TyroCity: Business Studies Notes

Concept of public enterprises

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

Public enterprise is an organization which is owned, managed and controlled by the government. It is necessary for the active participation of government in individual and commercial level. It is financed and operated by the government. It provides service to the public. It provides goods and services to the public at reasonable price. It is guide by service motive but it can earn nominal profit. It helps in maintaining the state of ownership and operation of industrial, agricultural, financial and commercial undertaking. It is one autonomous body which is managed and owned by government and which provide goods/ services for public.

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.

Types and means of business communication

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

Types of communication on the basis of formality

Formal communication

Formal communication refers to interchange of information officially. The flow of communication is controlled and is a deliberate effort. This makes it possible for the information to reach the desired place without any hindrance, at a little cost and in a proper way. This is also known as ‘Through Proper Channel Communication.’ It can be both written and oral. Daily works are handled through oral communication, while the policy matters require written communication. This communication is adopted among those employees where formal relations have been established by the organization. The sender and the receiver have some sort of organizational relations. The communication has to pass through a definite channel while moving from one person to another. For example, to convey the feelings of a worker to the manager, the foreman’s help has to be sought. This channel is concerned with the authorized organizational messages only and the personal messages are out of its jurisdiction. This channel of communication is not established automatically but effort has to be made for its creation. It is decided keeping in view the objectives of the organization.

Informal communication

Informal communication refers to interchange of information unofficially. This communication is based on informal relations (like friendship, membership of the same club, the same place of birth, etc.) And, therefore, is free from all the organizational formalities. The exchange of informal messages usually takes place on the occasion of community meals, social occasions, parties, etc. On such occasions, the superiors gather such information from their subordinates as may be difficult to get through formal communication. Such communication includes comments, suggestions, etc. For example, a superior wants to complain against his subordinate to his higher officer and at the same time he is afraid of giving it in writing. This can be conveyed to the higher officer through informal communication, say during the course of a conversation. There is no definite channel of communication. This communication is born out of social relations who mean that it is beyond the restrictions of the organization. No superior-subordinate relationship figures therein. A more sociable superior can gather much information through this channel. Through this communication, information about the work and the individual can be collected. It moves in a zigzag manner.

Communication on the basis of direction of flow

1. Horizontal communication:
It is the process of lateral flow of information in order to coordinate work activities at the same level of management hierarchy. It helps in coordination of task, share information and minimize the conflict. In other words, it is the flow of information between the activities and to solve the organization problems, this can be shown by following figure.

2. Vertical communication:
It is the process of upward and downward flow of information in order to coordinate work activities at the different level of management hierarchy. It helps in task directives, share information about rules and regulations, responsibility, problem, achievement and suggestions and minimize the conflict between subordinates and superior. There are two types of vertical communication

Downward communication: It is the flow of information from top to bottom through formal lines of authority. Top-level management transmits the information to subordinates about objectives, policies, strategies and responsibility.

Upward communication: It is the flow of information from bottom to top in an organization. Middle and low level management transmits the information to superior about problems, suggestions Upward communication

3. Diagonal communication:
It is the flow information between the superior and subordinates who are neither in the same department nor at the same level. It violates the principle of chain of command and unity of command.
Diagonal communication

Means of communication

1. Oral communication
The method of exchanging information through spoken word is known as oral communication. The information is passed from one place to another place by speaking. It helps to save time and provide immediate response and feedback. In oral communication, human voice is used. There are many means of oral communication. Some of them are telephone, radio, television.

It is economical. It is quick and fast. It helps to save time. It is more effective in comparison to written communication. It helps to give immediate feedback or response. It is the best method of solving problems. Ti is flexible. Decisions also can be changed on the spot. But it is less reliable and not good for evidence. It cannot provide future reference. It is not suitable for long message. Sometimes, there is language problem. It is not so suitable if sender and receiver are in different places.

2. Written communication
The method of exchanging information by writing is called written communication. It is important when message is complicated, accuracy and authentic. It is reliable source. It helps in future reference. It can be shown as evidence in court. The means of written communication are letter, order, report etc. It is authentic. It can be provided as proof in court. It can provide future reference. It is suitable for long message. It is suitable if sender and receiver are in different places. It is not economical. It is not quick and fast. It is time-consuming. It is not so effective in comparison to oral communication. It doesn’t help to give immediate feedback or response. It doesn’t help to solve problems. It isn’t flexible. Decisions also can’t be changed on the spot.

Concept of multinational companies

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

Multinational companies are those companies whose management, ownership and control are spread in more than one country. It does business in two or more countries. It is a large industrial organization. They are established in one country as parent country and in other countries as subsidiaries or as host countries. They produce and distribute goods and services in all these countries where they operate. The main aim of these companies is to operate business in most of the part of the world. Popular multinational companies of the world are IBM Company (USA), Sony Company. Wai wai, nestle company, coca cola company.

Drafting a business letters in English (enquiry, order, complaint and application)

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

Types of business letters

1. Enquiry letter
The letter written by a buyer to the seller asking for the information about goods to be purchased is called enquiry letter. It is written to enquire about the quality, price of goods, discount offered, terms of payment and so on.

The letter which is written by seller to the buyer giving the information about goods to be sold is called reply to enquiry letter. It is written to give the information about quality, price of goods, discount offered, terms of payment and so on.

Example of enquiry letter and its reply About typewriter

Garfield secretarial
Kathmandu

Baneshwor, Kathmandu
May 16, 2013

Reference:
CONFIDENTIAL
M/S ABC press and machineries
Kathmandu

Dear sir/madam,

Subject: for purchase of Nepali and English typewriter

We are one of the leading secretarial training institute of Kathmandu, and we are planning to extend our services to the fullest. We have heard about your clean services since a very long time, and we want to have purchase deals with you. Your market value and goodwill have lured us to extend our business dealings. We expect to have the best services from your side too. We are interested in purchasing Nepali and English typewriter four of them each. We would be glad to know about your offer, payment system, delivery period and post sale services.

Respectfully yours,
Garfield secretarial
Sales manager

Reply to the enquiry letter
ABC press and machineries
Kathmandu

Baneshwor, Kathmandu
May 18, 2013

Reference:
CONFIDENTIAL
M/S Garfield secretarial
Staff manager
Kathmandu

Dear sir/madam,
We thank you for your enquiry of May 16, 2013 regarding Nepali and English typewriter.

We have pleasure in informing you about the product type we have as following

model	Prices in rs. English 15 inch 18 inch		Prices in rs. Nepali 15 inch 18 inch
Remington	16000	19000	18000 29000
Helga	13000	15000	12000 13000
Brother	15000	18000	13000 18000

Delivery period for 2 months

Payment: after delivery of good [cash payment or cheque].
Post sale service: 1 year free servicing with 2 year warranties on each machine.

We hope you will find above term good and will accept it
Thanking you

Yours faithfully,
M/S ABC press and machineries
Sales manager
Kathmandu

2. Letter of order

The letter which is written by the buyer to the seller to place the order for goods is called order letter. It is contract between buyer and seller for the goods to be purchased while placing the order of the goods. The seller however must give and buyer must have pre determined information about quality, price of goods, discount offered, terms of payment and so on.

Example of letter of order
Garfield secretarial
New Baneshwor, Kathmandu

Baneshwor, Kathmandu
May 20, 2013

Ref no:
M/ S ABC press and machineries
Kathmandu, Nepal

Dear sir/madam
We thank you for letter along with price list and quotation dated May 18, 2013. The terms and conditions given in your letter are acceptable. So we want to extend our business. We would like to have the supply of following machines through transport co. and we will forward the document of payment through Janata bank located in Baneshwor.

Orders list

models	English pcs	Nepali pcs
Remington	5	3
Helda	6	4
Brother	7	8

Please confirm this order and informing us the dispatch date. This payment will be made only after receipt of goods.

Thanking you,

Yours faithfully,
Garfield secretarial
Sales manager

3. Confirmation letter

The letter which is written by the seller to the buyer confirming the order received is called confirmation letter. While writing confirmation letter, the seller should state that the order ha been received and the goods as per ordered will be delivered as soon as possible

Example of confirmation letter
ABC press and machineries
Kathmandu

Baneshwor, Kathmandu
May 18, 2013

Reference:
CONFIDENTIAL
M/S Garfield secretarial
Staff manager
Kathmandu

Dear sir/madam,
We received your order letter dated May 20, 2013, and we agree to your request of supply and mode of payment. We assure you that the goods and quantity of goods will be delivered through transport co. as soon as possible. We will make our best efforts to deliver the right good at right time and at right place. In addition, we would like to have full cash payment at the time of delivery. Thanks a lot for dealing with us. We hope for better relationship and more dealings here after.

Thanking you,

Yours faithfully,
M/S ABC press and machineries
Sales manager
Kathmandu

4. Complaint letter
The letter which is written by the buyer and the seller making complaint against the goods delivered is called complaint letter. The letter is written if the goods received are of inferior quality, high price and late delivery. Complaint should not be made unnecessarily without making sure that the facts found are right.

Example of complaint letter
Garfield secretarial
New Baneshwor, Kathmandu

Baneshwor, Kathmandu
May 20, 2013

Ref no:
M/ S ABC press and machineries
Kathmandu, Nepal

Dear sir/madam
The goods that we ordered for were received timely, but we noticed little damage on some of the typewriters on the time of delivery. 1 English typewriter of Brother was partly broken and 2 Nepali typewriters from Helda did not work properly since the time of installation. We want them to be replaced as soon as possible, and we don’t want any trouble here after. If they won’t be replaced soon then we would like to have our payment of each typewriter mentioned above to be repaid back. We hope for your better response.

Thanking you,

Yours faithfully,
Garfield secretarial
Sales manager

Letter of application
A letter written for receiving an employment is called application. It is generally written for selection for a job. When you write the letter of job application you should explain about yourself, your qualifications and experience. It should be clean, and respectful.

Anamnagar-32
Kathmandu, Nepal

May 18, 2013

To,
The personnel manager
The citizens’ bank
Kamaladi, Kathmandu, Nepal

Subject: an application for the post of an accountant

Dear sir/madam
With reference to your advertisement published in “The Himalayan Times” daily dated May 16, 2013 I would like to apply for the vacant post of an accountant in your most reputed bank of the city. Being a person with stupendous academic qualification and sound personality I think I would be a deserving candidate for the post.

I am a qualified, energetic and disciplined person of 24. I am a bachelor degree holder with distinction from TU which is the top university of the nation. I am currently doing MBA from Nepal commerce campus and have completed my first semester with distinction marks. I have always had excellent academic qualification. Addition to that, I am a multilingual person with fluency in English, Nepali, Hindi and French. I have a good knowledge of computer software design too. I have gathered relevant experience of being an accountant for 2 years in Griha cooperatives and for 2 years in Kist bank. I assure you that my glorifying qualifications and experiences will turn out to be better if you give me a chance to explore more out of me in your bank.

Attached documents, certificates and me CV will give you further more information about me. It is my vow that if I get a chance to work for your bank I won’t leave any stones unturned. My faithfulness, honesty and diligence will certainly be fruitful for your bank. Waiting for your positive reply

Yours sincerely,
Abc xyz

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

Characteristics of Multinational Companies

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

Characteristics of multinational companies are given below:

1. Productive organization: this organization produces various types of goods and services. It is supplies in many countries. It uses its own technology, patent right for manufacturing goods.

2. Worldwide: multinational companies operate in whole world. It extends its business worldwide. It establishes many branches in various companies. They extend their business in more than one country.

3. Ownership and control: ownership of company remains on both parent and host country. Parent company control, manage and help in the operation of all host countries. They have control in capital, high technology, and trade mark.

4. Transfer of technology: these multinational companies are establishes with hug capital and advanced technology. It also transfers the technology in the host countries that can be used for production.

5. Marketing superiority: it is large organization which has international name and fame. It has good network worldwide for distribution of goods.

6. High efficiency: these organizations operate their business with efficiency. They use advanced technology. They also involve keenly in research works. They used many trained person that helps in the production of quality goods.

Characteristics of public enterprises

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

Some features of public enterprises

1. Government ownership: It is totally owned by government. Its majority shares are taken up by the government. In this enterprise, sometimes 50% of share is owned by the government.

2. Government management and control: It is one autonomous body which is managed and owned by government. Government controls and manages organization by appointing key personnel. It is like board of directors, managing directors, chairman and so on which manage the appointing, transfer of members and so on.

3. Public accountability: They are operated by government fund. It is also accountable to general public. It is carried out by the parliament and helps in providing goods and services for public.

4. Service motive: It provides service to the public. It provides goods and services to the public at reasonable price. It is guide by service motive but it can earn nominal profit.

5. Autonomous: It is one autonomous body which is managed and owned by government. It receives fund from the government. But government doesn’t interfere in the day-to-day activities of the organization.

6. Monopoly: Government has monopoly in this sector.

7. Separate legal entity: It is established under acts and is rum under a law. It can purchase and sell securities, can enter into any contract, can sue and can be sued.

8. Stability: It is generally stable and perpetual in nature.

Concept and purpose of filing

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

Meaning of filing
It is the process of classifying, arranging and storing record so that they can be located when required. It is also the process o collecting and arranging records or their copies in such a way so that whenever it is needed it could be found very easily. All office receives letters and dispatches that are kept for the future use. They are to be stored in a safe place. For that filing is required. It is an important part of management that helps to decide about anything in a legal and systematic way. It is the process of arranging and protecting records so that they may be found and delivered easily when needed for future.

Purposes:

It helps to keep all records together so the history of office can be understood.
It helps to provide safety place for storage of necessary documents in order to use and locate them when required.
To make records readily and easily available.
It can be used as evidence in case of dispute
It helps in some legal formalities.
It is shown as profit or legal evidence.
It can be presented as a legal document in court.
It helps to make future plans. Past records are the base of future records

Company meeting : preliminary general meeting, annual general meeting, extraordinary general meeting

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

Company meeting
Company is an artificial legal person. It is not capable to think or decide any important matter. But through meeting it can think and easily make any decisions. Meeting means gathering of people who are connected with the company for discussion in certain place. It can be defined as assembly of number of person for predominated purpose and by previous notice for discussion and decision on the same business matter.

Types of meeting

General meeting
The meeting of shareholders is known as general meeting. The types of general meeting are

1. First or preliminary general meeting
First official meeting of shareholder is known as first general meeting. It is also known as preliminary general meeting. It must be conducted within one year after receiving certificate of commencement of business. It occurs only once in the lifetime of public company. Its main aim is to give details of company to all shareholders about the number of shares issued. Share holders must be pre-noticed about place, time, date and agenda in advance of 21 days of conducting the meeting. Following things are discussed in the meeting.

Authorized capital
Number of share
Issued share capital of company
Paid up capital
Total amount of installment paid
Loan borrowed from any bank
Financial institution
Name and address of current director

2. Annual general meeting
It is held in each financial year within six months from the date of expiry of its financial year. It is held to inform shareholders about progress of the company, about the ongoing performance and future plan of company. Share holders must be pre-noticed about place, time, date and agenda in advance of 21 days of conducting the meeting. Following things are discussed in the meeting

Annual financial statement
Audit and directors report
Matter related to the distribution of dividends
Appointed of any directors
Appointment of any auditor

The information and report may be printed in newspaper too. If any shareholder request for the copy of annual financial statement, director’s repost and auditor report then company should provide it.

3. Extra ordinary general meeting:
If any important matter arise and it should be discussed sooner and can’t be waited till the annual general meeting then this meeting is held. It is also called special circumstances and is held when special and urgent decisions have to be made. Share holders must be pre-noticed about place, time, date and agenda in advance of 15 days of conducting the meeting. This meeting is conducted by

a. By board of directors
In case of emergency

b. By auditor

In auditing the account there can be need of shareholder’s idea and so auditor calls this meeting with a reasonable cause
In case BOD fail to call meeting then auditor may submit application to company registrar offices for stating reasons about not conducting meeting.

c. By shareholder
10% of paid up capital or at least 25% of total shareholders demand to call this meeting with reasonable cause. They request to board and submit application. If there is no meeting within 30 days then application is submitted to company registrar with reasonable reason. Then registrar office can call a meeting.
Extra ordinary general meeting is called for following purposes

Increasing authorized capital of the company
Decreasing the share capital of the company
Altering name or objective of the company
Issuing bonus shares
Selling shares at discount
Converting private company into public company or vice versa

2. Board of directors (BOD) meeting
It is also called meeting of directors. Board means collective name for directors. When directors of company come together to determine its policy and to take decisions according to its act then the meeting of BOD is called. It is held at regular interval. In public company it is held when there is attendance of 51% of total number of directors. Its main agenda are management of company about share, recommendation of dividend, appointment of officers and fixation of data. Decisions are taken by passing resolution. If any director is not satisfied with decision then s/he can write the note of dissent of proof of his rejection.

Concept of sole trading concern

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

Sole proprietorship or individual proprietorship is the simplest, oldest and In some respect, the most natural form of business organization in private sector. In this form a single individual is solely responsible for providing the capital, for bearing the risk and for overall management and control of the enterprise. In is the one man show owned, managed and operated by one person. According to professor Henry, “the individual proprietor is the form of business organization at the head of which stands an individual as one who is responsible, who directs its operations and who alone runs the risk of failure.”

Features of cooperative organization

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

Features of cooperative organizations are as detailed below:

1. Voluntary association and open membership
It is voluntary association in which membership is open for all people with common interest. People can come together to satisfy the needs with common effort. In Nepal at least 25 members are required for establishment of cooperative organization.

2. Equal voting right
It is based on democratic principle. It is based on equality of status of all members. Decisions and other bills are passed on the basis of majority votes.

3. Democratic management
Management is always in democratic lines. All member of organization elect its managing committee. One man can give only one vote. Managing committee will then work for common benefit of all members.

4. Service motive
Its objective is to provide service to member. It’s not profit motive. Its aim is not to earn maximum profit as in all form of organization. Even though it can earn profit by extending their services to non members but they collectively work for service.

5. Legal existence
In Nepal, these types of organizations are established under cooperative act. There must be at least 25 members and they all must be guided through common objective

6. Cash transactions
In this type of organization transactions are done only through cash. There are no credit transactions. It eliminates bad debt too.

7. Disposal of surplus
It is service motive. Even though it can make surplus, the surplus amount is used for extending the surplus facility.

8. Education
The success of organization depends upon the education of its members. They should be constantly educated with objectives.

9. Liability
Liability of member is limited. It should use the word “ltd” after its name.

10. Government control
The organization must follow the rules and regulations of the government.