Definition

• Business involves all the activities enabling

exchange of goods and services for money in
the market
 Types of Governmental Systems
• Command system – Dictatorship
• Free market system – Make their own decision
• Mixed economy – Combination of both
 Types of market
• Perfect competition – Numerous buyers &
sellers
• Oligopoly – Few buyers & sellers
• Monopoly – Single seller (generally
government sector )
 Business Environment
• Macro environment – Common to no of
industrial sectors .
• Ex : Political,Legal environment
• Micro environment – External but within
macro
• Ex : Suppliers,competitors
• International environment – International
factors
 Role of Entrepreneurship
• Entrepreneur – Business promoted by the
person
• Generally Government plays the role of
entrepreneur but now a days individual take
up the job too …..
 Need for Business History
• BH – Bio data of a business
• Traces of the past
• Judging present & future trends
 Ancient History in brief
• Barter system
• India not a single country but made up of no of
kingdoms
• Generally family run business
• Inter kingdom trade – Transaction between two
different kingdoms
• International trade – Exports & Imports
• Exported goods – Cotton,silk & Wool etc
• Imported goods – Horse,ceramic ware,Chinese silk etc
• Banking – Bankers were called “Seth ”
 15 th century onwards (era of European
trading companies )
• 15 th century – Portugese made incursions
into Goa ,Western India
• Early 17 th century- Dutch East India Co
entered
• Mid 17 th century – British East India
Company commenced trade with India
• Duty exemption in Bengal – by the Mughal
emperor
• 18 th century – French established their
presence by entering Pondicherry
• Population of India in 1800 AD – 100 million
• Arab,Egyptian,Chinese, Persian & Armenian
merchants
 Details of British Operations
• British East India Company – Joint stock
company ,level of control increased from time
to time by its legal measures ,so the co was
firmly under Govt control .
• Merchants began to oppose – abolished
• By this time India was under British control
except for certain areas .
 Industrial revolution in UK
• Started from late 18 th century
• Gave rise to factory system of large scale
production
• India – easy market for manufactured goods
• Raw materials like cotton – exported from
India – finished textiles were imported .
 Agency houses
• Free merchants – agency houses for
commercial activities
• AH – acted as agent of firms in UK from whom
they charged a fee for their service .
• 1st AH – Forbes & Co
• AH – Entrepreneurial abilities but abused for
malpractices
Trade Balance
 Early 20th century
• India – one of the wealthiest economy began
to decline from 19 th century
• By 1920 ,USA was the world’s largest economy
 Rise of native Indian entrepreneurs from
later part of 19 th century
• Textiles – prominent industry in India
• First formed by Dawar in 1854
• Prominent names are Morarji Goculdas,
Khatau,Thackersey , Sassoon,Hukumchand ,
Juggilal ,Jamshed Tata.
• Birlas – trading in silver,sugar,cotton etc
• Due to lack of regulation – exploitation in textile
mills ,to reduce the plight Factories Act 1881 was
passed
 Other industries & Trade
• Tagore purchased coal mines – 1840
• First railway line opened in 1854
• First 3 universities were established
• Calcutta Electric supply corporation was
registered in 1857
• Tata hydro elcetric power supply in 1910
• Ahmedabad Electric co in 1913
• Andhra valley power supply of Tata group in 1916
• Tata power in 1919
• Electricity being used in textile industry
• Post & Telegraph stations have been set up
• Bombay share market - 1875
 Banks
• Banks – set up by Indians between 19 th
century to 1911
• PNB , Bank of India , Central bank of India ,
Bank of Baroda , Punjab & Sind Bank , Indian
bank .
 Pre independence era in Indian Business

• Between world war – 1915 to 1947

• Momentum in growth of Indian business
• Increase in domestic demand – due to war
• Opportunity for Indian business to grow
• Swadeshi spirit increased
• Indian industrial commision & Fiscal
commision on Tariff protection – to protect
Indian industry
• Industrial sector – substantial progress .
• Share of native indians in Indian companies –
13% to 34 %
• European counterpart – 72 to 40 %
• Indian industry – no longer confined to textiles
but spread to sugar , steel , cement , coal ,
shipping , paper , chemicals & airline .
 World war II
 Demand for Indian goods increased
 Price increased & the industry made large
profits
 Performance of Indian selected Business
Houses
• Tata
• Birla
• Walchand
• Kirloskars
• Singhanias
• Thapars
• Modis
• Lala sriram
• Dalmia
• Mafatlal
• Bajaj
• Godrej
Managing agencies
(Pre independence )
 Growth of joint stock companies (Pre –
independence)
• India - joint stock companies – mid 19 th
century
• Europe – 17 th century
• Family controlled
• Growth
• 1851 – 1892 – 1149 Co were registered ,only
505 survived
• 1939 – 11114 with a capital of 290 crores
• 1948 – 22675 with a capital of 570 crores
• During 1920s & 30s big international
companies entered namely
Unilever,ICI,Dunlop, General Motors ,Ford
motors etc.
Chamber of commerce & industry
• 1st chamber of commerce was set up in France in
1599.
• In India , Coc was started in Bengal,Bombay &
Calcutta by the British with a few Indians in 1830
• Chambers at Cochin,Karachi & upper India during
the 19th century
• 1905-1947 - Coc - founded by Indian business
houses ,they laid their own standards & practices
Federation of Indian COC & industry(FICCI)
• 1st set up by the initiative of G.D.Birla & Thakur das in
1927.
• Southern Indian COC was founded in 1909.
• Indian merchant chambers – traders and small industrialist
to protect their interest.
• Associated Coc – large business interest mainly British
• Specific associations to industry
• Ex : Indian Tea association – 1885
• Mining association- 1892
• Paper association – 1895
• Fiscal commision & Tariff board set up in 1930
 Labour relation(Pre – independence)
• Exploitation phase
• Labour – exploited ,difficult working
condition ,heavy working hours
• Cotton mills – 13 to 15 working hrs a day
• Condition of female workers – deplorable
• Child labour
• Jute mills – Child labour
• Factories Act was passed but with no specific
effect.
• Organised labour movement
• There were periodic strikes
• 1st strike in Bombay with 120000 workers mostly
from textile industry – not a success
• 3 yrs later – strike by plantation workers - not a
success
• By mid of 1921 - stike took place in Madras
• Strike mainly for – profit sharing & higher wages .
• Trade Union movement – protect worker interest.
• In 1918 – AITUC (All India Trade Union Congress )
was formed
 Post independence era in Indian business
• Socialistic economy :
• Economic policy resolution – adopted at the karachi
session of congress in 1931.
• At the time of independence – India an agricultural
country
• Before 1947 – exploitation was present
• After 1947 – demand to built the country
• 1947-there were 1811 strikes
• 1950- there were 814 strikes
• Later Unionism became more militant
 Industrial policy resolutions- Basic
infrastructure & regulatory system
• Business activity after independence – guided
by Industrial policy resolution of Govt of India
1948 & Industrial resolution of 1956
• Resolution of 1948 – greater participation by
Govt in economic activity & role of private
capital in a regulatory framework
• Emphasize mainly on continuous increase in
production & equitable distribution .
• 1st five year plan – 1951-56 – priority to agricultural sector .
• Industrial sector emphasize on basic industries
likeiron,steel,metal,heavyengineering,cement,chemicals,fertili
zers,power.
• 5 yr plans is still continued.
• Industrial Finance Corporation of India was set up after 1948
policy resolution
• Main objective – providing concessional finance in backward
areas.
• National Small industries Corporation of India (NSCI)
,IDBI,Industrial re finance Corporation of India (IRCI)
• Imperial Bank of India (1955)- nationalised to become SBI
• Life insurance business nationalised to become - Life insurance
Corporation of India (LIC)- providing basi financial
infrastructure
• Industrial policy resolution – 1956
• Gave more specific directions relating to the
responsibility of the state towards industrial
development
• Obj : accelerate rate of economic growth,speed up
industrialization,develop heavy industries & machine
making industry,expand public sector & build up co
operative sector,reduce disparities in income &
wealth,prevent monopoly.
• The policy also dealt with providing financial & technical
assistance, balanced development of different
regions,maintenance of industrial peace,accelerating
growth of village in small scale.
• Policy stmt divided industry into 3 categories –
Schedule A – 17 industries – responsibility of
state –
Ex:Atomicenergy,Railways,Aircraft,Airtransport
,defence, telecommunication etc.
• Schedule B – progressively state owned with
state initiative to set up new units but private
enterprises would be allowed to supplement
• Ex : Sea transport,machine tools,fertilisers etc
• Schedule C – Left to private sector but subject
to licencing regulation
 Regulatory System
• To implement a planned economy regulatory system
needed
• National need – projected by planning commission
with roles of public & private sector defined
• Industries act was passed in 1951-System of industrial
licencing was introduced
• Pricing & distribution of specific industries like oil-
controlled by Essential Commodities Act .
• Import & Tariff policies – to conserve foreign exchange
• Foreign Exchange Regulations Act (FERA) – ctrl
entry & operations of foreign co in India
• Pricing of shares & public issues – controlled
by Controller of Capital issues
• 1969 – MRTP Commission – check growth of
monopoly
 Emergence & growth of Public sector
• After 1956 policy resolution – no of
enterprises were set up in public sector both
by central & state Govt.
• Schedule A – IOC,BHEL,NLC,ONGC etc
• Schedule B – Indian Tourism development,
Indian drugs & pharmaceuticals etc .
• Canalising of International trade
• Nationalisation – Banking , general insurance,
coal & oil enterprises were nationalised in
1970s
• Growth Phase : Majority – public ,but
drastically slowed down since reforms of 1991.
• Pros & Cons- Pros : Advantage of Govt
resource & support
• Cons – Too many restrictions
 Growth of Private sector
• Private sector – grew within the licence permit system
• Post 1956 policy statement – concession to private sector
• Liberalisation in 1973 policy statement
• Private sector began to get Govt support
• Investment from industrial houses & foreign Co were
permitted
• Industrial policy statement of 1980-attention for promoting
competition , technological upgradation & modernisation
• 1985-86 – increasing productivity,reducing cost &
improving quality.
 Indian private Business Houses
• Tata
• Birla
• JKGroup
• Kirloskars
• Thapars
• Mafatlal
 Co operatives
• Policy resolution of 1956 – role of
cooperatives
• NCDC (National cooperative Development
corporation)
• National cooperative sugarmills federation
• National cooperative marketing federation
 Large cooperatives
• IFFCO
• KRIBHCO
• Amul
 Joint sector
• Get the benefit of private participation & Govt
involvement .
• Agricultural Business :
• One of the prominent sector -8% of India’s imports
• Govt role – providing infrastructure & financial
resources for agriculture
• Green revolution – 1970 – increase in India’s wheat
production
• Trade in agriculture
 Position of consumers
• Preference of consumers did not matter
• Labour militancy & rise of unions – Pre
independence labour was exploited
• AITUC & INTUC was formed soon after
independence followed by BMS & CITU
• Bargaining power is strong where trade unions
are present
• Appropriate technology choices :
• Time of independence- technology
underdeveloped
• Man power plenty but low technical skill
• Over a period of time technical & business skill
grew resulting in a gradually more complex
technology