Unit-1 Nature And Scope Of Business

In this introductory unit, you will learn the exact connotation of terms like business, commerce, trade, industry etc.

What do you understand by organisation? What are the basic forms of business organisation?

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Learning Pundits Content Team

Written on Apr 15, 2019 5:03:15 PM

  • The process of combining the work which individuals and groups have to perform with the facilities necessary for its execution so that they provide the best channels for efficient, systematic, positive and coordinated application of the available effort.
  • Whatever business activity you may take tip, you have to bring together various resources like capital, machinery; raw-materials, labour, technicians, etc. Mere presence or availability of these resources is not enough. Such resources are to be put in action in a systematic way to achieve its objective.
  • A business activity becomes a reality only when efforts are made to bring the required resources together, put them at work systematically, and coordinate their activities properly. This is referred to as business organization.
  • "Organization is a combination of necessary beings, materials, tools, equipment, working space apparatus and finance brought together in a systematic and effective correlation to accomplish some desired objective".
  • “Organization is the arranging or combining of resources to achieve an economic aim--either with the resources available to achieve the maximum result or profit, or to achieve a given aim with the least possible expenditure of resources".
  • Thus, business organization means bringing together various components of business such as workforce, raw-materials, machines, capital, energy, etc., putting them on work systematically, and coordinating and controlling their activities effectively to achieve the objective of earning profit.
  • Forms of Business Organization: Business may be owned and managed by a single man, or a group of persons forming a partnership firm or as a joint stock company or even as a cooperative society.
  • Thus, on the basis of ownership and management, we can classify 'business organization’ into four groups. 1. Sole proprietorship 2. Partnership firm 3. Company 4. Cooperative society
  • Sole proprietorship and Partnership may be called non-corporate forms of organizations. Company form and Cooperative society may be called as corporate forms of organizations.
  • Entrepreneur: You know that the business is carried with the primary objective of earning profits. You also know that setting up of the business to achieve this objective requires bringing together various resources, coordinating them and controlling all activities. This has to be done by somebody who may conceive the idea of doing a particular type of business, mobilize the resources and bring the organization into existence. Such a person who does all this is called an entrepreneur. He is the one who also bears the risk of the business. You know that although each enterprise is started with the objective of earning profit but the possibility of loss cannot be ruled out. Thus, the entrepreneur is the person who conceives the business idea., brings the organization into existence and carry on the business activity, and prepared to bear the risk of loss.

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