naLure Scope and Cb[ecLlves Cf Lhe

8uslness envlronmenL
JhaL ls 8uslness?
W Accordlng Lo Lhe Chambers ulcLlonary Lhe word buslness
means employmenL Lrade professlon or occupaLlon a Lask
commerclal acLlvlLy a lndusLlal concern eLc
W All economlcs acLlvlLles relaLed Lo producLlon and exchange of
goods or servlces for money or economlc reLurn
8uslness SysLem/rocess
8uslness LnLerprlse
CrganlzaLlon of
lacLors of
roducLlon
rocesslng
LoglsLlcs
MarkeLlng of
CuLpuL
8uslness SecLors
W 1here are Lwo maln secLors
1 lndusLrlal secLor and 2 Servlces secLor
W Industr|a| Sector
ManufacLurlng acLlvlLles generaLlon of elecLrlclLy and ConsLrucLlon
W Serv|ces sector
lnsurance professlons LransporL repalrs malnLenance
W 1he conLrlbuLlon o Lhls secLor Lo Cu ls more Lhan 60 ln developed
economles and nearly 30 ln developlng economles
ClasslflcaLlon of 8uslness
W 8us|nesses Wh|ch produce Goods
W 1here are Lwo caLegorles of goods
1 CommodlLles 2 roducL
W CommodlLles are good produced by Lhe prlmary secLors le agrlculLure mlnlng
W roducLs are good produced by Secondary secLors le manufacLurlng
W Importance types of enterpr|ses
W 1 larms dalrles and oLher agrlculLural producers
W 2 Mlnes flsherles lumberlng enLerprlse and oLher exLracL naLural resources
W 3 ManufacLurlng enLerprlses
ConL
W 2 8us|nesses Wh|ch roduced Serv|ces
1ransporLaLlon enLerprlses
1elephone companles
roducers of LlecLrlc llghL and power
PoLels resLauranL and oLher producers of servlces of food
l1 servlces enLerLalnmenL servlces eLc
W 3 8us|nesses Wh|ch D|str|bute Goods
Jholesale merchanL of varlous Lypes
reLall merchanL of varlous Lypes
lmporLer and LxporLer
ConL
W 4 8us|nesses Wh|ch Iac|||tate D|str|but|on Goods
Jarehouse and oLher sLorage buslnesses
AucLlon houses exchange and oLher enLerprlses whlch afford places of Lrade
1ransporLaLlon llrms
AdverLlslng llrms
W 3 8us|nesses Wh|ch Dea| |n I|nance and I|nanc|a| serv|ces
Commerclal 8anks CooperaLlve banks and lndlgenous bank
uevelopmenL 8anks
MerchanL banks oLher llnanclal servlces flrms
SLock exchange
ClasslflcaLlon of lndusLrles
W |ass|f|cat|on 8ased Cn 1he Nature Cf Act|v|ty
1 LxLracLlve lndusLrles
2 CeneLlc lndusLrles
3 ManufacLurlng lndusLrles
4 ConsLrucLlon lndusLrles
3 Servlce lndusLrles
6 l1 lndusLrles
ClasslflcaLlon 8ased on CompeLlLlve
SLrucLure
W Monopo|y
Monopoly ls a markeL slLuaLlon characLerlzed by a slngleflrm of lndusLry
ex lndlan 8allway
1he Monopolles and 8esLrlcLlve 1rade racLlces (M81) AcL was ma[or law Lo
ConLrol monopoly ower ln lndla 1he M81 AcL was replaced by Lhe CompeLlLlon AcL
W Duopo|y
uuopoly ls an lndusLry or CompeLlLlve slLuaLlon characLerlzed by only Lwo
llrms (le sellers)
ex 1he caprolacLum lndusLry ln lndla was characLerlzed by duopoly SlLuaLlon
ConL
W C||gopo|y
lf an lndusLry ConslsLs of only a lew llrms lL ls known as Cllgopoly
1wo forms of Cllgopoly can be ulsLlngulshed perfecL Cllgopoly where Lhe
roducL ls homogenous and lmperfecL ollgopoly when some degree of
dlfferenLlaLlon exlsL beLween Lhe producL of dlfferenL flrms
Colluslve prlclngprlce relaLlonshlp
W Monopo||st|c ompet|t|on
MonopollsLlc CompeLlLlon ls characLerlzed by Lhe exlsLence of a large
number of flrms selllng producLs whlch are close buL noL perfecL
subsLlLuLes
roducL ls dlfferenL
ex 1exLlle lndusLry
ConL
W erfect ompet|t|on
1here are large number of flrms selllng homogeneous producLs and no
slngle flrm has any conLrol over Lhe markeL
A flrm earns only normal proflLs
Slzed8ased ClasslflcaLlon
W Small scale lndusLry
W Medlum scale lndusLry
W Large scale lndusLry
Dsed8ased ClasslflcaLlon
W 8as|c Industr|es
8aslc lndusLrles are Lhose lndusLrles whlch provlde essenLlal lnpuL for Lhe
developmenL of oLher lndusLrles and Lhe economy
ex Mlnlng lerLlllzers Peavy lnorganlc chemlcals cemenL lron and 8aslc
lndusLrles meLals LlecLrlclLy
W ap|ta| Goods Industr|es
CaplLal Coods lndusLrles are Lhose lndusLrles whlch roduce Machlnery
equlpmenL or Lools
ex Pand Lools small Lools Speclallzed equlpmenL Machlnery Lools
AgrlculLural machlnery heavy LlecLrlc cable and wlres 8all equlpmenL
Peavy vehlcals
ConL
W Intermed|ate Goods
lnLermedlaLe goods are goods whlch have already undergone
manufacLurlng process buL whlch form lnpuL for oLher lndusLrles as maLerlals
for furLher processlng parLs or componenL
ex CoLLon Splnnlng !uLe LexLlles 1lres and Lubes Manmade flbers
lasLlcs and synLheLlcs reslns roducLs of peLroleum and Coal 8olLs nuLs
nalls screws sprlngs chalns ManufacLure of meLal
W onsumer Goods Industr|es
Consumer goods lndusLrles are Lhose lndusLrles Lhe ouLpuL of whlch
serve Lhe flnal consumpLlon requlremenL
A onsumer Durab|e goods
LlecLrlc fans LelecommunlcaLlon equlpmenL MoLor cycle blcycles
ConL
W 8 onsumer Non Durab|e goods
lood manufacLurlng 1obacco manufacLurlng coLLon weavlng paper and
paper producL 8ubber fooLwear urugs and pharmaceuLlcals soaps and
glycerln LlecLrlcs lamps
W Input based c|ass|f|cat|on
agrobased foresLbased marlnebased meLalbased chemlcalbased eLc
W ropr|etarybased c|ass|f|cat|on
Cwnershlp publlc secLors prlvaLe secLors !olnL and cooperaLlves secLors
CharacLerlsLlcs of 8uslness
W change of Goods or Serv|ces for Income
8uslness lnvarlably lnvolves Lhe exchange of goods or servlces for lncome by
money paymenLs 1he buyers musL geL or aL leasL excepL Lo geL some
saLlsfacLlon Lo make Lhem buy Lhe goods or servlces
W ecurr|ng Act|v|t|es
1he acLlvlLles of buslness enLerprlse are normally recurrlng ln naLure and lL
operaLe more or less conLlnuously
W rof|t Mot|ve
1hls naLurally lnfluences Lhe cholce of producLs markeL segmenLs
Lechnology planLslze prlclng sLraLegy eLc
W |sks
8uslness lnvolves some rlsks Plgh rlsks hlgh reward
uynamlcs of Modern 8uslness
W Several characLerlsLlcs of modern buslness
W Strateg|es Cr|entat|on
W G|oba| Cr|entat|on
W rofess|ona||zat|on
W Strateg|es operat|ons Management
roducL
uevelopmenL
Sourclng and
lnbound
LoglsLlcs
roducLlon CuLbound
loglsLlcs
MarkeLlng and
servlclng
ConL
W 1echno|ogy Cver|aps and Integrated systems
W estructur|ng
W Iocus and D|vers|f|cat|on
W oe|stence of D|fferent Sectors
W Iast change
W segmantat|on
Coal of 8uslness
l
C
M
D
L
A
1
l
C
n
A
C
P
l
L
v
L
M
L
n
1
Mlsslon
Cb[ecLlves
Coals
1argeLs
ConLl
W I|s|on]M|ss|on
vlslon Means your percepLlon Lowards your longLerm goals
Mlsslon Means your ob[ecLlve Loward your 8uslness
W As Drucker suggests three fundamenta| quest|ons wou|d he|p to c|ear|y
def|ne the bus|ness and formu|ate]reformu|ate the m|ss|on
W JhaL ls our buslness?
W JhaL wlll our buslness be ?
W JhaL should our buslness be?
Cb[ecLlves Coals 1argeLs
W Cb[ecLlve ls longLerm process Cb[ecLlves help Lo Lhe organlzaLlon Lo
[usLlfy lL's exlsLence and envlronmenL
W Coal ls deflne as an lnLermedlaLe resulL Lo be achleved by a cerLaln
Llme as parL of Lhe grand plan
W Coal should be sLaLed ln Lerms of managemenL markeLlng flnanclal
producLlon and research and developmenL accompllshmenL
lmporLance of ob[ecLlves
W 1 !usLlfy Lhe organlzaLlon
W 2 rovlde ulrecLlon
W 3 8asls for managemenL by ob[ecLlves
W 4 help Lhe sLraLeglc plannlng/ managemenL
W 3 help ln coordlnaLlon
W 6 provlde sLandards for assessmenL and conLrol
W 7 help ln decenLrallzaLlon
Culdellnes for ldeal ob[ecLlves
W 1 arLlclpaLlon
W 2 ClarlLy
W 38eallsm
W 4 llexlblllLy
W 3ConslsLency
W 68anklng
W 7 verlflablllLy
W 8 8alance
lacLors of AffecLlng ob[ecLlves
W 1 lorce ln envlronmenL
W 2lnLernal lorce
W 3 1he value sysLem of Lop execuLlves
ClasslflcaLlon of ob[ecLlves
W conom|c ob[ect|ves
Survlval
8eLurn on lnvesLmenL
CrowLh
lnnovaLlon
MarkeL share
W Soc|a| ob[ect|ves
ob[ecLlves whlch proLecL consumer lnLeresLs
ob[ecLlves whlch proLecL Lhe lnLeresLs of workers
ob[ecLlves whlch proLecL Lhe lnLeresLs of socleLy
ConL
W r|mary secondary ob[ect|ves
Ceorge Coyder ln hls well known book tbe fotote of ptlvote eotetptlse A stoJy lo
tespooslblllty seL ouL Lhe ulLlmaLe ob[ecLs ln hls followlng four prlnclple ob[ecLs
1 1he exlsLence developmenL and lmprovemenL of Lhe company's buslness and Lhe
bulldlng up of lL flnanclal lndependence
2 1he paymenLs of falr and regular dlvldends Lo Lhe shareholders
3 1he paymenLs of falr wages under Lhe besL posslble condlLlons Lo Lhe
workers
4 1he reducLlon of prlces Lo consumers
8eferrlng Lo Lhe arLlcles of Lhe Carl Zelss loundaLlon Coyder polnL ouL four
secondary ob[ecLlves
1 1o provlde bonus for workers
2 1o asslsL ln promoLlng Lhe amenlLles of Lhe locallLy
3 1o asslsL ln developlng Lhe lndusLry of whlch Lhe flrm ls Lhe member
4 1o promoLe Lhe educaLlon research and developmenL ln Lhe Lechnlques of Lhe
lndusLry
ConLl
W Shortrun and |ongrun ob[ect|ves
1he shorL run ob[ecLlves may be Lo achleve longrun ob[ecLlves
A company wlll normally pursue Lhe secondary ob[ecLlves llsLed Lhereln as long
run ob[ecLlves
W 1opdown and 8ottomUp Approaches
1he upper level managers deLermlne Lhe ob[ecLlves for Lhelr subordlnaLes
ln boLLomup approaches Lhe subordlnaLes lnlLlaLe Lhe seLLlng up of
ob[ecLlves for Lhelr poslLlon and presenL Lhem Lo Lhe superlor for conslderaLlon
1hank ?ou