TyroCity: Business Studies Notes

Requisites of business success

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Establishment of objectives:
There must be proper establishment of objectives. Objectives are the aim of business. It determines the scope of future work. Objectives must be clearly defined. It provides guidelines for doing work. Objectives are defined for long term and short term.

Proper planning and policy:
Proper planning classifies the works done. Planning and policy formation should be done in efficient way. There must be clear set of policies and programs to complete the work. It helps in minimizing risk and maximizing profit.

Proper location layout and size of business:
Proper location layout and size of business is needed for progress of business. Layout means planting the business in such a way that production work can be carried out with efficiency and true manner. It helps in determination of proper size of business. Location also should be suitable. It must attract the market.

Sound organization:
There must be division of work among employees. There must be effective use of human sills and knowledge. Organization should help to answer various business problems. It ensures team work. It must ensure the best communication channels for proper decision-making.

Separate finance:
Finance is the blood of business. Business can’t be established without sufficient capital. Volume of capital to be invested is dependent upon size of business firm. Source of capital must be properly taken into consideration. It must be flexible. It should be suitable for both long term and short term business.

Efficient management:
Its main objective is to manage all activities of human and other resources. It must perform right job at right time in right place. It must use effective management technique.

Employees morale:
The success of business depends upon employee’s morale. The business should be used with intensity of employees. Employee should be encouraged, motivate. They could complete their work heatedly.

Modern technology:
It brings/ uses modern technology. It provides new idea and methods in production process. There should be proper labor and capital adjustment.

Research:
It helps in improvement of product. It works under the taste, desire and preference of the customers. In it various marketing, strategies, skills, knowledge and experts are used. Research and development is the main way to achieve profit with customer satisfaction.

Office furniture : meaning and importance

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Office furniture
Office furniture is an important part of office management; it is mostly used for indoor activity. Employees working in the office should be provided with comfortable and convenient furniture so that they can work efficiently. The major and most popular office furniture are chair, table, cabinets, cupboards, sofas, racks etc. office furniture are common in all offices. Office furniture should have good design which can help the office to look attractive ad pleasant. In a well furnished office, employees feel comfortable and are motivated for work

Importance of office furniture

It increases the efficiency of work
It makes the office more attractive and pleasant.
It helps to maintain the prestige of office
It provides better working environment for the employees
It helps in reducing the fatigue.
It helps in protection of documents from fire, dust, insects etc.
It helps in proper storage of files

Differentiate between sole trading and partnership

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Sole trading concern	Partnership firm
1. Low capital	1.high capital
2. One man management	2. two or more partners
3.quick and prompt decisions	3. Delay in decisions
4. business secrets can be maintained	4. difficulty in maintaining business secrets
5. risk and losses are to be born by a single person	5. there is reduction of risk and losses because they are shared with proportion of capitals by partners
6.no chances of conflict	6. Higher chances of conflict
7. lack of managerial ability	7. harmonization of managerial ability
8.chances of wrong decisions	8. Specialization in decision-making

Evolution of industry and commerce

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Evolution of business

The historical development of business and its processes of development up to now is called evolution of business. Business was not evolved in one or two days. It can be studied in two ways.

Evolution of industry

It is dated with the evolution of human beings. It is as old as human civilization. It was developed through various stages.

1. Hunting stage
In ancient times people lived in caves and fulfilled their basic needs of food and clothes through hunting the wild animals in forest. They were not civilized and hovered here and there. Their needs were also limited.

2. Pastoral stage
The stage of further development of human from barbarism is called pastoral stage. This stage is basically called the age of keeping animals. Animals were used for milk, meat, wool, skin and so on beyond food and clothes. The wants went on increasing and development also started.

3. Agriculture stage
Slowly, human beings became a little bit civilized and got idea about farming and keeping cattle. This stage was the major stage of development of industry. In this stage people started to do agriculture and live in river banks. They started to cultivate crops and domesticate the animals.

Development of agriculture is divided into 5 stages they are

Handicraft stage:
It is the beginning of industrial era. It is the stage of development of industry. Simple hands made tools were also developed. Local resources were the major source of raw materials. In the beginning of this stage people were only limited to their own needs but later own surplus products were used to exchange the goods with the roods basically called barter system. Products were exchanged with product and market was starting to develop. Capital invested was minimized.
Guild stage:
It was the beginning of organized activities. Organized groups of traders, craftsmen, artisans used to collect various resources from the local areas and produced goods using them.
Age of domestic system
After the stage of guild the age of domestic system was initiated. Crafts men were not able to fulfill the unlimited and increasing wants of people by using the limited resource. So, use of hands and tools for producing quality goods was introduced. People were employed and were paid according to the units of goods produced. However, salary was very low because the value of money was much higher at that time.
Industrial revolution
It began with the replacement of old system. It is the turning point of modern industrialization. Domestic system of production was replaced by large scale factory system. There was invention, innovation. Development of scientific techniques which encouraged mass production and distribution. There were numerous job opportunities. Salary was increased and quality was maintained.
Present age
Today’s modern era with industrialization, use of technology, computerization, modernization robotizing is the most developed stage of industries. Goods are being produced meeting the demand of large number of people. There are huge number of industries producing large number of goods to meet large amount of needs and wants by providing many jobs and salaries.

Evolution of commerce

It is related with the distribution and exchange of goods and services. It is related with transportation, communication, Banking, warehousing import export, trade and so on. It links between producer and consumer. It gradually develops along with the development of human and society. There are many stages of evolution of commerce

1. Self sufficiency stage
It is the initial stage of commercial evolution. The wants are very limited. In this stage people produced goods themselves to satisfy their own basic needs. They survived through hunting and gathering foods. There was no market. There was thus no exchange of goods. They were independent.,

2. Barter system
The wants of people increased with development of society. There was both advancement and civilization of market. Self-sufficiency stage didn’t remain with advancement. They started to exchange the goods they produced with goods that other people produced to fulfill other requirements. This is called barter system. There was exchange of goods and services with goods and services.

3. Origin of money
From the beginning of barter, people felt that there was difficulty in deferred payment, commerce, divisibility and place of exchange. That’s why money was originated. People developed coins but there was difficulty in large payment. So paper money was introduced. Money was used as medium of exchange, Measurement of value, deferred payment, redistribution of income and wealth, credit system and many more. After the origin of money, national and international trade started.

4. National economy
In this stage, buying and selling of goods and services was done within the country. The local market converted into regional and city market. There was division of work and specialization. Then goods were produce not only for local people but also for national market. There was also development in banking, advertising, insurance, warehouse and other auxiliaries.

5. International economy
International economy s called global economy. The globalization of trade introduced to speed up the activities of trade in the international level. It is not possible for a country to produce all demanded goods according to needs and wants. Therefore, the countries started to import the goods and other countries exported. Slowly, import and export was introduced in all counties. Trade started to extend in world market. WTO (world trade organization) was also established to control the level of import, export and evils associated with them.

Social responsibility of business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

The major responsibilities of business are:

1. Employees

Provides better working environment to satisfy the employees
It provides salary, bonus, provident funds and job security.
It also provides financial and non-financial supports.
Enriches employees’ performance.
Provide training to develop their skills.
listen and handle their complaints and issues

2. Creditors:

Make duly payment
Satisfaction of creditors with proper relationship
Helping them to create their own market.
Entrusting the right of proper selling of goods and services of their goods
Copyright and other legal rights.

3. Customers/consumers:

Better quality of goods and services by charging reasonable price
Supply of commodities is also to be done according to needs of customer
Helps to achieve needs and wants
Provide right goods at right place in right time.
Provide proper pre-sale and post sale information
Provide proper information about new products

4. Investors:

True information about earning power of business
The objectives are to provide reasonable rate of return to shareholder.
Provide the information about plan of business.
Ensure safe investment
Promote utilization of resources without leakage
Ensure transparency of business activities

5. Government

Increase in tax i.e. Increase in government revenue
Fulfill demand of government
Non violation of rules and regulation of government.
Avoid unfair trade
Provide essential information to the government.
Solve national problems like natural calamities.
Avoid malpractice like black marketing, adulteration, smuggling

6. Society

Good environment
Employment opportunities generation.
Socio-cultural understanding
Apply anti pollution measures.

Concept of partnership firm and partners

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Partnership is a form of business organization which as evolved to overcome the shortcomings of sole proprietor. As the size of business expands, one person is unable to provide the necessary capital and managerial skills. Therefore, two or more than two persons form a partnership to carry on business by pooling their financial resources and managerial skills. Thus, partnership is an extension of sole trading concern.

Types of Managerial Decisions

Business Studies XII — Sun, 18 Aug 2013 05:41:42 +0000

Types of decision-making
1. Programmed and non programmed decisions: Programmed decisions are those which are normally repetitive in nature and are taken as a routine job and responsibilities. These types of decisions are made by middle level management in accordance with some policies, rules and procedures. They have short term impact. For example: – granting a leave to an employee, purchasing office materials etc. non programmed decisions are non repetitively taken by top executives. They need to collect data and analyze them and forecast the strategic plans.

2. Major and minor decisions: among different decisions some decisions are considerably more important than others and are prioritized. They are called major decisions. For example, replacement of man by machine, diversification of product etc. contrary to that, some remaining decisions are considerably less important than others and are not so prioritized. They are minor decisions. For example, store of raw materials etc.

3. Routine and strategic decisions: Routine decisions are those decisions which are considered as tactical decisions. They are taken frequently to achieve high degree of efficiency in the organizational activities. For example, parking facilities, lighting and canteen etc. strategic decisions are those which are related to lowering the prices of products, changing the product etc. they take more fund and degree of partials.

4. Organizational and personal decision: Organizational decision is taken by top executives. For official purpose. They affect the organizational activities directly. Authority is also delegated. Personal decisions are concerned to an employee. The executives whenever takes the decisions personally that is known as personal decisions.

5. Individual and group decisions: When a single employee is involved in decision-making it is called individual decision. They are taken by ole proprietor when the problem is of routine nature. On the other hand when the decision is taken in a large organization where important and strategic decisions are taken, it is a group decision.

6. Policy and operating decisions: Policy decisions are taken by top-level management to change the rules, procedures, organizational structure etc, and they have a long tern effect. Operational decisions are taken by low level management which have short term effect and which affect the day-to-day operation of the organization.

Techniques of motivation

Business Studies XII — Sun, 18 Aug 2013 05:41:42 +0000

1. Financial incentives: First techniques of motivation are financial incentives as money is indicator of success. Therefore, it fulfills psychological safety and status need as people satisfy their needs by money. Wages, salary motivates employees to perform better.

2. Job enlargement: Under this technique, task assigned to do job are increased by adding simile task. So the scope of job enlargement is high for the motivation of subordinates. It is also known as horizontally leading of job.

3. Job enrichment: Under this technique jobs are made challenging and meaningful by increasing responsibility and growth opportunities. In such technique of motivation, planning and control responsibility are added to the job usually with less supervision and more self evaluation. It is also called vertical leading.

4. Job rotation: it refers to shifting an employee from one job to another. Such job rotation doesn’t mean hanging of their job but only the employees are rotated. By this it helps to develop the competency in several jobs which helps in development of employees.

5. Participation: Participation refers to involvement of employee in planning and decision-making .it helps the employees feel that they are an asset of the organization which helps in developing ideas to solve the problems.

6. Delegation of authority: Delegation of authority is concerned with the granting of authority to the subordinates which helps in developing a feeling of dedication to work in an organization because it provides the employees high morale to perform any task.

7. Quality of work life: It is the relationship between employees’ and the total working environment of organization. It integrates employee needs and well-being with improves productivity, higher job satisfaction and great employee involvement. It ensures higher level of satisfaction.

8. Management by Objectives: It is used as a motivation and technique for self-control of performance. By this technique supervisor and subordinates set individual and organizational goals. Each individual’s responsibilities are clearly defined which would help identify the skill sets one has to make the best use of the same to meet organizational mission and vision. This also helps the organization function effectively.

9. Behavior modification: The last technique of motivation is behavior modification. It develops positive motivation to the workers to do the work in desired behavior in order to modify behavior.

Concept of cooperative organization

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Meaning and concept
Co-operative organization is the form of organization where in persons voluntarily associate together as business being a basis of equality for promotion of economic interest of themselves. It is a voluntary association of persons with same interest. It is guided by service motive. It is established for economical and social development of weaker section of the society. It tries to solve similar problems. In all form of business organizations, the objective of owner is to make profit. But its objective is to provide services. Its motto is all for one and one for all. It helps through mental support too. It can be defined as voluntary association of person usually of limited means forming together in equal basis for promotion of certain economic or business interest.

Difference between private company and public company

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Bases of difference	Private company	Public company
Number of members	It needs at least 1 member for its formation. The maximum number can be 50.	It needs at least 7 members for its formation. The maximum number is not limited.
Invitation for capital	It cannot invite the public to buy its shares	It is free to invite the public to buy its shares
Commencement of business	It can commence the business immediately after the incorporation	It can commence the business after receiving the certificate of commencement of business.
Issue of prospectus	It does not need to issue prospectus	It must issue prospectus
Statutory meeting	It does not need to hold statutory meeting and file statutory report.	It must hold statutory meeting and file statutory report
Transfer of shares	The transferability of share is not allowed and hence its ownership cannot be transferred	The transferability of share is allowed and hence its ownership can be transferred
Use of word	It must use the word Pvt. Ltd. at the end of its name.	It must use the word Ltd. at the end of its name

Business Studies XI

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Unit 1 and 2

Unit 1: Introduction to Business

Unit 2: Evolution of Business

Unit 3 Forms of Business Organizations

Sole trading concern

Partnership firm

Joint stock company

Cooperative organizations

Public enterprises

Multinational companies

Business support agencies in Nepal

Unit 4 to 8

Unit 4: Office Management

Unit 5: Filing and Index

Unit 6: Record Management

Unit 7: Office Machines and Furniture

Unit 8: Business Communication

Component of Business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Scope of business
Business covers wide area and all economic activities. It also includes all types of industry and commerce. Industries are related to the activities of production of goods and services and commerce is related to distribution of goods and services from producers (industries) and customers.

Types of industries

1. Genetic industries:
Genetic industries are also called heredity industries that involve in production of goods from plants and animals to earn profit. Those industries which produce medicines from herbs, perfume from flowers, milk and meat form animals are called genetic industries

2. Extraction industries:
Industries that are involved in extracting the resources from the sources of nature are called extraction industries. It supplies the raw material to other industries. These types of industries are generally based in mining, fishing etc.

3. Construction industries:
Those types of industries which are related to construction of different infrastructures are called construction industries. They basically construct road, bridges, houses and so on . It helps in development of country

4. Manufacturing industry:
It is related to produce finished goods. It processes raw materials into finished goods. There are mainly 4 types of manufacturing industry they are:

Analytical industry:
It is an industry which produces goods by analyzing raw materials in scientific way. In this industry various goods ate purchased by single material. For example dairy product (milk, ghee, butter, ice cream from milk)
Processing industry:
The industry which is involved for production of goods and services by using different steps or stage is called processing industry. For example for processing cotton into thread the processes of spinning, weaving, dying, bleaching is used.
Synthetic industry:
The industry which is involved for using various raw materials to produce a single good is called synthetic industry. For example to produce cement limestone, red soil, chemicals etc are used.
Assembling industry:
The industry which is involved for production of goods by combining different parts which are already manufactures by different industries is called assembling industry. For example TV, computer, mobile, watch manufacturing industries.

Commerce:
It is related with buying, selling and exchanging of goods and services. It is related to economic activities to earn profit. The role of bridge between manufacturer and customer is played by commerce

Types of commerce

Trade:
Trade is related to buying and selling goods and services for earning profit. It supplies quality goods with reasonable price. Those activities which are related to buying, selling and distributing goods in market is known as trade

Types of trade

1. Home trade:
Home trade means national, domestic or internal trade i.e. Buying and selling within a nation. In home trade both buyer and seller are from the same nation. In home trade task is simple than foreign trade. It is classified into two types they are.

Wholesale trade:
When trader buy goods in bulk amount and resell to retail in small volume is called whole sale trade. In this trade goods are bought from manufacturer and are sold to retail. It acts as a middleman between manufacturer and retailer. It deals with special product
Retail trade:
When trader buy goods in bulk amount and resell to customer in small volume is called retail trade. In this trade goods are bought from wholesaler and are sold to customer. It acts as a middleman between wholesaler and customer. It deals with various types of product.

2. Foreign trade:
Foreign trade means international, global, external trade i.e. Buying and selling is between two or more nation. In foreign trade buyer and seller are from different nation. In foreign trade task is difficult than home trade. It is classified into three types they are.

Import:
A good or service brought into one country from another is called import. Along with exports, imports form the backbone of international trade. The higher the value of imports entering a country, compared to the value of exports, the more negative that country’s balance of trade becomes. Buying goods from India, china is called import.
Export:
A good or service sold to another country from one is called export. Along with imports, exports form the backbone of international trade. The higher the value of exports exiting a country, compared to the value of imports, the more positive that country’s balance of trade becomes. Exporting herbs, garments to Germany, India is the example of export
Entry port:
The trade in which a country purchases the goods from one country and sells it to another country is called entry port trade. The goods bought from a country is not used for self benefit but is rather exported to another country. For example India buys herbs from Nepal and sells it to china.

Auxiliaries of trade:
It supports or assists the trade activities. It helps to run business smoothly. It helps for transfer goods from production area to consumption area. It creates time and place utility.

1. Transportation:
It transfers goods from one place to another. There are many means of transportation that can assist business and trade activities. They are air travel. Bus route, sea route, rope route etc. It delivers right product and right time in right place. It creates time utility

2. Warehouse:
It is one of the auxiliary of trade. It helps to protect and store goods until customers uses them. It provides the goods then demand is created. It also helps to provide unseasonal goods.

3. Insurance:
It acts as nutrition to trading activities. It helps to reduce risk and uncertainties. It is a contract between organization and their future. The system that takes the responsibility of compensation of certain risk is called insurance system.

4. Banking:
Banks are the financial institution that supports for traders. It provides loan, investment, credits facilities to the trading companies. It helps for expansion and flexibility of trade.

5. Advertising:
It is a supporter to trade. It provides information to customer about goods and services. Its aim is for creation of demand. It also acts as a promotional tool.