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B.A.- 1 - Business operations - Coggle Diagram
B.A.- 1 - Business operations
Activities involved in management of business operations
Strategic planning
Blueprint for achieving the goals of an organization.
Organizations look 3-5 years ahead while planning.
Meant to take the company from current position to desired position.
Financial Decisions
Finance = Lifeblood of the business
Money is required to begin, continue and expand
This is needed for optimal procurement and use of finances.
To obtain funds, various sources are compared by cost (ex. Interest on loans) and associated risk
Market research and development
Business have to be aware of their competition
Increased competition in industries because of globalization, liberalization, etc.
They also have to formulate company policies, pricing, sales promotion, etc.
Logistic decisions
Movement of material from where it is produced to place of procedure and of finished goods to the consumer
Provides product to the customer at the right place and at the right time.
Plays role in expansion of business also.
Includes decisions about transport, warehousing, procurement, etc.
Technological decisions
Helps perform business activities in less time and at a lesser cost.
It is also used to improve the quality of decisions by providing fast processing and data transmission.
I.T. helps in collecting, processing & communicating information very quickly & effectively.
Internal Process review
Helps the business recognize its current position in the market
It lets the business know what they are doing wrong and how they can improve their market share.
Maintaining customer relationship
Helps keep the customer happy and satisfied
All the plans, policies & operations of a business enterprise should be oriented towards the customer.
This helps maximize profit in the long run.
Helps build reputation.
Employee enrichment
Human resources are large assets because they have unlimited potential for development.
Thus, companies formulate strategies for attracting, developing, retaining and utilizing human resources.
A competent & dedicated team of employees can help an enterprise in achieving its goals efficiently & effectively.
Innovation and creativity
Innovation implies doing new things or doing things that are already being done in new ways.
Innovation and creativity is required to survive and succeed in today’s competitive environment.
Operations:
The processes and resources that we use to produce the highest quality products or services as efficiently as possible. 4 key areas:
Location (Physical or online)
Equipment (tools needed)
Labour
Process (Method to perform, check and improve business)
For the survival of the business, human resources, material, money, machines and other factors of production need to be well coordinated by the owner.
Classification of business activities on the basis of nature of activities
Industry:
The activities of extraction, production, processing, Conversion of products
are described as industry.
Extractive:
Natural resources - Ex. Mining, Fishing, Farming
Genetic:
Breeding plants & animals for production - Ex. horticulture, poultry farms, etc.
Manufacturing:
Conversion & transformation of
raw materials and semi finished products into finished products.
Construction:
Engaged in construction Ex. Hindustan Construction Co.
Commerce:
All those activities which help (directly or indirectly) in the distribution of goods and services to the ultimate consumers.
Trade
Internal Trade
(within country)
Retail
Wholesale
External Trade
(outside of country)
Import
Export
Entreport: Importing goods to export them
Auxiliaries to Trade
Transportation:
Carrying goods from producers to wholesalers and then retailers. Connects the world efficiently. Creates place utility.
Warehousing:
Storage for manufacturers and traders. Creates time utility
Insurance:
Provides cover against risk of damage of goods.
Banking:
Offering credit facilities to needy producers at reasonable interest. Banks facilitate in easy, safe & quick transfer of money. It removes the hindrance of finance.
Advertizing:
Creates awareness of product or service. It removes hindrance of information
Scope of business (Role of profit)
Survival
Reward on Risk
Creates good reputation
Growth or expansion
Measure of efficiency
Profit is important but not the sole objective of a business. They also have a social responsibility to provide goods and services in a way that does not harm society.
Types of business based on the scale of operations:
Small Scale
Small in size
Smaller investment
More labour intensive
Capital investment criteria
Manufacturing sector: 25 lakh to 5 crore
Service sector:10 lakh to 2 crore :
Independent area of production
Sole proprietorship or partnership
Localized area of operation
Simple or primary technology
Owned and operated by owner
Medium Scale
Formed by growth in small scale businesses
More labour and investment that small scale
Capital investment criteria
Manufacturing sector: 5 crore to 10 crore
Service sector:2 crore to 5 crore
Generally, privately owned, professionals in key roles
Localized area of operation
More technologically advanced
Large Scale
Also called heavy industry
Heavy investment of capital & large machinery
Operated by skilled professional and labourers
National and international market
Fixed assets - more than 10 crore
Types of businesses based on Ownership
Sole Proprietorship
Suitable for small businesses
Owner bears all risk
Owner gets all profit
Owner has many responsibilities
Partnership
Allows for greater capital investment and shared risk
Varied skills
It is a relation between two or more persons who agree to share the profits earned by a business.
Governed by Partnership Act 1932
Partnership Deed = Most Important Document
Hindu Undivided Business
Unique to India
Governed by Hindi Law instead of Partnership Act
Membership can only be acquired by birth
Eldest member of the family (Karta) makes all decisions.
Ex. Haldiram
Joint Stock Companies
Owned by Shareholders
Governed by Companies Act, 2013
“A Company is an artificial person created by law having a separate entity with perpetual succession and common seal.”
Shareholder requirements
2 - 50
Pvt Ltd Companies
More that 7
Public Ltd. Company
Cooperative societies
Voluntary association of persons who join together for mutual help, economic and social interests.
Registration is necessary under the Cooperative Societies Act, 1912.
Capital is raised by members through issue of shares.
Established to provide services to its members and not earn profit.
Ex. Housing Cooperatives, Marketing Cooperatives, etc.
Characteristics of business
Economic activity
Profit Motive
Production or Purchase of goods or services
Sale or exchange of goods and services
Regular Dealings
Customer satisfaction
Risk Element
Uncertainty of return
Business is an institution organized by and operated to provide goods and services to society under the incentive of private gain. -
B.O. Wheeler