Business+Organisation+and+Environment

In simple words, business is an organisation which converts inputs in to outputs.

Outputs can also be called as products

i.e., goods and services

Business exist for satisfying needs and wants of people.

Needs : Basic neccessities i.e., food clothing and shelter.

__Wants:__ Desires of people regarding the things or goods and services.

Wants are unlimited

Business is affected both by internal and external factors.

__Market :__ It is a place or process where buyer and seller meet each other for trading purpose.

Market can be physical or virtual.

Eg of physical market are shop, restaurant, Cinema

Eg of virtual market is E-commerce

__Difference between consumers and customers__

Consumers: Who actually consume or use the product

Customers: The one who buys a product.

Eg: Mother purchasing a chocolate for her child

Here, Mother is a customer and the child is a consumer

__Types of Goods__

Goods are of two types i.e., consumer goods and capital or producer goods

Consumer : These are goods which are sold to public and are for consumption purpose.

Types of Consumer goods,

1. Durable 2.Non- durable

Durable goods: Those goods which can be used for a longer period of time.

Non-durable goods : Those goods which are consumed in a very short time, after their purchase.

__Value Added :__ It is the difference between the value of input(cost of production) and the value of output (value of goods and services sold to the customers)

In short value added is S.P - C.P

__Adding Value__ : It is the result of the production process.

Adding value can be in the form of
 * 1) Speed/quality of service
 * 2) Quality of finished product
 * 3) Taste or design

Business has to take decisions regarding daily operations and for its long term prospects

__Opportunity Cost:__ It is the value of next best alternative forgone while making a decision.

Opportunity cost is useful when assessing the true cost and benefits of competing choices.

__Role of profit in business__

__Factors of Production :__ To produce a good or service their is always the need of resources
 * 1) It is a reward for risk
 * 2) It acts as an incentive to produce
 * 3) It encourages invention and innovation
 * 4) It is an indicator of growth/decline.
 * 5) It acts as a source of finance.

These resources are called as factors of production or factor inputs.

All resources can be classified in to two groups i.e., Human resources and non -human resources

The are four vital factors of production


 * 1) Land
 * 2) Labour
 * 3) Capital
 * 4) Enterprise

Land : It refers to all natural resources found on the planet that are available for production.

These can be further classified as renewable and non-renewable

Eg of renewable sources: Fish stocks, trees and water

Eg of non- renewable sources : Minerals and fossil fuels.

Labour : It means the physical and mental effort of people used in the production of a good or service.In context of labour quality is more important than quantity.

Capital: It refers to all non-natural i.e., manufactured resources that are used in the creation and production of other products. Examples include money, buildings, equipment, tools, machinery and vehcile etc.

The greater the spending on capital stock(also known as investement), the greater the productivity of business.

Enterprise : Generally Known as entrepreneurship, refers to the management, organisation and planning of the other three factors of production.Successful entrepreneur tend to be creative, innovative and passionate.Entrepreneurs are not labourers, although they are human because the success or failure of a business rests on the abilities of the entrepreneur.

__Factors of production and their return.__

Factors of production Return


 * 1) Land - Rent
 * 2) Labour - Wages
 * 3) Capital - Interest
 * 4) Enterprise- Profit

Specialization It implies that a business concentrates on the production of a particular good or service or a small range of similar products. Specialization at different levels : · Individual – People specialize in profession · Departmental – Departments within an organization specialize in various functions. · Corporate – Most firms specialize in the provision of a limited range of products. · Regional – Certain regions within a country also specialize.For eg, the City of London and Wall Street, New York both specialize in financial services. · National –Countries also specialize.For e.g. Japan and Germany are known for their manufacturing.


 * // Division of Labour //** It is the term used to refer to the specialization of people rather than organizations.

Advantages of specialization : · Increased Productivity – Output increases because of use of specialized machinery and staff · Increased Efficiency – There is better use of scarce resources and least wastage. · Standardization – Specialization results in product specification being constantly met.Specialized machinery, will mean that output is of the same standard and quality. · Higher profit margins- Customers will be ready to pay higher prices for specialized products.

Disadvantages of specialization · Boredom · Inflexibility – Employees who over specialize will be less flexible as they lack the skills and opportunities to adapt to different roles and responsibilities. · A lack of autonomy – Specialization results in interdependence in the production process.A breakdown or delay in one part of the process will cause problems for the entire business. · Capital costs – The purchase and maintenance of specialist machinery and equipment may be extremely expensive. Business Fuctions :

The four functional areas of a business organization are production, marketing, finance and human resources.  1. Production(Operations) : The production manager is the incharge of the production department and the functions of production department will be coordinated and monitored by the production manager.These task may include: · Determining how the good will be manufactured or how the service will be delivered. · Deciding on the resources needed for production e.g. technical and specialist equipment <span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; msobidifontfamily: Symbol; msofareastfontfamily: Symbol; msolist: Ignore;">· Planning the time scale of production <span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; msobidifontfamily: Symbol; msofareastfontfamily: Symbol; msolist: Ignore;">· Stock management and control <span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; msobidifontfamily: Symbol; msofareastfontfamily: Symbol; msolist: Ignore;">· Performing quality control and inspections. <span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; msobidifontfamily: Symbol; msofareastfontfamily: Symbol; msolist: Ignore;">· Arranging for delivery of finished stocks to customers <span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; msobidifontfamily: Symbol; msofareastfontfamily: Symbol; msolist: Ignore;">· Meeting production targets and deadlines. <span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol; msobidifontfamily: Symbol; msofareastfontfamily: Symbol; msolist: Ignore;">· Carrying out research and development into new products and work processes <span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; msobidifontfamily: Calibri; msobidithemefont: minor-latin; msolist: Ignore;"> 2. Marketing – Functions of the marketing department can be summed up as the four P’s of marketing