TyroCity: Business Studies Notes

Role of cooperative organization in developing countries

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

Following are the role of cooperatives in developing countries:

Works for the economic progress of the nation
Uplifts the poor people.
Develop the weaker section of the country
Bring balance between economic and social development of the country
Mobilization of resources in rural areas
Employment of the people in agricultural sector
Provide better qualities of seeds, fertilizers, pesticides, insecticides to the farmers
Help to get agricultural loan.
Helps to establish business in low capital
Enhance the economic activities like banking, shares, investment and so on
Encouragement in saving
Farmers, employee, and small retailers who are often neglected for loan are provided credit facilities.
Provides loan to poor farmers at low interest rate.
Elimination of poverty
Increase the living standard of people

Factors affecting decentralization

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

Factors affecting decentralization of authority

1. Size – size of the organization, terms of sales number, plans, number of employees affects the decentralization of authority. It is observes that the speed and adequacy of decision making, flexibility and efficiency are enhanced through decentralization of authority in case of very large multi product, diverse and complex organization. Therefore in larger size of organization, there will be more dispersion of authority

2. History and age– the size of organization, the degree of decentralization depends upon history and ages of organization. If it is organized by an individual then in such kind of organization, there will be centralization of authority. But in case of business activities when there is merging being done there is decentralization of authority. In any organization, relatively high degree of centralized authority may be needed when new values and viewpoint are establishes by the executives

3. Philosophy of top management– decentralization of authority depends upon philosophy of top management. it is seen that in the owners managed enterprise there is delegation of authority but in professionally managed enterprise decentralization of authority is seen.

4. Competent personnel– competent personnel affect decentralization of authority. more personnel at lower level more policy of decentralization of authority,

5. Strategy and organization environment– strategy and organization environment influences market, technological environment, competition. It is the basis of determining decentralization of authority and centralization of authority.

6. Nature and management function– the degree of decentralization of authority is influenced by nature and management functions. Generally functions like production and sales are more decentralized and finance, personnel, research and development are highly centralized.

7. Control techniques– decentralization of authority is more when control technique is good. When control system is reliable, there is better and higher decentralization of authority to the lower level.

8. Dispersion of organizational plans– decentralization of authority also depends upon dispersion of organizational plans of the organization. Organization has officer of different types located at different places. That’s why decentralization of authority becomes necessary.

Business environment : concept and components (internal and external)

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

Business establishes, grows or operates and dies in environment. It exchanges resources in environment. It collects inputs i.e. Man money, materials, machines etc. And provides output i.e. Goods and services in the environment. Environment means surrounding. Business environment defines as a force that affects on organizational performance. It includes internal an eternal factors. It provides opportunities and threats.

1. Internal environment
It is defined as all the forces or conditions that are available within an environment that affects on organization and business. It is also known as controllable factors because business can control them. It includes

Employees:
Business hires employees. It is the major internal factor. It works inside the business. It can be controlled by the business. Employees differ in skill, knowledge, morality, and attitude and so on. When managers and employees have difference in goals and beliefs then conflict may arise. The task of management is to divide the work and assign the work to the suitable employee and handle the conflict.
Shareholders:
Management deals with many shareholders. Shareholders have the right of ownership, power of management and voting right. The actual management of organization is carried out by elected representative of shareholders jointly known as boar of directors. Boards of directors have the responsibility of overseeing the management of organization. It plays the major role in formation of objectives, policies, strategies of the organization as well as their implementation.
Organization structure:
It is located inside the organization. The arrangement of various facilities, pattern of relationships among the various department, responsibility, authority and communication is the organization structure. It also included specialization and span of control.
Organization culture:
The sets of values that help the members to understand what organization stand for how it does work, what it considers, cultural values of business forces of business and so on. It helps in direction of activities.

2. External environment (PEST)

All the forces and condition that cannot be controlled by the business is called external environment. It is also known as uncontrollable factors because business can’t control them. It is located outside the business. It affects on organizational performance.

It includes:

Economic environment:
It indicates the condition of economy in which business organization operates. It has continuous and great impact on business. It includes national income, production, inflation, savings, investment, price, government activities. Business person must have constant watch on this factor.
Political or legal environment
It is defined as rules and regulations determined by the government. Business must fulfill demand of government. There should be non violation of rules and regulation of government. Business should avoid unfair trade and should provide essential information to the government.
Social environment:
Business must have good environment where a business can be established neatly. Business also helps in employment opportunities generation. There should be socio-cultural understanding and application of anti pollution measures.

Technological environment:
It defines about the methods available for converting resources into product or services. It transforms inputs into output. Input means material, capital, man, machine. It affects on business. It helps to change the level of job, skill, and product and so on. There can be innovation, development of scientific techniques which encouraged mass production and distribution.

Concept of Business

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

Human beings are continuously engaged in some activity or other in order to satisfy their unlimited wants. Every day we come across the word ‘business’ or ‘businessman’ directly or indirectly. Business has become essential part of modern world. However, Business is an economic activity, which is related with continuous and regular production and distribution of goods and services for satisfying human wants.

All of us need food, clothing and shelter. These needs are the basic human needs. We also have many other household needs that are to be satisfied in our daily lives. We meet these requirements from the shopkeeper. The shopkeeper gets from wholesaler. The wholesaler gets from manufacturers. The shopkeeper, the wholesaler, the manufacturer are doing business and therefore they are called as Businessman.

Lewis Henry defines business as, “Human activity directed towards producing or acquiring wealth through buying and selling of goods.”

In short, all those economic activities which are concerned with earning profit and creating wealth through the production and exchange of goods and services is called business.

Structure of business letters

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

Business letter is one which appears well, is written well and communicated well. It includes several parts and the parts are arranged in sequence to make it meaningful. Arranging various parts in proper sequence in letter is called structure of business letter. The structure is heading, opening, body and closing:

1. Heading
Heading is used to convey a positive image of the company. Because it includes the company’s address, phone and often email. It is not necessary to include that information again in the body of the letter. Sometimes the writer will provide a direct phone number or personal email address if the action statement calls for direct communication.

Inside Address
Two spaces below the date are the full name and business address of the person to whom the letter is addressed. If several people are receiving the letter, all their names and addresses should appear. The address on the letter should be the same as the address on the envelope. As with the date, there can be legal consequences for inaccuracies. The address on the letter is presumed to be the one to which the letter is actually sent. If it is incomplete or inaccurate, a recipient can make the case that the letter was mailed to the incorrect address as well.

Date
Full date must be included in the letter. The date can be any agreement being made Because the letter is a formal document, often used in contract situations, the date can be extremely important. The letter is usually dated the same day on which it is mailed, but whatever agreements are included in the letter are considered effective as of the date of the letter.

The opening

Salutation
The formal greeting always starts with “Dear” followed by the person’s title and last name, and ending with a colon. This requires finding out whether the recipient is properly addressed as Mr., Ms. Or Dr. Attempts to avoid the issue (i.e. Substituting the title with the person’s first name, using impersonal phrases like “Mr. Or Ms” or “To Whom It May Concern”, or eliminating the salutation entirely) indicate that the writer doesn’t actually know the recipient of the letter at all, making the letter a “form” letter, a much less formal document.

Body

Context Paragraph
The first paragraph of the letter will define the context, providing a clear statement of the letter’s topic and purpose. Avoid starting a letter flowery language that doesn’t explain what the letter is about. In social letters or in letters written for businesspeople, it is appropriate to begin a letter with a question about the family or a comment about recent weather or world events. U.S. businesspeople, however, generally prefer to find out right away why the letter has been written.)

Content Paragraphs
The typical letter uses one to three paragraphs to provide the information relevant to its purpose. Each paragraph should cover a single topic or point. In the case of a long letter that covers multiple pages, it is appropriate to break the information into sections with internal headers or bullets to provide clarity.

Action Paragraph
The final paragraph of the letter provide a clear, straightforward statement of the action that will be taken be the writer, requested of the reader, or expected by a third party.

Closing
Two spaces below the final paragraph of the letter, a traditional closing line, generally “sincerely” or “respectfully,” ends the letter. If the situation calls for a warmer tone, the closing might be “cordially,” “best wishes,” or “regards.”

Signature
A four-line space allows room for a written signature immediately below the closing, then the sender’s full name is typed, with the full business title (sometimes with the department or division as well) on the next line. The signature on a business letter signifies that the writer is taking responsibility for fulfilling any commitments being made. Thus, even when the sender and recipient know each other well, a full signature is used.

When writing on behalf of a team or department, type the group’s proper name immediately above the written signature of the team’s representative.

Merits and demerits of sole trading concern

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

Merits of sole trading concern

1. Easy to start and dissolve:
A sole proprietorship can be setup easily and quickly. No legal formalities and expenditures are involved in the establishment of a proprietorship. There is no need to associate others or to enter any agreement. Only a license may be needed in special cases. The owner can start business operations as and when he desires.

Similarly, a sole proprietorship can be closed down very easily and quickly.

2. Motivation to work:
The proprietor is all alone entitled for all the profits and the losses of the business. He bears the complete risk and there is nobody to share the risks, workload or any profit or losses. There is direct relationship with efforts and reward. There is an incentive to work hard. The proprietor is motivated to make the best possible use of his skills and resources to maximize the profits.

3. Quick decisions:
The sole proprietor is completely free to take all decisions and to implement them. He doesn’t need to consult or seek others approval. Quick decisions and prompt actions are helpful to improve the efficiency of business operations.

4. Independent control:
The proprietor alone takes all the decisions pertaining to the business. He is not required to consult anybody. Ownership and management are vested in a person. There is no governmental intervention in day to day activities.

5. Business secrets:
The sole proprietor can keep the secrets to himself and these secrets are not known to competitors or others.

6. Personal contact:
A sole proprietor is in a position to maintain intimate contacts with his customers and employees. He can enter to the requirements of each and every customer. Close personal touch increases the competitive strength of the business.

7. Flexibility:
A sole proprietorship is small in size and has a simple management functions. Therefore, it can be adapted easily to suit the changing conditions of the market. The line of business can be easily changed or modified.

8. Economy:
The management of sole proprietorship is inexpensive. As sole proprietor himself is the manager, the cost of management is very low. Borrowing capacity is high owing to the unlimited personal liability of the owner.

9. Social utility:
Sole proprietorship provides an opportunity for gainful self employment for the people with limited money. It offers a way of earning an honorable living for those who do ot ant to work under other. It also facilitates equitable distribution of income and wealth.

Demerits of sole trading concern

Sole proprietorship has limited capital
Sole proprietor only uses his ideas and innovation capacity. So there is limited managerial ability
Sole proprietor must work more to earn more profit. Higher profit generation is important. So, there is dull and monotonous wok.
Death of sole proprietor causes death of sole proprietorship.
There is no specialization in decision taking. So there can be chances of taking wrong decisions
There is low investment resulting in limited areas of operation.

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.

Selection of Office Location

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

Nearness to customer: The office should be accessible to customers. They do not like long distances to make business inquiries. The office should be accessible to other parties who are in regular contact.
Nearness to related business: It is desirable to locate the office near the offices of related business. It should be established in the same line of trade.
Availability of infrastructure: The infrastructure should be available in office location. It consists of transport, communication, power, water and parking facilities.
Nature of business: The nature of business affects location of office. Office of manufacturing business in located near the source of raw materials, labor and service facilities. Office of trading and banking business is located in commercial centers near the customers. Office of perishable goods business is located near the market for such goods.
Availability of human resources: Needed human resources should be available for office. They can be skilled, semi-skilled and unskilled. All facilities must be available for employees
Environment: The office location should have healthy environment. It should not be near polluted rivers or waste disposal sites. It should be free from noise, dust and pollution.
Cost of space: Sufficient space should be available at reasonable cost for the office. Space should be available for future expansion.
Government laws: The selection of location should comply with government laws and regulation at national and local levels.

Concept of direction

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

Concept of direction
Direction is an important function of management which is related to inspiring, instructing and guiding human factors in the organization to achieve organizational activities and objectives. A superior direct and control the subordinates and instruct the manpower which yields better performance. Direction is the guideline inspiration which is provided from higher position to lower position. It is also an important function of management. It is useful to coordinate the activities. Therefore, it is defined as the skill of influencing employees.

Registration and renewal of partnership firm in Nepal

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

Partnership concerns are registered under partnership act 2020.

Procedures of registration

Apply for registration.

Application form is needed to be filled up and apply for registration. The application must include the following things

Name of firm
Address of the firm
Objective of the firm
Name and address of partners and address of the partners
Type of partnership
Amount of capital invested by each partner
Method of sharing profit and loss
Duration of business.
Other particular things.: necessary documents, registration fees, copy of citizenship

2. Deposit registration fee

Registration fee should be deposited in the Nepal Rastra Bank. Voucher is needed for the deposit of registration fee. It should be enclosed in application form. If the firm is commercial then recommendation letter from Nepal chamber of commerce is required.

Capital	Registration fee	Renewal fee	Registration fee
Up to 1,00,000	Rs 700	Rs 100	Rs 700
From 1,00,001 to 3,00,000	Rs 2100	Rs 125	Rs 2100
From 3,00,001 to 5,00,000	Rs 4100	Rs 150	Rs 4100
From 5,00,001 to 10,00,000	Rs 7600	Rs 200	Registration fee
Up to 10.00,001 to 50,00,000	Rs 10100	Rs 250	Rs 700
Above 50,00.000	Rs 15100	Rs 300	Rs 2100

3. Receiving the certificate of registration

Concerned department receive the application. Than an authorized officer will examine. It satisfied then the form is approved and “certificate of registration” is issued and then legal business can be operated.

Procedure of renewal

The entire registered firm should be renewed each year within 35 days of time period. He should fill application for renewal with renewal fee to the concerned department. This amount is dependent upon the capital invested.

Effect of non-registration and non renewal

If the partnership firm is operated without registration and renewal then it is considered illegal. It can’t get loan from any financial institution. This department will charge from rs 5 to rs 50 as fee. The effect of non-registration and non renewal is if he is not registered and renewed then fee is charged. If same crime is done for 3 times, additional rs 10 are to be paid. If it is committed gain then partnership firm is closed and no any concern can be established under any partners’ name.

Concept of joint stock company

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

Meaning of Joint Stock Company

Joint stock companies first came into being in the 18th century in Britain, and were mainly concerned with foreign trade. Initially, the organizational form was viewed with suspicion, it being supposed that it encouraged managerial efficiency and corruption. A corporation, chartered by the state in which it is headquartered is considered by law to be unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors (BOD) to oversee the major policies and decisions. The company has a life of its own and does not dissolve when ownership changes.

A company is a voluntary association, an incorporated association, an artificial person created by law, having a common seal and perpetual succession. Shareholders are owners of the company but management lies in the hands of BOD. Company means a company registered under an act.

According to H.L Haney: “A joint company is a voluntary association of individual for profit, having its capital divided into transferable shares the ownership of which is the condition of membership.”

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.”