial person created by law, having separate
entity with a perpetual succession and common seal.”
Characteristics
• Limited Liability
• Huge financial resources
• Perpetual existence or stability
• Transferability of shares
• Sound management
• Diffusion of risk
• Economy in operation
• Democratic management
• Scope of expansion and growth
• Public confidence
• Encourages capitalization
• Social advantages
• Difficulty in formation
• Regulation and Control
• Oligarchy of directors
• Neglect of minority interests
• Lack of Secrecy
• Delay in decisions
• Lack of motivations
• Tax Burden
• Difficulty in winding up
• Insider trading
Co-operative society
• A Co-operative society or organization is one which has been voluntarily formed by some
persons for the promotion of their common economic interest.
• According to the Indian Co-operative Societies Act, 1912, A Co-operative society is “a society
which has its object as the promotion of economic interests of its members in accordance with co-
operative principles.”

• Voluntary organization
• Must be registered
• Separate legal entity and artificial person
• Liability is limited
• Perpetual existence
• Every member has to buy at least one share
• Non-transferable shares
• Each member of a co-operative society has a right to one vote
• Managed on Democratic principles
• Certain proportion of profit is of co-operative society is distributed among its member
• Works for promotion of economic interest of its member
• Primary object is to serve its members
• Based on principles equality, justice and mutual benefit
CO-OPERATIVE PRINCIPLES
• Principle of voluntary and open membership
• Principle of democratic member control
• Principle of member’s economic participation
• Principle of autonomy and independence
• Principle of education, training and information
• Principle of co-operation among co-operatives
• Principle of concern for community
• Organisational Advantages
• Easy formation
• Small amount of investment
• Equal voting rights
• Democratic management
• Stability
• Easy to wind up
• Economic Advantages
• Economic management
• Tax advantages
• Ploughing back the profits
• Government aid
• Equitable distribution of profits
• Limited liability

Social Advantages
• Spirit of mutual help and brotherhood
• Uplift standard of living of weaker sections of society
• Promotes equal distribution of income and wealth in the society
• Relief from exploitation
• Decentralisation of economic power
• Changes in society by peaceful means
• Promotes maximum social welfare
Public Enterprises
• Public enterprises (PE) refers to an enterprise which is owned and controlled by the Government
or public authority.
• A public enterprise refers to an industrial, commercial or service enterprise which is owned and
controlled by the Government or by public authority/ Government organisation for providing goods and
services to the public.
CHARECTERISTICS OF PUBLIC ENTERPRISES

• Owned by the government or any public organisation
• Managed, controlled and operated by the Government
• Carry on activities of production of goods or services
• Run in different form of organisation (departmental organisation, public corporation,
Government Company, Boards, Trusts etc.)
CHARECTERISTICS OF PUBLIC ENTERPRISES

• Established with some special objectives (economic objectives, social objectives, political
objectives etc.)
• Service motive is prime motive
• PE accountable to the public
• Subject to audit rules of the Government
• Required to prepare annual return of working & place the same before the Lok Sabha.
• Monopoly position in certain economic activities such as railways, mining, petro-products etc.
• Infrastructure Development
• Strong Industrial Base
• Planned Development
• Balanced regional development
• Employment
• Promotes capital formation or investment
• Export promotion
• Import Substitution
• Contribution to the GDP
• Contribution to Exchequer
• Research and Development
• Help reduce disparities of income and wealth/ concentration of economic power
• Protection of consumer interests
Virtual business organizations

The ‘virtual organisation’ emerged in 1990 and is also known as digital organisation, network
organisation or modular organisation.
A virtual organisation is a network of cooperation made possible by, what is called ICT, i.e.
Information and Communication Technology, which is flexible and comes to meet the dynamics of the
market.
Alternatively, the virtual organisation is a social network in which all the horizontal and vertical
boundaries are removed. In this sense, it is a boundary less organisation. It consists of individual’s
working out of physically dispersed work places, or even individuals working from mobile devices and
not tied to any particular workspace.
The ICT is the backbone of virtual organisation
Characteristics:
1. Flat organisation
2. Dynamic
3. Informal communication
4. Power flexibility
5. Multi-disciplinary (virtual) teams
6. Vague organisational boundaries
7. Goal orientation
8. Customer orientation
9. Absence of apparent structure
10. Sharing of information
11. Staffed by knowledge workers.
Types of virtual organisations:
Depending on the degree or spectrum of virtuality, virtual organisations can be classified into three
broad types as follows:
1. Telecommuters
2. Outsourcing employees/competencies
3. Completely virtual
Telecommuters:
These companies have employees who work from their homes. They interact with the work- place via
personal computers connected with a modem to the phone lines. Examples of companies using some
form of telecommuting are Dow Chemicals, Xerox, Coherent Technologies Inc., etc.
Outsourcing Employees/Competencies:
• These companies are characterised by the outsourcing of all/most core competencies.

• Areas for outsourcing include marketing and sales, human resources, finance, research and
development, engineering, manufacturing, information system, etc.
• In such case, virtual organisation does its own on one or two core areas of competence but with
excellence. For example, Nike performs in product design and marketing very well and relies on
outsources for information technology as a means for maintaining inter-organisational coordination
Completely Virtual:
These companies metaphorically described as companies without walls that are tightly linked to
a large network of suppliers, distributors, retailers and customers as well as to strategic and joint
venture partners.
Atlanta Committee for the Olympic Games (ACOG) in 1996 and the development efforts of the
PC by the IBM are the examples of completely virtual organisations.
BOUNDARYLESS ORGANIZATION
What is Boundary less Organization?
A boundary less organization is a contemporary approach in organizational design. It is an organization

that is not defined by, or, limited to , the horizontal, vertical, or external boundaries imposed by a
predefined structure.
Boundary less- From an Organizational Evolution perspective

In this term,
Organizational Evolution & foundations of boundary less organizations thinking are related.
Both focus on the ways organization can best change to meet their challenges.
Organization Evolution focuses on the “grass roots level” looking at the structure & process of actual
change transaction in companies.
In Boundary less- 3 Specific Ideas
• Adapting an idea is as valuable as inventing an idea

• The town meeting concept
• Pointing & Pushing, or, the lack there of, described in boundary less organization
Why Boundarylessness ?
Boundarylessness should not be taken, does not imply a completely amorphous organization. Rather, a
boundaryless organization has divided in the 4 boundary types to better serve its customers & capitalize
on good ideas.
The 4 dimensions, which companies measured to become successful –
• Size
• Role Clarity
• Specification
• Control
New Dimensions for Success, In New Era

Speed Flexibility Integration Innovation
Types of Boundarylessness :
 Vertical Boundaries
 Horizontal Boundaries
 External Boundaries
 Geographic Boundaries
Vertical & Horizontal Boundaries:
VERTICAL BOUNDARIES:-
It divides management from employees & divides layers of management from each other.
Do the different layers communicate effectively?
HORIZONTAL BOUNDARIES:-
It divides divisions & departments within a corporation from each other. Do different functional areas
cooperate with or compete against each other?
External & Geographic Boundaries:
EXTERNAL BOUNDARIES:-
It divides a company from others in its value chain.
How well does a company collaborate with its customers & suppliers?
GEOGRAPHIC BOUNDARIES:-
These boundaries are a special form of horizontal boundary.
How well does a company cross the national & cultural boundaries that divide its international
operations from each other & itself from foreign markets ?
One person companies (OPC)

The introduction of OPC in the legal system is a move that would encourage corporatization of micro
businesses and entrepreneurship with a simpler legal regime so that the small entrepreneur is not
compelled to devote considerable time, energy and resources on complex legal compliances.
With the implementation of the Companies Act, 2013, a single national person can constitute a
Company, under the One Person Company (OPC) concept.
One person companies are in existence in certain countries. In India this concept has been mooted by
the Ministry of Corporate Affairs by allowing One Person Companies in India in line with UK, China, USA,
Australia, Singapore, Qatar, Pakistan and several other countries.
It is a right thinking in right direction by the Ministry of Corporate Affairs. One Person Companies have
been in existence in UK for several years now. China allowed formation of OPCs as recent as in 2005. A
few other countries have also given the legal status for OPCs.
Clause 2(62) defines a OPC as “a company which has only one person as a member”.
OPC Sole Proprietorship
Separate Legal Entity Owner & Entity are same personality
Limited Liability Unlimited Liability
Perpetual Succession No Perpetual Succession
Loan not the sole responsibility of the owner Loan- sole responsibility of the owner
Registration Required Registration not required.

 Separate legal entity.

 Incorporated as a private limited company
 Must have only one member/shareholder
 Should indicate nominee member in the MOA, who shall become member in the event of
death/ incapacity of sole member
The member and nominee should be natural persons, Indian Citizens and resident in India.
One person cannot incorporate more than one OPC
No minor shall become member or nominee.
OPC cannot be incorporated/converted u/s. 8 (i.e. Formation of companies with charitable objects)
OPC cannot carry out Non-Banking Financial Investment activities.
OPC Lose its status if paid up capital exceeds Rs. 50 lakhs or average annual turnover is more than
crores in 3 immediate preceding consecutive years.
OPC is required to specifically mention the word “one person company” below the name wherever it is
used. (e.g. : Vijay Corporate Solutions OPC Private Limited)
Limited Liability.
Easy Incorporation & conversion procedure. Mandatory rotation of auditors not applicable.
The annual return of a OPC signed by the company secretary (C.S.), or where there is no (C.S.) , by the
director of the company.
The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to holding of general
meetings, shall not apply to a OPC.
Must have at least one director and conduct board meeting once within each half of the calendar year.
No Annual General meeting is required, it shall be sufficient if the resolution is communicated by the
member to the company and entered in the minutes-book, which will be signed and dated by the
member. {Sec. 96(1) & 122(3)}
No Board meeting is required, when there is one director, if the resolution by such director is entered in
the minutes-book and signed and dated by such director.
Financial statements can be signed by one director alone.
Cash Flow statement is not mandatory.{Sec. 2(40)}
Obtain Digital Signature Certificate [DSC] for the proposed Director(s)
Obtain Director Identification Number [DIN] for the proposed director(s)

Select suitable Company Name, and make an application Form INC -1 to the Ministry of Corporate
Affairs for availability of name
Draft Memorandum of Association and Articles of Association [MOA& AOA]
Sign and file various documents including MOA & AOA with the Registrar of Companies electronically
Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty
Scrutiny of documents at Registrar of Companies [ROC]

Receipt of Certificate of Registration/Incorporation from ROC
Obtain ‘No Objection’ in writing from Members & Creditors
Pass a special resolution in the general meeting.
File copy of the special resolution with the R.O.C. in
Form No. M.G.T. 14 within 30 days from the date of passing such resolution.
File an application in Form No.INC.6 for its conversion into One Person Company along required
documents.
On being satisfied the ROC shall issue the certificate.
OPC convert itself, within 6 months from fulfilment of any of the above conditions, into either a Private
or Public company in accordance with the provisions of section 18 of the Act.
1) Alter its memorandum and articles by passing a resolution in accordance with sub-section (3) of
section 122 of the Act .
 Directors {Sec. 152(1), 149(1)a & (1)b} Annual Return (sec. 92)
 Financial statement, Board’s report, etc.(Sec. 134)
 Copy of Financial statement to be filled with Registrars
 Meetings of Board (Sec. 173) Appointment of directors (Sec. 152)
 Contract by one person company (Sec. 193)
 Limited Liability Protection to Directors and Shareholder.
 Legal Status & Social Recognition
 Complete Control Of The Company With The Single Owner
 Helps for Testing of business model and enables Funding.
 Easy to Get Loan from Banks.
 Easy To Manage and Freedom Compliances.

Unit III
Setting up of a business enterprise
3.1
Business Opportunity: Identification, Evaluation and Selection Business is all about selling a product or
service
• Every time something happens, positive or negative, I ask myself, WHERE is the OPPORTUNITY
here?
• How do you spot an opportunity? Keep your eyes open all of the time
Business Idea and Opportunity
• A business idea starts with an opportunity.

• A business opportunity exists when there is demand for goods and services to meet the needs
and wants of community.
• Changes in the environment create opportunities; cultural, social, legal, economy, political,&
technology (C-SLEPT).
Illustrations – Environment changes

• Good economic condition
–↑ demand luxury cars, homes
• Increase number of working couples
–↑ demand maids, babysitter
• Introduction of ICT
–↑ demand computers, repairs, knowledge, spare parts
Process of Identifying, Evaluating and Selecting Business Opportunity
 Identifying the needs & wants of customers
 Scanning the environment & evaluating of self the community

 Screening of business opportunities
 Selecting a business opportunity & preparing a business plan

• Human NEEDS and WANTS are unlimited.

• Next, translate the NEEDS and WANTS into PRODUCTS or SERVICES.
• PRODUCTS – are physical forms e.g. car, handphone, books.
• SERVICES – non-physical form, intangible product e.g. cab service, telco network, training.
3 factors to be considered:
1) Environmental Scanning
- help identify business opportunities.
- 2 approaches:
i) Macro scanning e.g. population, ethnics, average income,
ii) Micro scanning e.g. family size, Malay delicacies, individual income.
2) Self Evaluation
- to see what is available in oneself:
i) Experience
- match business with experience e.g. engineer work with Public Work Dept (JKR) will become a
Civil Engineer.
ii) Knowledge & Skill

- do business on what he really knows what to do e.g. Contractor must not only knows how to
manage his business but also how to construct the buildings.
Step 2: Environmental Scanning, Self Analysis & Community Values

2) Self Evaluation (cont.)
- to see what is available in oneself: iii)Financial situation
- business that is planned to be implemented must match with financial ability. E.g. Land owner can do
housing business.
iv) Interest
- select business based on his interest
e.g. a person with gardening hobby can open nursery.
v) Networking
- good networking generate business opportunity e.g. trading
Step 2: Environmental Scanning, Self Analysis & Community Values

3) Values/Norms of the Community
- business opportunities need to be coordinated with the religious’ and society’s values or norms.
- Values and Norms = what is perceived as useful and beneficial to the community.

- E.g. Incinerator in Kuala Langat, Nuclear- powered electricity generator, poultry farm nearby
residential areas.
Step 3: Screening of Business Opportunities
• Legality:
- ensuring the business opportunity is a legal one.
- E.g. selling pirate DVD, imitate product e.g. Crocs.
• Degree of competition;
- choose business that is not monopolized.
- E.g. supplying Sugar
• Capital requirements:
- to identify sufficient funds to finance the business.
- E.g. own money, debt financing, FDI.
• Risks involved:
- expecting the potential uncertainties & considering the percentage of success & failure
- E.g. sell 2nd hand cars
1) Business Risks:
Types of Business Risks Description

Examples
Transferable Risks
 Risk that can be transferred to another party
 Insurance scheme that cover fire, stolen stocks and accident at work
Controllable Risks
Risk that can be somewhat controlled by an entrepreneur.
Cannot fully control the situation involving market expectations, labor turnover, product quality &
machine breakdown.
Uncontrollable Risks
Risk that cannot be controlled by an entrepreneur
Economic downturn, natural disaster e.g tsunami
2) Financial Risks:
Types of Business Risks

Description
Examples
Liquidity level
Low liquidity – problem of setting short term debt; Too high liquidity – overspending. Lack of stocks,
too much cash in hand
Loan
Risk due to non-servicing of
financial loan. Finance business through bank’s loan – still have to pay bank monthly despite no profit.
Credit
Risk when company give credit facility to customers. Buy on instalment - potential to be bad debt if
not able to recover from customer for a long period of time.
Foreign exchange Risk due to increase or decrease of foreign currency rate.

Import/Export business –
Margin
Seeing Opportunities
• Simply understand that there is little difference between obstacle & opportunity
– able to turn both to their advantage
• The opportunities for potential entrepreneurs are unlimited.
Technology is perhaps the most dramatic force shaping the marketing environment.
Here, a herder makes a call on his cell phone
Step 4: Selecting a business opportunity and preparing a business plan

• After fulfil step 1 to 3, it is time for the entrepreneur to select a business opportunity.
• Then to prepare the business plan.
I. Influencing factors while setting up of business enterprise
o Line of Business
o Physic al Facilities
o Plant Layout

o Size of Unit
o Financial Planning
o Internal l Organisation
o Location of Business
o Form of ownership p
o Personnel

Unit IV
Study of Domestic and Foreign Trade
Introduction and meaning

• Foreign trade of a country refers to its exports and imports of merchandise from and to other
countries under contract of sale
• No Country in world produces all the commodities it requires.
• Exchange of goods and services between two or more diff countries.
• Such trade is also known as International trade
• Import
Features and Types
If the seller is aboard and the buyer is in home
• Export If the seller is in home country and the purchaser Is aboard
Foreign trade can be further classified into
Visible
A Trade which can be seen i.e exchange of goods and merchandise is a visible part
Invisible
Services are the intangible (invisible) output of the production process, including plumbing, transport
and education.
Balance of Trade (BOT)

• The difference between the value of goods and services exported out of a country and the value
of goods and services imported into the country.
• If a country has a balance of trade deficit, it imports more than it exports, and if it has a balance
of trade surplus, it exports more than it imports.
• The balance is said to be favourable when the value of the exports exceeded that of the imports
(i.e. Exports exceed imports), and unfavourable when the value of the imports exceeded that of the
exports (i.e. imports exceed exports).

Factors that can affect

• The cost of production (land, labour, capital, taxes, incentives, etc.) in the exporting economy
vis-à-vis those in the importing economy;
• The cost and availability of raw materials, intermediate goods and other inputs;
• Exchange rate movements;
• Multilateral, bilateral and unilateral taxes or restrictions on trade;
• Non-tariff barriers such as environmental, health or safety standards;
• The availability of adequate foreign exchange with which to pay for imports; and
• Prices of goods manufactured at home (influenced by the responsiveness of supply)
Balance of Payment (BOP)

Balance of Payment is a system of recording all the economic transactions of a country, with the
rest of the world over a period, say one year.
typically, the transactions included in BoP are country's exports and imports of goods, services,
financial capital, and financial transfers. Thus, in nut shell we can say, the BoP accounts summarize
international transactions for a specific period, usually a year, and are prepared in a single currency,
typically the domestic currency for the country concerned
BOP -
• Any transaction that causes money to flow in is a Credit.

• Any transaction that causes money to flow out is a debit.
• The BOP includes the current account, which mainly measures the flows of goods and services;
• The capital account, which consists of capital transfers and the acquisition and disposal of non-
produced, non-financial assets; and the financial account, which records investment flows.
• The BOT is typically the biggest bulk of a country's balance of payments as it makes up total
imports and exports.
• favorable balance of payments, when more payments are coming in than going out.
Balance of Payment
A. Current Account
A. Net exports/imports goods & services (Balance of Trade)
B. Net Income (investment income from direct portfolio investment plus employee compensation
C. Net transfers (sums sent home by migrant abroad)
B. Capital Account Omissions
• Missing data such as illegal transfers
Overall Balance =
A+B+C+D
Balance of Payment
• Balance of Trade is defined as 'difference between export and import of goods and services
• BOT = Net Earning on Exports
-
Net payment made for imports
• If export is more than import, at that time, BOT will be favourable. If import is more than export,
at that time, BOT will be unfavourable.
• BOP is defined as the 'flow of cash between domestic country and all other foreign countries'. It
also includes financial capital transfer.
• BOP = BOT + (Net Earning on foreign investment i.e. payments made to foreign investors) + Cash
Transfer + Capital Account
+or - Balancing Item
• Balance of payment will be unfavourable, if country has current account deficit and it took more
loan from foreigners. After this, it has to pay high interest on extra loan and this will make BOP
Unfavourable.
BOT
• Solution of being Unfavourable:
To Buy goods and services from domestic country.
• Following are main factors which affect BOT
a) cost of production
b) availability of raw materials
c) Exchange rate
d) Prices of goods manufactured at home
BOP
• To stop taking of loan from foreign countries
• Following are main factors which affect BOP
a) Conditions of foreign lenders.
b) Economic policy of Govt.
c) all the factors of BOT

BOS Notes

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BOS Notes

Uploaded by

Copyright:

Available Formats

DNYANSAGAR ARTS AND COMMERCE COLLEGE, BALEWADI, PUNE – 45

Subject: Business Organisation and System Class: FY BBA

Business Organisation & System

Concept of business and its characteristics

activity which involves providing

a business entity involved in a business activity.

cannot be controlled, managed and run.

Subject: Business Organisation and System Class: FY BBA

satisfaction of consumer is a main tool for earning more profit.

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

WHAT IS A BUSINESS ORGANISATION?

WHAT IS THE RIGHT FORM OF OWNERSHIP ?

TYPES OF BUSINESS ORGANISATIONS

Choosing a Form of Business

Subject: Business Organisation and System Class: FY BBA

Subject: Business Organisation and System Class: FY BBA

• Owner has unlimited liability

• Every coparcener has an assured share in profits

Subject: Business Organisation and System Class: FY BBA

• Decision making is quick as the powers are with the Karta

A Partnership consists of two or more individuals in business together

Subject: Business Organisation and System Class: FY BBA

• Name of the firm

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

CHARECTERISTICS OF PUBLIC ENTERPRISES

CHARECTERISTICS OF PUBLIC ENTERPRISES

Subject: Business Organisation and System Class: FY BBA

Virtual business organizations

Types of virtual organisations:

Subject: Business Organisation and System Class: FY BBA

• These companies are characterised by the outsourcing of all/most core competencies.

What is Boundary less Organization?

A boundary less organization is a contemporary approach in organizational design. It is an organization

Boundary less- From an Organizational Evolution perspective

Subject: Business Organisation and System Class: FY BBA

In Boundary less- 3 Specific Ideas

• Adapting an idea is as valuable as inventing an idea

The 4 dimensions, which companies measured to become successful –

New Dimensions for Success, In New Era

Vertical & Horizontal Boundaries:

Subject: Business Organisation and System Class: FY BBA

Do the different layers communicate effectively?

External & Geographic Boundaries:

One person companies (OPC)

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

 Separate legal entity.

Obtain Digital Signature Certificate [DSC] for the proposed Director(s)

Obtain Director Identification Number [DIN] for the proposed director(s)

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

Scrutiny of documents at Registrar of Companies [ROC]

PROF. VINAYAK GRAMOPADHYE www.dacc.edu.in

Subject: Business Organisation and System Class: FY BBA

Setting up of a business enterprise

Business Idea and Opportunity

• A business idea starts with an opportunity.