COLLEGE OF COMMERCE

Session: 2024-25

BUSINESS ORGANISATION &

COMMUNICATION
(Notes)

by: Ms. Ocean Rana,

Assistant Professor, COC

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 UNIT 1: INTRODUCTION
Business, Trade & Commerce
Concept of Business:
Business refers to those economic activities performed by humans which are
done for the fulfilment of social needs. It involves production of goods and
services and delivering them to satisfy customer needs and wants with the
motive to earn profit.
Characteristics of business:
1. Element of profit by exchange
2. Regularity of transactions
3. Element of production and distribution
4. Exchange of goods and services
5. Profit making
6. Human activities
7. Fulfillment of society needs
8. Element of risk and return

Importance of business:

1. Balanced economic development

2. Increase in employment opportunities
3. Improvement in standard of living
4. Optimum utilization of resources
5. Growth in GDP of a country
6. Means of Foreign exchange
7. Satisfaction of societal needs

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 INDUSTRY & COMMERCE

Concept of Industry – Industry involves those activities which are related

to the production of goods.

Classification/ Types of industries:

1. Genetic industry – Those industries which produce food items by

doing agricultural activities. For eg: agricultural industries, forest
industry, fishery industry, etc
2. Extractive industry – Those industries which extract minerals from the
land, Eg: mining, fishing, hunting, cattle rearing, etc.
3. Manufacturing industry- Involves in manufacturing of goods. Eg:
steel industry, sugar industry, textile industry, etc.
4. Construction industry – Construction of buildings, roads, canals,
dams, etc.

Concept of Commerce
Commerce is divided into two parts:
a. Trade
b. Auxiliaries to trade
TRADE
Trade refers to buying and selling of goods.
Types of trade:
1. Domestic trade – Retail and Wholesale
2. Local Trade
3. State Trade
4. Inter-state Trade
5. Foreign Trade
6. Import Trade
7. Export trade
8. Entrepot (Import for further export of goods)

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AUXILIARIES TO TRADE
Auxiliary activities facilitate trade. These include the following:
1. Transportation
2. Banking & Finance
3. Insurance
4. Warehousing
5. Advertising
INDUSTRY, TRADE & COMMERCE (differences)

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 BUSINESS ORGANISATION
Business organisation means to run a business according to a definite plan and
to get maximum output (production) at minimum expenses. Thus, when 3
elements land, labour, and capital are invested, a business organisation is
formed to earn profit.
Characteristics of business organisation:
1. Group of people
2. Pre-determined goals
3. Co-ordination & co-operation of individuals
4. Procurement of resources (raw materials, labours, finance)
5. Delegation of authority and responsibility
6. Art and science

Objectives of business organisation:

1. Achievement of pre-determined goals/ objectives
2. Increase efficiency of business
3. Receive benefits of specialisation
4. Maintain effective control
5. Earning profit
6. Establish harmonious relationships among individuals
7. Establish coordination among departments
8. Fulfillment of society needs

Functions of business organisation:

1. Production function
2. Management Function
3. Marketing Function
4. Distribution function
5. Human Resource Management
6. Finance function

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7. Miscellaneous functions (inventory management, public relations, book
keeping, etc)

Importance of business organization:

1. Optimum utilization of resources

2. Large scale production
3. Maximum production at minimum cost (efficiency)
4. Employment opportunities
5. Improvement in standard of living
6. Economic growth

Essential elements of business organisation:

1. Human Activity
2. Risk factor
3. Regularity in dealings
4. Legality
5. Uncertainty of profit
6. Creation of utilities
7. Exchange, sale and transfer
8. Satisfaction of social needs

Objectives of business organisation:

1. Unity of objectives
2. Division of work
3. Span of control (No manager should be required to supervise more
subordinates than he can effectively manage)
4. Scalar Principle
5. Delegation
6. Unity of Command
7. Unity of Direction
8. Coordination

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 9. Flexibility
10. Continuity

COMPONENTS OF BUSINESS ORGANISATION

Business

Industry Commerce

Auxiliaries to
Extractive Trade
Trade

Domestic
Genetic Banking
Trade

Manufacturing Foreign Trade Transport

Construction Insurance

Warehousing

Advertising

Interconnectedness (Relation between industry, trade and commerce)

• Industry produces goods that are in demand by consumers. These goods
need to be distributed and sold, which is where commerce comes in.
• Commerce provides the services (banking, insurance, transport, etc.)
necessary to move these goods from the industry to the market.
• Trade allows for the exchange of these goods across regions and
borders, connecting supply with demand.
In summary, industry produces goods, commerce provides the means and
infrastructure to move and sell these goods, and trade is the mechanism through

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which these goods are bought and sold. They function together to ensure the
flow of goods and services in the economy.

BUSINESS ETHICS
Business ethics refers to the system of moral principles and rules of
conduct applied to business. These are code of conduct according to which
a businessman must run his enterprise.
Features of business ethics
1. Code of conduct- what to do and what not to do for society welfare
2. Based on moral and social values
3. Provides protection to social groups
4. Provides basic framework
5. Voluntary
Concept of Social Responsibility
Social responsibility is the responsibility of an individual towards the society.
Social responsibility requires businessmen to consider whether their actions are
right or wrong towards the society.
Causes of growing concern for social responsibility:
➢ Public opinion
➢ Trade Union Movement
➢ Consumerism
➢ Education
➢ Public Relation

Arguments for Social Responsibility

➢ Long term self-interest of business
➢ Ensuring Law & Order
➢ Profitable Opportunities
➢ Moral Justification

Arguments against Social Responsibility

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➢ Dilution of Profit
➢ Burden on consumers (shift of cost of social action to consumers in form
of high prices)
➢ Business lacks social skills

Areas of Social Obligation:

• Conservation of National Resources
• Promoting interest of groups of society
• Work withing framework of the laws
• Environmental Planning
• Social Health and family Planning

INTERNAL & EXTERNAL SOCIAL RESPONSIBILITY

Internal Social Responsibility:

1. Shareholders –
• Fair and regular return
• Accurate financial information
2. Workers –
• Fair wages and salary
• Safe working environment
• Job satisfaction

External Social Responsibility:

1. Consumers –
➢ Quality product at reasonable price
➢ Truthful and honest towards consumers
➢ Provide after sales services
2. Suppliers
3. Government
4. Society

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 PROMOTION OF BUSINESS
(Meaning, Functions, Stages of Promotion)

Promotion: Promotion refers to the act and process of establishing a new

business unit. It may be defined as the discovery of new opportunities and the
procedure to convert the idea into a business (product/service).
Methods / Stages in Promotion
1. Discovery of new ideas
2. Investigation and verification
3. Assembling
4. Financing
PROMOTER: A promoter is a person who conceives a business idea and takes
various steps to bring the organisation into existence.
Functions of a promoter:
A. PROCEDURAL FUNCTIONS:
1. Selection of Line of Business
2. Size of unit
3. Location of Business
4. Choice of form of organisation
5. Financial Planning
6. Physical facilities needed
7. Human resources required
8. Plant Layout
9. Project Report
B. LEGAL FUNCTIONS
1. Permission from the appropriate authority
2. Apply for a license (if needed)
3. Take approval from Competition Commission
4. Permission from Central Government (in case of import/export)

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Qualities of a successful promoter:
1. Leadership Qualities
2. Wide Knowledge
3. Initiator
4. Adaptability
5. Self-confidence
6. Business ethics and social responsibility
7. Business connection and goodwill

Factors to be considered for starting a business:

1. Market analysis to select a line of business
2. Production analysis to decide size of unit
3. Financial Analysis
4. Location of business
5. Government Policy
6. Physical facilities
7. Personnel
8. Plant layout

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