Introduction to

Business
Course Code: BUSI-1101
Instructor
Syed Md Hasib Ahsan
Assistant Professor
Department of Business Administration
International Islamic University Chittagong
Email: hasib27.ahsan@gmail.com
Mobile: 01712527736
Syllabus at a glance
Mid-Term Examination
• 1. Foundation of Business:
• Business: Meaning –Evolution-Characteristics-Objectives-Elements-Functions-Importance-Economic Systems-Relation between
Business and Economics
• 2. Business Environment:
• Micro and Macro Environmental factors- Impact of Environment on Business.
• 3. Entrepreneurship: Meaning, Qualities of a growth-oriented entrepreneur-Risks of Entrepreneurship-Small Business:
Meaning - Causes of Small Business Failure.
• 4. Franchising: Meaning - Franchisor and Franchisee- Advantages and Disadvantages of owning a franchise business -
Franchising Agreement-Case Study on Pizza Hut, KFC, Mc Donald.
• 5. Forms of Business Organization:
• Different Forms of Business Organizations- Factors Affecting the Choice of Business Organization.
• 6. Sole Proprietorship: Meaning-Features-Suitability-Advantages and Disadvantages of owning Sole Proprietorship Business.
• 7. Partnership: Meaning- Features of Partnership Business -Types of Partners- Partnership Deed- Registration of Partnership-
Effects of non-registration of Partnership- Rights and Duties of A partner- Dissolution of a Partnership Business.
 Final Examination

8. Joint Stock Company

Meaning- Characteristics-Types – Advantages and Disadvantages –formation-Prospectus-MA and AA-Rights and
Obligations of Shareholders and Directors-Different types of Share, Share Capital and Share Values-Liquidation of A
company.
 
9. Cooperative Society:
Definition, Types, Features, Registration.
 
10. Supportive Business Organization to Develop Business In Bangladesh:
BSCIC, EPB, EPZ, ICB, Stock Exchange, Chamber of Commerce, SEC, BOI
 
11. Trade Practices in Bangladesh
Basic Concepts of International Business-Middlemen involved with International Business- Import and Export
Procedure-Shipping and Non Shipping Documents-Barriers to International Busuiness-Types of Letter of Credit-
Opening an L/C.
 
12. Social Responsibility:
Meaning-Arguments for and against Social Responsibility- Areas of Social Responsibillity-Legal Measures of SR-
Expectations to Business and Government- SR in Islam.
 
13. Business Ethics: Meaning- Principles- Business Ethics in Islam.
 
Recommended Text:
1. Skinner, S. J., & Ivancevich, J. M. (1992). Business for the 21st Century. RD Irwin.
References:
Bhattacharjee, D. (1996). An introduction to business management,. Didar Pub. House.
Khan A. R. Business Ethics
Text Book

Business for the 21st century

- Steven J. Skinner, John M. Ivancevich.

References:
1. Bhattacharjee, D. (1996). An introduction
to business management,. Didar Pub.
House.
2. Khan A. R. Business Ethics
Foundation of Business
Definition of a business
A business is any activity that allows exchange of goods and services
for the purpose of making a profit. And it must be legal.
For Example: When Steve Jobs and Steve Wozniak invented Computer
in Jobs’s family garage, they started a business. The product was the
Apple I, and the founders hoped to sell their computers to customers
for more than it cost to make and market them. If they were successful
(which they were), they’d make a profit.
• Skinner & Ivancevich: “Business is the exchange of goods, services, or
money for mutual benefit or profit”.

• Keith Davis: “Business may be defined as any form of commercial

activity to satisfy the economic wants of people at a profit”.
• According to Ronald “As an organization that produces or sells goods
and services to make profit”.
• According to Urwick and Hunt “ business is any enterprise which
makes , distributes or provides any service which other members of the
community need and are within to pay for it”.
Features of a business
• Profit motive
• Risk and uncertainty
• Legality
• Creation of utilities
• Exchange of goods and services
• Financing
• Entrepreneurship
• Mutual interest
Objectives of Business:

• Profit
-Business profit
-Economic profit
• Survival
• Growth- the following indicators can measure growth of a firm
-Increasing market share
-Increasing productivity
-Long term relationship with customers, suppliers, competitors and marketing
intermediaries
Social responsibility
Basic elements of business

Physical elements
• Organization form and structure
• Capital
• Goods and services
• Place
• Legal aspects
• Information technology
• Human and non-physical elements
• Owners
• Managers
• Employees
• Customers
• Knowledge
• Risk and uncertainty
Functions of business:

• Purchasing
• Production
• Marketing
• Financing
• General management
• Public relations
• Personnel management
Why we study business:

• Understanding the business environment

• Increasing dependence on others
• International opportunities
• Standard of living
• Coping with change
• Preventing misconceptions
The study of business will help us to increase our skills, sharpen our
knowledge and understand the business and economic links among
nations. There are some other reasons for which we study business:
Increasing dependence on others:
Over the years, people have become more and more dependent on others.
The knowledge of business is increasing the understanding of mutual
dependence through business system. For example- you drive a car that is
manufactured in Japan.
International opportunities: 
In the 21st century, it has become indispensable for every one especially
individuals educated in business to take exiting opportunities that will exist
around the world. By studying business they can know how to start,
operate, and sustain business successfully in the competitive world.
• Improving standard of living: Standard of living indicates measure of
how well a person or family is doing in terms of satisfying needs and
wants with goods and services. This is possible through their
knowledge of business. So we must study business to develop our
standard of living.
• Coping with change: As like as the world itself, business is also
dynamic- always changing, Coping with both predictable and
unpredictable events we must have to study business. If a man
doesn’t study business, he/she is sure to fail to fit himself/herself in
the business world.
Preventing misconceptions: 
Understanding business also prevents us accepting misconceptions,
misinformation, and inaccurate data as truths.
Evolution of Business
• Evolution means the gradual development of something. Here evolution in
business refers to how business and country’s economic system have been
developed over the years. This development is closely connected with
civilization and different stages of economic development such as-
Feudalism
Mercantalism
Capitalism
Commerce
Property Rights
The Industrial Revolution
Feudalism
• Feudalism was Govt system combined with legal, economic and military customs
that flourished in medieval Europe between the 9th and 15th centuries. Broadly
defined, it was a way of structuring society around relationships that were
derived from the holding of land in exchange for service or labour. Although it is
derived from the Latin word feodum or feudum (fief),[1] which was used during
the Medieval period, the term feudalism and the system which it describes were
not conceived of as a formal political system by the people who lived during the
Middle Ages.[ A landowner (lord) would give a fief, along with a promise of
military and legal protection, in return for a payment of some kind from the
person who received it (vassal). Such payment came in the form of feudal service
which could mean military service or the regular payment of produce or money.
(Source:www.ancient.eu and www.wikipedia.com)
Mercantilism
• Mercantilism is a national economic policy that concentrates to
maximize a country’s export and minimize its import. The aim is to
reduce the country’s current account deficit or reach a current
account surplus. Mercantilism was dominant in modernized parts of
Europe from the 16th to the 18th centuries, a period of proto-
industrialization. Proto-industrialization is the regional development,
alongside commercial agriculture, of rural handicraft production for
external markets. The term was introduced in the early 1970s by
economic historians who argued that such developments in parts of
Europe between the 16th and 19th centuries created the social and
economic conditions that led to the Industrial Revolution
Capitalism
• The economic system in which most businesses are owned and operated by
individuals is known as capitalism. In capitalism, competition dictates how
goods and services will be allocated. Business is conducted with only
limited government involvement. The origins of capitalism have been much
debated , but fully fledged capitalism is generally thought by scholars to
have emerged in Northwestern Europe, especially in Great Britain and the
Netherlands, in the sixteenth to seventeenth centuries. Over the following
centuries, capital has accumulated by a variety of different methods, in a
variety of scales, and associated with a great deal of variation in the
concentration of wealth and economic power. Capitalism has gradually
become the dominant economic system throughout the world
Commerce
• Barter economy stage:
• In barter economy stage, money is not used as a medium of
exchange. Here, goods are exchanged for goods.
• Monetary transactions are absent in barter exchange.
• Here, the rate of exchange depends upon needs of both parties
involved in a barter transaction.
• It is the barter system of trade that laid the very foundation of a
business.
• Village economy stage:
• The village is a self-sufficient communal unit. Here, people usually live in harmony with
each other and their environment by forming different cooperative social groups.
• The village economy is mainly supported and fueled by various agricultural activities.
• Here, people satisfy each other’s requirement by trading among themselves, their basic
goods and services. However, in some special cases, even gold, silver, and copper are
used for trading.
• When villagers started doing their businesses at a village level, it helped to form the
world’s first markets.
• In these small markets, the villagers exchanged or sold their surplus goods.
• This overall helps to transcend the economy from a barter stage to become a village
economy.
Town economy stage:
• Town is a meeting ground for the majority of villages.
• It is a place where people from different villages come together,
interact and mingle.
• This heterogeneous interaction brings the influx of new cultures and
traditions, ideas, and creates better opportunities.
• This attracts many new people, and development also start taking
place to sustain the demands of incoming masses.
• This process gradually results in the formation of the town's economy.
National Economy
Nation is an organized political union of its member states.
• The meaning of national business:
• It is present in the entire country. In a practical sense, it is spread in the most parts of a
country.
• The business at a national level first started in England during the era of the Industrial
Revolution. The joint-stock companies became very popular during this stage.
• The size of it is always large when compared with the business done at a regional level.
• It helps to make the availability of goods and services in the most parts of a country.
International business
• No nation is 100% self-sufficient with its all available resources. A nation may have an abundance of
some resources but may also experience scarcity of other resources. To overcome this scarcity,
nations often trade among themselves. They satisfy each other's needs by supplying their surpluses
and/or expertise, and in return bring home, the scanty resources.
• The meaning of international business:
• It implies businesses conducted among or between different nations. Here, two or more countries
do business with each other. It mainly consists of imports and exports.
• This business is not a phenomenon of modern times. It has its origin in the ancient times. It began
when merchants from different kingdoms started exploring remote parts of the old world in search
of wealth and opportunities. For examples, European traders came to the south-Asia via a new sea-
route in search of cheaper spices, which were in huge demand in Europe.
• It helps to improve friendly relations between different countries.
• It also helps to improve the standard of living of the people.
• Today, international business has increased many folds. It is so, mostly due to the availability of
faster modes of communication and transport, regional cooperation between countries, and
adaptation of free trade policies
 Global Business
• Global business, is the current stage of evolution of business. Global market is one big world
level market. Here, the entire globe or world is considered as one huge market of
opportunities. This market has the enormous levels of customer base than any other type of
market. It has no borders and is almost restrictions free. All companies can sell their goods and
services in this kind of one open global market. However, here, the competition is very severe.
Large funds, skilled human resource, an ample amount of creativity and innovation, best quality
of products and services, along with world-class logistics and marketing are required to sustain
the tremendous pressures of its severity. Generally, this market is fully controlled by the rich
cartels of multinational companies (MNCs).
• The meaning of global business:
• It is a business in one giant world-level market.
• It is a new concept and is also referred as globalization.
• India entered the world market and started its global business in the early 1990s. Since then its
importance has increased in India.
• It is the most current and latest mature stage the modern business has evolved into.
• This is how business evolution took place, starting from its basic local level and arriving at a
matured global stage.
Property rights are theoretical socially-enforced constructs in economics for
determining how a resource or economic good is used and owned.
[1] Resources can be owned by (and hence be the property of) individuals,
associations, collectives, or governments.
[2] Property rights can be viewed as an attribute of an economic good.
This attribute has four broad components
[3] and is often referred to as a bundle of rights:
• the right to use the good
• the right to earn income from the good
• the right to transfer the good to others, alter it, abandon it, or destroy it (the right
to ownership cessation)
• the right to enforce property rights
• In economics, property is usually considered to be ownership (rights to the
proceeds generated by the property) and control over a resource or good.
• Industrial Revolution, in modern history, the process of change from
an agrarian and handicraft economy to one dominated by industry
 and machine manufacturing. This process began in Britain in the 18th
century and from there spread to other parts of the world. Although
used earlier by French writers, the term Industrial Revolution was first
popularized by the English economic historian Arnold Toynbee (1852–
83) to describe Britain’s economic development from 1760 to 1840.
• Traditional Economic System
• The traditional economic system is the most traditional and ancient
types of economies in the world. Vast portions of the world still
function under a traditional economic system. These areas tend to be
rural, second- or third-world, and closely tied to the land, usually
through farming. In general, in this type of economic system, a 
surplus would be rare. Each member of a traditional economy has a
more specific and pronounced role, and these societies tend to be
very close-knit and socially satisfied. However, they do lack access to
technology and advanced medicine.
Command Economic System
• In a command economic system, a large part of the economic system
is controlled by a centralized power. For example, in the USSR most
decisions were made by the central government. This type of
economy was the core of the communist philosophy.
• Since the government is such a central feature of the economy, it is
often involved in everything from planning to redistributing resources.
A command economy is capable of creating a healthy supply of its
resources, and it rewards its people with affordable prices.
This capability also means that the government usually owns all the
critical industries like utilities, aviation, and railroad.
• Advantages of Command Economic Systems
• If executed correctly, the government can mobilize resources on a
massive scale. This mobility can provide jobs for almost all of the
citizens.
• The government can focus on the good of society rather than an
individual. This focus could lead to more efficient use of resources.
• Disadvantages of Command Economic Systems
• It is hard for central planners to provide for everyone’s needs. This
challenge forces the government to ration because it cannot calculate
demand since it sets prices.
• There is a lack of innovation since there is no need to take any risk.
Workers are also forced to pursue jobs the government deems fit.
• Market Economic System
• In a free-market economy, firms and households act in self-interest to
determine how resources get allocated, what goods get produced and
who buys the goods. This is opposite to how a command economy
works, where the central government gets to keep the profits.
• There is no government intervention in a pure market economy (“
laissez-faire“). However, no truly free market economy exists in the
world. For example, while America is a capitalist nation, our
government still regulates (or attempts to control) fair trade,
government programs, honest business, monopolies, etc.
• In this type of economy, there is a separation between the government
and the market. This separation prevents the government from
becoming too powerful and keeps their interests aligned with that of
the markets.
• Advantages of a Free Market Economy
• Consumers pay the highest price they want to, and businesses only produce profitable goods and
services. There is a lot of incentive for entrepreneurship.
• This competition for resources leads to the most efficient use of the factors of production since
businesses are very competitive.
• Businesses invest heavily in research and development. There is an incentive for constant innovation
as companies compete to provide better products for consumers.
• Disadvantages of a Free Market Economy
• Due to the fiercely competitive nature of a free market, businesses will not care for the disadvantaged
like the elderly or disabled. This lack of focus on societal benefit leads to higher income inequality.
• Since the market is driven solely by self-interest, economic needs have a priority over social and
human needs like providing healthcare for the poor. Consumers can also be exploited by monopolies.
Mixed Economic System
• A mixed economy is a combination of different types of economic
systems. This economic system is a cross between a market economy
and command economy. In the most common types of mixed
economies, the market is more or less free of government ownership
except for a few key areas like transportation or sensitive industries
like defense and railroad.
• Advantages of Mixed Economies
• There is less government intervention than a command economy. This results in private
businesses that can run more efficiently and cut costs down than a government entity might.
• The government can intervene to correct market failures. For example, most governments
will come in and break up large companies if they abuse monopoly power. Another example
could be the taxation of harmful products like cigarettes to reduce a 
negative externality of consumption.
• Governments can create safety net programs like healthcare or social security.
• In a mixed economy, governments can use taxation policies to redistribute income and
reduce inequality.

• Disadvantages of Mixed Economies

• There are criticisms from both sides arguing that sometimes there is too much government
intervention, and sometimes there isn’t enough.
• A common problem is that the state run industries are often subsidized by the government
and run into large debts because they are uncompetitive.
Business Environment
A business environment is a set of elements closely involved with a
business’ activities. These factors have an internal or external influence
over the company’s results, performance and growth.