MEANING AND

CONCEPT OF
BUSINESS
ORGANIZATION
TRADITIONAL
CONCEPT
MODERN CONCEPT
 Business should determine the needs
and wants of customers.
 Should deliver them desired products
and services.
 Should earn profits through Customer
satisfaction.
SCOPE OF BUSINESS
ORGANISATION

 Products and Services.

 Target Market
 Geographic Reach
 Competetive Advantages
 Distribution channels
 Organization Structure
 Financial Goals
 Growth Strategy
CLASSIFICATION OF
BUSINESS ACTIVITIES
 Operational Activities
 Investing Activities
 Financing Activities
 Research and Development
 Human Resource Management
 IT Management
 Legal and Regulatory Compliance
 Marketing and sales
 OPERATIONAL
ACTIVITIES

 Sales and Revenue Generation

 Cost of Goods Sold (COGS)

 Gross Profit

 Operating Expenses:
 FINANCING ACTIVITIES
 Issuance of Equity

 Repurchase of Equity (Share Buybacks)

 Issuance of Debt

 Repayment of Debt

 Payment of Dividends

 Repayment of Loans
 INVESTING ACTIVITIES

 Purchase or Sale of Property, Plant, and

Equipment
 Investments in Securities
 Acquisition or Sale of Subsidiaries or
Affiliated Companies
 Receipts from Sales of Investments
 Loans to Other Entities
CHARACTERSTICS OF
BUSINESS

 Continous Activity
 Human Activity
 Profit Motive
 Creation of utility
 Entrepreneurship
 OBJECTIVES OF BUSINESS

 Economic Objectives
 Social Objectives
 Human Objectives
 National Objectives
EVOLUTION OF BUSINESS
ORGANIZATION
Brarter System

Villege Economy

Intoduction of Money

Industrial Revolution
MODERN BUSINESS AND
PROFESSION
Business

Economic activity
Earning Profit
Legal Formalitiesi
Codes of Conduct
No Qualification

Profession

Economic Activity
Specific skills
Rendering services
Professional Certificate
UNIT -2

 Business Unit-
A business unit is a distinct and typically self-
contained division or segment within a larger
organization that operates with a certain
degree of autonomy. Business units are
established to focus on specific products,
services, markets, or regions, and they often
have their own management teams
responsible for decision-making within their
designated areas.
BUSINESS UNIT

FACTORS AFFECTIING BUSINESS

UNIT

 Nature of business.
 Availability of resources.
 Entrepreneural skills.
 Managerial Ability.
 Extant of markrt.
 STEPS FOR ESTABLISHING
A NEW BUSINESS UNIT
 Idea generation
 Nature of business

Type of business- wholesale/ retail

what to offer- product/ service/ mix of both
Sector of business-
Software/hardware/construction/retail
 Size and scale of operations
 Select a place for business
 Form of ownership- Partnership/ Company
 Financial requirements
 Appropriate plant layout
 Human resource requirements
 Legal and proceedural requirements
 Launch the business
 FEATURES OF BUSINESS

 Dealing with goods and services

 Production or Acquisition of goods.
 Recurrence of Transactions
 Profit Motive
FIVE TYPES OF UTILITY
INVOLVED INTO BUSINESS

 Utility of form
 Utility of Place
 Utility of time
 Utility of nature
 Utility of service
ECONOMIC ISSUES
INVOLVED IN BUSINESS

 What goods are to be produced?

 How different goods are to be produced

 Are all available resources being fully

utilized
 PLANT LOCATION
 Location of an Industry
General idea about region
Choice of site in the region.

 Market Location
 Market which could be served?
 product delivery
 Competition in the market
 Purchasing power of consumer
 Buying habits of consumer
 PLANT LAYOUT

 MEANING-

Plant layout refers to the arrangement of machinery,

equipment, workstations, storage areas, and other
elements within a manufacturing or industrial
facility.
 OBJECTIVES OF PLANT
LAYOUT

 Optimization of Space
 Maximizing Productivity
 Enhancing Safety
 Facilitating Material Flow
 Flexibility
 PRINCIPLES OF PLANT
LAYOUT

 Principle of Optimal Space Utilization.

 Principle of minimum movement.
 Principle of inter-dependence.
 Principle of flexibility.
 Principle of overall integration.
 Principle of safety.
 Principle of economy.
FACTORS AFFECTING
PLANT LAYOUT
 Management policy.
 Nature of product
 Volume of production.
 A- Job production- Production as per
orders, non standardised products.
 B- Mass production- Continuous large
scale standardised production.
 C- Batch production- Identical products
in batches.
 Availability of floor space.
 Nature of manufacturing process.
 UNIT-3
 Organization process and
Importance
MEANING OF ORGANIZATION
An organization is a structured entity or
group of people, often with a specific purpose
or goal, that is formed to achieve certain
objectives or tasks. Organizations can take
various forms, including businesses,
government agencies, non-profit
organizations, educational institutions, and
more.
THE CONCEPT OF
ORGANIZATION

 The static organization-

 In the context of business or management, a "static

organization" might refer to a company or entity
that has a fixed or rigid organizational structure.
This means that the roles, responsibilities, and
hierarchy within the organization are relatively
stable and do not frequently change.
THE DYNAMIC
ORGANIZATION

 A dynamic organization refers to a company or

entity that is flexible, adaptable, and responsive to
change in a proactive manner. It is an organization
that actively embraces change as a core part of its
culture and strategy, rather than merely reacting to
external forces or crises. Here are some key
characteristics and aspects of a dynamic
organization:
CHARACTERISTICS OF
ORGANIZATION

 Division of work.
 Co-ordination
 Common Objectives
 Co-operative Relationship
 Well defined authoritiy-responsibility
 ORGANIZATION
PROCESS
 Organization

 Process of Organization
 Step 1: Determination and classification of firm’s
activities.
 Step 2: Grouping of the activities into workable
departments.
 Step 3: Assignment of authority and responsibility on
the departmental executives for undertaking the
delegated tasks.
 Step 4: Developing relationship amidst superior and
subordinate, within the unit or department.
 Step 5: Framing policies for proper coordination
between the superior and subordnate and creating
specific lines of supervision.
 ORGANIZATION
STRUCTURE
 FORMAL ORGANIZATION

The organization structure of jobs and

positions, with specified activities and
relationships, is known as formal
organization structure. It is created by
management, to attain the objectives of
the company.
 LINE ORGANIZATION
 Line organization is the oldest and simplest
pattern of orgnization, wherein the
supervisor has outright supervision over the
subordinate. The flow of authority is from
the top level executive to the person at the
lowest level of the organization’s echelon.
 Line organisation, also known as a scalar
organisation, is a traditional and
straightforward organisational structure
where each employee reports directly to
their immediate superior.
STRUCTURE OF LINE
ORGANIZATION
 FUNCTIONAL
STRUCTURE

 In this structure, the organization is

divided into various departments or
functions based on the specialized skills
and expertise required for each area of
operation. Each department is
responsible for a specific set of tasks or
functions, and employees within that
department have similar skills and job
roles.
DIVISIONAL
ORGANIZATION

 A divisional organizational structure,

also known as a divisional structure or
multidivisional structure, is a type of
organizational design where a company
is divided into different divisions or
business units based on specific criteria
such as product lines, geographical
regions, customer segments, or
functions. Each division operates as a
semi-autonomous entity with its own
management team and resources.
 DIVISIONAL
STRUCTURE
 MATRIX STRUCTURE

 This system characterized by a form of

management with multiple chains of
command. Unlike a traditional hierarchy
in which each worker has one
supervisor, a matrix system requires
employees to report to two or more
managers, each responsible for a
different aspect of the organization’s
overall product or service.
 ORGANIZATION
PRINCIPLES

 Principle of Objective
 Principle of Specialization.
 Principle of Co-ordination.
 Principle of Authority and Responsibility.
 Principle of Span of Control.
 Principle of Continuity.
 Principle of Uniformity.
 Principle of Unity of Command.
 ASPECTS OF
ORGANIZATION
 Mission and Vision

MISSION- What an organization is

aimed to achieve in current.
VISION- long term objectives of a
organization.

 Organization Structure
Line,Functional,Divisional, Matrix
 LEADERSHIP STYLES
 Autocratic Leadership-
In this style, the leader makes decisions unilaterally, with little or
no input from team members. They have complete control and
authority over the group.
 Democratic Leadership-

A democratic leader involves team members in the decision-

making process. They seek input, opinions, and feedback from
the team before making decisions.
 Laissez-Faire Leadership-

Laissez-faire leaders provide a high degree of autonomy to their

team members, allowing them to make decisions and manage
 Culture-
Organizational culture encompasses the shared values,
beliefs, and norms that shape the behavior and
attitudes of its members.
 Strategy-

The strategy is the plan that outlines how the

organization will achieve its goals. It involves
decisions about resource allocation, market
positioning, and competitive advantages
 Organizational Finances-
Managing finances, budgets, and resources is crucial
for the sustainability and growth of an organization.
 Innovation and Adaptability-

The ability to innovate and adapt to changing market

conditions is vital in today's fast-paced business
environment.
 Communication-

Effective communication is essential for internal

coordination, as well as for conveying the
organization's message to external audiences.
 Compliance and Ethics-
Organizations must follow the laws, regulations, and
ethical standards in their operations.
 Quality Assurance-

Ensuring the quality of products or services is

important for customer satisfaction and reputation.
 Legal and Regulatory Affairs:

Compliance with laws and regulations is vital to

avoid legal issues and maintain a positive reputation.
 DEPARTMENTATION

 Departmentation is the process of

dividing an organization into different
departments or units based on certain
criteria or characteristics.
PURPOSES OF
DEPARTMENTATION

 Specialization
 Coordination:
 Accountability- hold individuals or teams
accountable for their performance.
 Clarity
LINE AND STAFF
RELATIONSHIPS

 Line and staff relationships are

organizational structures and
relationships that are commonly found
in businesses and other institutions.
These relationships help define the
hierarchy, roles, and responsibilities of
individuals within an organization.
 LINE POSITIONS

 Line positions are those that have direct

responsibility for achieving the
organization's goals and objectives.
Individuals in line positions are involved
in the core operations of the
organization. They have the authority to
make decisions and are accountable for
the outcomes.
 STAFF POSITIONS
 Staff positions are support roles that
provide expertise, advice, and
assistance to the line positions. Staff
positions do not have direct authority
over the organization's core functions
but play a vital role in helping line
positions achieve their goals. Staff
functions often include specialized areas
like human resources, finance, legal,
marketing, and IT.
 SPAN OF
MANAGEMENT CONTROL
 Span of control is a concept in
organizational management and
structure that refers to the number of
subordinates or employees that a
manager or supervisor can effectively
oversee and Instruct.
FACTORS AFFECTING
SPAN OF CONTROL
 Organizational size: Larger organizations
typically have a broader span of control as
they may have more hierarchical levels with a
greater number of managers. Smaller
organizations may have narrower spans of
control due to their smaller workforce.

 Nature of the work: In jobs that require

close supervision or specialized knowledge,
the span of control may be narrower, while in
jobs that involve routine tasks and less
complexity, it may be broader.
 EMPLOYEE SKILLS AND
EXPERIENCE
 The experience and skills of employees can
affect the span of control. More skilled and
experienced employees may require less direct
supervision, allowing for a wider span of control.

 Managerial competence-

The ability of managers to effectively delegate,

communicate, and provide guidance can impact
their span of control. Skilled and effective
managers can handle a larger number of
subordinates.
 TECHNOLOGY AND
TOOLS
 The use of technology and tools for
communication, monitoring, and data
analysis can enable managers to handle
a broader span of control. Information
systems and automation can streamline
managerial tasks.
 DELEGATION OF
AUTHORITY

 It refers to the process of giving

someone else the responsibility and
authority to perform specific tasks,
make decisions.

 Delegation is a crucial management tool

that helps distribute workloads,
empower employees, and improve
overall efficiency within an organization.
 ASPECTS OF DELEGATION
OF AUTHORITY

 Assignment of Responsibility
 Granting of Authority
 Accountability
 Feedback and Evaluation
 Clear Communication
 BENEFITS OF DELEGATION OF
AUTHORITY

 Increased Efficiency-Delegating tasks

to those with the appropriate skills and
expertise can lead to more efficency and
productivity.
 Skill Development- Delegation can
help employees develop new skills, gain
experience, and take on more significant
responsibilities.
 Reduction of Bottlenecks
 Time Management
 DECENTRALIZATION OF
AUTHORITY
 Decentralization of authority refers to
the distribution of decision-making
power and responsibilities from a central
authority to lower levels within an
organization, government, or other
hierarchical structures. This concept is
often applied in various contexts,
including business, government, and
social systems. Here are some key
aspects and benefits of decentralization:
PRINCIPLES OF
DECENTRALIZATION

 Principle of Distribution of
Authority
 Principle of autonomy and
Empowerment
 Principle of transparency and
Accountability.
 Principle of Incentives
Alignment.
 Principle of Scalability.
 Principle of Community
TYPES OF BUSINESS
COMBINATION

 Horizontal Combination

 Involves the combination of companies operating

in the same industry and at the same stage of the
production process.
 For example, the merger of two automobile
manufacturers.
 VERTICAL COMBINATION

 Involves the combination of companies

at different stages of the production or
distribution process.

 For instance, a merger between a car

manufacturer and a tire producer.
LATERAL / ALLIED
COMBINATION

 It refers to the combination of two firms,

manufacturing different kinds of
products, though they are allied in some
way, this combination may be of two
types-
 1- Convergent Lateral
 2- Divergent Lateral
 CONVERGENT LATERAL COMBINATION

 Different industrial units which supply

raw material to a major firm, combine
together with the major firm.

For example - A printing press may

combine with different units engaged in
supplying paper, ink,cardboard etc.
DIVERGENT LATERAL
COMBINATION

When a major firm supplying its product

to other firms which use its product as
raw-material combines with them .

For example a steel mill combines this

various other firms which produce variety
of prooducts like- tubes, wires, machinary,
locomotives etc.
 DIAGONAL
COMBINATION

 When a unit providing auxiliary goods/

services to an industry combines with a
unit operating in the main line of
production.

 For example ; A car company combines

with a service center.
CIRCULAR/ MIXED
COMBINATION

 When fiirms engaged in different types

products join hands together.

 For Example- if a sugar mill combines

with a sleel mill or a cement factory.
 FORMS OF BUSINESS COMBINATION

 Association
 Trade Association
 Chamber of combination
 Federation
 Pools
 Cartels
 Consolidation
 Merger
 Amalgamation
 MERGER

 A merger is a corporate strategy

involving the combination of two or
more companies into a single entity.
 done to achieve synergy, improve
efficiency, expand market presence, or
gain a competitive advantage.

 Ex- Idea- Vodafone (2018)

 Ebey- Flipcart (2018)
 TYPES OF MERGERS

 Horizontal Merger
 Vertical Merger

 Conglomerate Merger- Involves companies

from different industries or business activities.

 Typically pursued to diversify the business portfolio,

reduce risk, and take advantage of new opportunities.
MARKET EXTENSION
MERGER

 Involves companies that operate in the

same industry but in different
geographic markets.

 The goal is to increase market reach and

gain access to new customer bases.

 Example - Wallmart and Flipcart

PRODUCT EXTENSION
MERGER

 Involves companies that operate in the

same market but offer different products
or services.
 Aims to broaden the product or service
offerings and cater to a more diverse
customer base.

 Example- The merger of Pizza Hut and

PepsiCo in 1977
 TAKEOVER

 When one company acquires another,

taking control of its operations, assets,
and often its management.
 TYPES OF TAKEOVERS

 Friendly Takeover (Acquisition)

In a friendly takeover, the acquiring company and
the target company mutually agree to the acquisition.

 Hostile Takeover
 A hostile takeover occurs when the acquiring
company pursues the target company without its
consent or against its wishes.
(directly approaching shareholders)
 Reverse Takeover (RTO):
Reverse takeover happens when a private
company acquires a public company, leading to the
private company.

Backflip Takeover:
This is a type of takeover where a smaller company
takes over a larger company. While unconventional,
it can occur in situations where the smaller company
has a more stable financial position
 ACQUISITION

 Acquisition refers to the process by

which one company purchases another,
either by acquiring its assets or by
buying its ownership stake (equity).
ACQUISITION PROCESS
 BUSINESS FINANCE

 Business finance refers to the

management of money and financial
resources within a business or
organization.

 it involves making financial decisions

that impact the overall performance and
growth of the company.
 COMPONENTS OF BUSINESS
FINANCE
 Financial Planning:
Budgeting: Creating a detailed plan of expected
income and expenses to guide financial
activities.
Forecasting: Estimating future financial
performance based on historical data and
market trends.

 Capital Structure:
Equity: Funds raised by selling shares of
ownership in the business.
Debt: Funds borrowed from lenders, such as
loans or bonds.
 FINANCIAL STATEMENTS

 Income Statement: Summarizes revenues,

expenses, and profits over a specific period.

 Balance Sheet: Provides a snapshot of a

company's financial position, showing assets,
liabilities, and equity.

 Cash Flow Statement: Tracks the flow of

cash in and out of the business.
 SOURCES OF FINANCE

 Financial Planning-

 Financial planning is the process of setting goals,

assessing your current financial situation, creating
a strategy to achieve those goals, and
implementing the plan.
FINANCIAL PLANNING
PROCESS
 Step 1- Establishing Goals and Objectives:

 Identify short-term and long-term financial goals.

 Step 2- Gathering Financial Information:

 Gathering Financial Information:

 Collect detailed information about your current financial

situation.
 Include income, expenses, assets, liabilities, insurance
coverage, and investment portfolios.
 Step 3- Analyzing the Current Financial
Position

Evaluate your net worth (assets-liabilities).

Examine cash flow to understand income and expenses.

Identify strengths, weaknesses, opportunities, and threats
(SWOT analysis) in your financial situation.

Step 4- Developing a Financial Plan:

Create a comprehensive plan to achieve your financial

goals.
Allocate resources to meet specific objectives.
STEP 5- IMPLEMENTING A
PLAN
 Put the financial plan into action.
 Execute strategies outlined in the plan, such as budgeting,
investment decision

 STEP 6- Monitoring and Reviewing:

 Regularly review your financial plan to ensure it remains

aligned with your goals.
 Track changes in your income, expenses, and overall
financial situation.
 Assess the performance of investments and make
adjustments as needed.
 SOURCES OF FINANCE
 Long term sources - Loans, Equity
 Equity - Equity capital, Preference Capital,
 Debentures,Long
 Term loans, Retaied
 Earnings.
 Medium term sources- Borrowings from
 Commercial banks
 loans from
 financial institutions.
 Short terms sources- Bank overdraft
 Credit card

 SECURITIES MARKET
AND MONEY MARKET

 Securities Market-
 The market in which securities are issued,
purchased by investors, and subsequently transferred
among investors is called the securities market.
 Securities markets can be split into two levels:
Primary markets- where new securities are issued.
Ex- NIM (new issue market)
 Secondary markets -where existing securities can
be bought and sold. Secondary markets can further
be split into organised exchanges, such as stock
exchanges.
 TYPES OF
SECURITIES

 1- MARKETABLE EQUITY
SECURITIES-

 Marketable securities are financial assets that can

be easily bought and sold on a public market, such
as stocks, bonds, and mutual funds.
2- MARKETABLE DEBT
SECURITIES

 Marketable debt securities are financial

instruments representing debt that can be easily
bought or sold in the secondary market. These
securities are typically issued by governments,
corporations, or other entities to raise capital, and
they have a fixed maturity date. Investors can buy
and sell these securities on the open market.
 ex- Treasury bills issued by govt.
 Corporate bonds issued by corporations
 MONEY MARKET

 The Indian money market is a crucial component

of the overall financial system in India. It
facilitates the borrowing and lending of short-term
funds, typically with maturities ranging from
overnight to one year.
COMPONENTS OF MONEY
MARKET
 Commercial Banks: Banks are major
participants in the money market, both as
borrowers and lenders.
 Financial Institutions: Non-banking financial
institutions also actively participate.
 Non-Banking Financial Companies (NBFCs):
NBFCs engage in money market operations
for their short-term funding needs.
 RBI (Reserve Bank of India): The central
bank plays a crucial role in regulating and
managing the money market.
 SEBI

 SEBI stands for the Securities and

Exchange Board of India. It is the
regulatory body for the securities
market in India. SEBI was established in
1988, objective of SEBI is to protect the
interests of investors in securities and to
promote the development and
regulation of the securities market in
India.
 FUNCTIONS OF SEBI
 Investor Protection: SEBI works to protect
the interests of investors by implementing measures to
ensure the proper disclosure of information by
companies, preventing fraudulent and unfair trade
practices, and promoting investor education.

 Regulation and Oversight: SEBI regulates stock

exchanges, brokers, merchant banks, and other
intermediaries in the securities market. It formulates
regulations and guidelines to ensure fair and
transparent trading practices.
 Development of Securities Market:
SEBI plays a crucial role in the development of the
securities market in India. It introduces reforms and
measures to enhance market efficiency, liquidity, and
transparency.

 Registration of Intermediaries: SEBI

registers and regulates various intermediaries in the
securities market, such as stockbrokers, sub-brokers,
merchant bankers, and mutual funds, to ensure their
compliance with regulatory norms.
 Enforcement: SEBI has the authority to take
enforcement actions against entities that violate
securities laws and regulations. This includes imposing
fines, penalties, and other disciplinary actions.

 Research and Training: SEBI conducts

research and provides training to market participants to
improve their understanding of market dynamics and
regulatory requirements.