A project report on business. This report will help you to learn about:- 1. Meaning and Definitions of Business 2. Essential Characteristics or Elements of Business 3. Objectives 4. Classification 5. The Concept of Social Responsibilities 6. Essential Requisites for Success of Business.
Contents:
- Project Report on the Meaning and Definitions of Business
- Project Report on the Essential Characteristics or Elements of Business
- Project Report on the Objectives of Business
- Project Report on the Classification of Business
- Project Report on the Concept of Social Responsibilities of Business
- Project Report on the Essential Requisites for Success of Business
1. Project Report on the Meaning and Definitions of Business:
In broad sense, business includes industry, commerce and trade. Its main aim is to increase wealth. Industry means a place where materials are extracted or converted into finished or semi-finished products. Trade means a process of buying and selling of commodities, while commerce relates to financial, transportation, insuring and allied activities.
The form of organisation will be decided by various factors, such as:
1. Size and nature of the business to be started;
2. Technical difficulties;
3. Market conditions (i.e., competition and scope of the article in the market);
4. Capital required to start the business and the means to collect the funds;
5. Limitations and restrictions put forth by the government (i.e., grant of loan, licence, foreign exchange and other such things).
Definitions of Business:
Business may be defined as “an activity, in which different persons exchange something of value whether goods or service for mutual gain or profit.”
It may also be defined as “an enterprise engaged in production and distribution of goods for sale in market or rendering services for a price.”
2. Project Report on the Essential Characteristics or Elements of Business:
The following are the essential characteristics of business:
(i) Element of Enterprise:
The element of enterprise exists in every business. The person who recognises the need for a product or service is known as an ‘entrepreneur’. The entrepreneur is an important factor in the process of economic growth. It is the entrepreneur who visualises a business, combines different factors of production and puts them into a going concern.
(ii) Element of Exchange of Goods and Services:
Business activity aims at transfer of goods and services. The exchange of goods and services is undertaken with a ‘profit motive’. Any activity done to satisfy oneself cannot be known as business. For example, a tailor who stitches his own pant, is not paid for this. On the other hand, if he stitches pants for others in exchange of money, it can be included in business activity.
(iii) Profit Motive:
The motive of profit is an essential characteristics of business. Any human activity undertaken without profit motive cannot be included in business. The incentive of earning profits keeps a person in business and is also necessary for the regularity and continuity of the business. This motive has, therefore, played a very important role in the establishment, running and expansion of business.
(iv) Element of Risk and Uncertainty:
The element of risk and uncertainty exists in every business. The factors on which business depends are quite uncertain. The success of a businessman depends upon his correct forecasting’s, otherwise he may be forced out of the business. Hence, the risk element in the business keeps the businessman vigilant.
(v) Economic Activities:
Only economic activities are covered in the business. Economic activities are those activities which are related to the production and distribution of goods and services. These activities are undertaken with economic motive. Any activity undertaken without economic motive will not be included in the business.
(vi) Element of Creation of Utilities:
It is an important element of business. Business makes goods more useful to satisfy human wants. Business creates various types of utilities in goods so that consumers may make use of them. The utilities may be – time utility, form utility and place utility.
(vii) Element of Continuity of Transactions:
Continuity of transactions is an important element of business. In business, the transaction of goods is a must but it must be regular and continuous. Only regular and continuous transactions are included in business. A single transaction cannot be called business.
In the light of the characteristics discussed above, we come to the conclusion that business may be defined as that economic activity of man which aims at earning profit and acquiring wealth through continuous process of production, sale or exchange of goods and services.
3. Project Report on the Objectives of Business:
Every human activity is motivated by some objective or objectives and the business being the most important human activity has definite objectives.
It is a general belief that profit making is the main objective of business and now a days the businessmen are defamed for making the maximum profit. For a business to exist it must make profit. The profit making is all the more necessary to attract additional capital and to build services. It is, however, a false notion that the sole purpose of business is to make maximum profit.
The business along-with making reasonable profit has to bear in mind that there should always be an element of service in carrying it. If making of profit is essential for the survival of business, equally important is the element of service for making profit. Further, the business must produce goods that customers want, maintaining quality standard.
Apart from this, the conditions of service should also be attractive so that the customers could be attracted. A business which fails to maintain any of these essentials might collapse any time. It is, therefore, important to realise that profit is the legitimate reward for honest endeavour, something the entrepreneur gets for rendering service to the community.
Profit making plays an important role as a measure of efficiency and must be watched constantly. The profits provide the most accurate test of the efficiency of the business and are also necessary against the risk of failure. Over the course of-time, profits are the measures of how well a company has stood the test of time and met the need of labour, consumers, shareholders and the general public.
Besides economic objectives, a business has to adhere to social objectives. The fact is that economic and social objectives go side by side and are intimately related. The primary objective of business, therefore, should be satisfaction of human wants through supply of quality goods at reasonable price.
The other important objective is to provide fair return to the investor and to have sufficient amount to cover future risks and to ensure future expansion. The third objective is to create customers and meet their needs and wants and also provide fair wages to the workers.
For convenience point of view the main objectives of a business are classified into the following three heads:
(i) Economic Objectives:
The initial main objective of a business is the earning of sufficient profits-to give reasonable reward to the investor of the capital and to provide for future capital. In other words, business enterprise is brought into existence only with a view to earn profit.
According to Peter Drucker,”It is the purpose, nature and necessity of this institution to take risks, to create risks. Unless we provide for risk, we are going to destroy capacity to produce. And, therefore, a minimum profitability, adequate to the risks which we, by necessity,, assume and create, is an absolute condition of survival not only for the enterprises but for society.”
We find with human psychology that nobody takes risks, unless he is assured of sufficient return with profit. By starting of the business, in something hence, it must yield profit. Thus, it is quite away from government organisation that has no profit motive but it exists to serve the people and maintain law and order in the society.
Profit is the ultimate test of business performance. It is a criterion of efficiency. The more efficient a business is, the greater is the profit earnings for it. Greater and better profits also facilitate the future expansion of business.
According to Bernard Shaw,”Capitalism has no conscience, its ambition is ‘profit’ and its god is ‘gold’.”
In nutshell, the businessman should charge a reasonable profit and it will be beneficial both to the business and the society.
(ii) Social Objectives:
It implies of a business the obligations that a business house owes to the society. Society can never permit business concerns that are harmful to the public interest. Although, business is an economic enterprise and it must justify itself on economic performance, yet it is also true that a business is an organ of society and as such it must justify its continuance by fulfilling its role and responsibilities to the society.
As a matter of fact, a business is a trust of the community that must discharge its obligations towards the various sections of the community. The social objectives of the business demand that good quality goods be produced or manufactured and they should be available to the consumers at reasonable rates.
Society is organised with beliefs in some ethical principles and promises to its members, business has to conform to these beliefs and promises. Business also aims at positively giving to the well-being and uplift of the community in which it is situated.
Only those businessmen can get success who try to serve the society. According to Urwick,”Earning of profit cannot be the objective of a business any more than eating is the objective of living.” Henry Ford, the founder of Ford Motors, states that mere “Money-chasing is not business.” According to him, businessman “who keeps his customers satisfied by service will definitely earn good profits.” Peter Drucker puts,”There is one valid definition of business purpose to create a customer.”
The business must provide to the society:
(i) Good quality products at the lowest possible price.
(ii) Setting up and keeping standards of quality of goods and services.
(iii) Control on monopoly tendencies.
(iv) Courteous to their customers.
(v) Fair trade practices.
(vi) To provide employment opportunities. Hence first and profit next should be the objective of a businessman.
(iii) Human Objectives:
This is the third important objective of business.
A business organisation deals with two important constituents of society:
(i) Employees, and
(ii) Customers.
The business enterprise should ensure that both these groups of society have a feeling of having been treated as human beings. The workers should be provided with better working conditions and opportunities for advancement. And, the business enterprise should also try to satisfy the needs of the customers.
The business owes to the workers to provide them:
(i) Fair wages.
(ii) Healthy working conditions.
(iii) Social protection.
(iv) Adequate opportunity for collective bargaining.
(v) To recognise their work and give them rewards.
(vi) Stability of employment.
To sum up, the business has economic as well as social objectives, whereas the economic objectives relate to earning a satisfactory profit, creating customers and making innovations, the social objectives comprise supply of quality goods in sufficient quantity at reasonable rates, fair deal to workers, fair return to investors and fair dealings with suppliers of materials. The valid definition of a business is to create customer that is to provide goods or services which anyone may need.
4. Project Report on the Classification of Business:
Business includes all those activities which are concerned with the production and exchange of goods and services.
The classification of business activities is given in Table 1.1:
I. Trade:
Trade means the exchange of goods for cash or for credit or for services. It is to facilitate supply of goods from seller to the buyer. It does not include the activities like banking, warehousing, transportation, insurance, etc. which facilitate trade.
Trade can broadly be classified as:
(a) Internal or Home Trade, and
(b) External or Foreign Trade.
(a) Internal or Home Trade:
This relates to the domestic trade of buying and selling of goods within the territory of the country. All transactions connected with it are national and no foreign agency is involved.
Internal trade may be classified as such:
(i) Local Trade:
When the demand for products is limited only to particular place, it is called ‘Local Trade’. The sellers and buyers belong to the same place. The goods, in which trading is made are of daily use and are of perishable nature. These goods are vegetables, bread, milk, etc.
(ii) Provincial or State Trade:
The trade which is limited to the boundaries of the State is called ‘Provincial’ or ‘State Trade’. The goods traded are of durable nature. Sometimes, goods are produced according to the requirements of a particular region of State.
(iii) Inter-State Trade:
This relates to die buying and selling of goods to traders throughout the country but within the national boundaries. The goods traded are of durable nature and can be kept in the godowns for a longer period and to meet the future demands. These goods are textiles, iron and steel, etc.
Wholesale Trade and Retail Trade:
Home trade may be of the nature of wholesale and retail.
Wholesale Trade:
This trade relates to the purchase of goods in large quantities from producers and their resale to retailers in small lots. It serves as a link between the manufacturers or producers and the retailers who sell them to the ultimate consumers.
Retail Trade:
This is the last link in the economic chain where the human wants are satisfied. The retailer keeps his goods at convenient place where from the supplies to the consumers. The retail is the end or the tail of business where the circle of-the industry is completed.
(b) External or Foreign Trade:
This relates to the buying and selling of goods to traders outside the country. It involves the exchange of goods and services between the citizens of two nations. For example, India’s trade with USSR, USA, France, Japan and Pakistan is called foreign trade.
Foreign trade can be classified under the following three heads:
(i) Import Trade:
It refers to the purchase of goods from a foreign country. Countries import goods which are not produced by them either because of cost disadvantage or because of physical difficulties so as to meet their needs and requirements.
(ii) Export Trade:
It refers to the sale of goods to a foreign country. In other words, when goods are sold and sent out to other countries, it is called export trade.
(iii) Entrepot Trade:
Sometimes goods are purchased or imported from one country with the objective of selling or exporting them to some other countries, it is known as entrepot trade.
II. Commerce:
“Commerce in broader sense comprises of all those activities which are concerned with the distribution of goods and services so that they may reach the consumers with a minimum of inconvenience.”
According to Prof. J. Stephenson, “Commerce is the sum total of those processes which are engaged in the removal of the hindrances of persons (trade), place (transport and insurance), and time (warehousing) in the exchange (banking) of commodities.”
Commerce means the process of buying and selling and all those activities which facilitate trade, such as storing, grading, packaging, financing, insuring and transporting. The main function of commerce is to remove the hindrances that come in the flourishing of trade.
For convenience point of view, commerce can be divided into two divisions:
(i) Trade, and
(ii) Aids to Trade or Auxiliaries to Trade.
(i) Trade:
Trade is the final state of business activity and involves sale and purchase of products. It is to facilitate supply of goods from seller to the buyer. Trade is a main branch of commerce.
(ii) ‘Hindrances’ and ‘Aids to Trade’ or ‘Auxiliaries to Trade’:
The hindrances in the way of smooth trade such as of person, place, time, exchange and knowledge in connection with the distribution of commodities unless those reach the consumer, are overcome by various agencies known as ‘Aids to Trade’.
(a) Hindrance of Place (Transport):
The goods are produced at one place but their demand comes from various places situated at a short or long distances. This may be due to various reasons such as goods may not be produced there or the goods in question may be better in quality or cheaper. The hindrance of distance is removed by various means of transport, such as rail, road, air and sea. The various means of transport have helped the growth of commerce and industries.
(b) Hindrance of Persons (Distribution):
The buyers and sellers are in several cases residing at different places and due to distance factors contact between them is hindered. The commerce helps to remove this distance by the help of trade. The trader, as a part of commerce plays a vital role in establishing contacts between the producers as sellers of their products and the consumers as buyers of those goods to satisfy their needs. A chain of wholesalers, retailers, brokers, agents, etc. operates between the producer and consumer and overcomes the hindrance of persons.
(c) Hindrance of Exchange (Banking):
The payment of goods and services is generally made possible through institutions such as banks. Accordingly, banks, as part of commerce, act to remove the hindrance of exchange and enable to procure goods, especially by extending their own credit. The banks very often finance trade in different ways.
(d) Hindrance of Time (Warehousing):
Goods are produced anticipating demand in the near future. Accordingly, after production the goods are stored to be released as and when demand is to be met. The storing of goods is to be done at a safe place.
The function of storing and preservation of goods is performed by warehouses. To say that warehouses remove the hindrance of time by balancing the time lag between production and supply, and thus create time utility. Further, the risk of loss or damage and theft is removed by insurance of goods stored in warehouses.
(e) Hindrance of Knowledge (Advertisement and Salesmanship):
The selling of goods is the greatest and ultimate problem of businessman. The problem is how the consumers and the purchasers should know about the availability of goods of a particular type and about the rates etc.
The products may be best but how should the purchasers know. The problem is removed by means of advertisement and salesmanship by bringing to the notice of people the advantage of buying the goods and services offered.
(f) Hindrance of Risk (Insurance):
Risk is also involved in transporting goods from one place to another place. There can be a risk due to fire or theft. The risk of loss or damage and theft is removed by insurance. The insurance companies provide a coverage for all types of losses of goods.
To sum up, commerce includes not only trade or exchange of goods and services but also includes all those activities which are necessary to remove the hindrance of place, persons, time, exchange, knowledge and risk.
Commerce is the branch of business which facilitates exchange of goods by removing the various kinds of hindrances, namely, those of persons through trade, of exchange through banking, of place through transport, of risk through insurance and of knowledge through advertisement and salesmanship.
According to Stephenson, “Commerce is the sum total of those process which are engaged in the removal of hindrances of persons (trade), place (transport and insurance), and time (warehousing) in the exchange (banking) of commodities.”
III. Industry:
The industry is concerned with the production of goods. The process of extraction, production, conversion, processing or fabrication of products is called ‘industry’. The products of industry are sold for transformation into finished goods or for ultimate consumption. The goods which are used for consumption are called ‘consumer’s goods’ and those used in production of other goods are called ‘producer’s goods’.
To clarify, an enterprise making soaps, cloth, oils, etc. is producing consumer’s goods. A steel company that makes steel for further fabrication into variety of goods is producing producer’s goods or capital goods.
Types of Industry:
Following are the main types of industries:
(i) Extractive Industries:
These industries concern with the supplying of commodities which are extracted or raised from earth, sea and air with comparatively little help from man. The products of such industries are generally used by manufacturing and construction industries for fabricating finished goods. Fishing, mining, fruit gathering, agriculture and afforestation are some of the examples of extractive industries.
(ii) Genetic Industries:
Genetic industries are those industries which though dependent upon nature require a greater application of human skill in their production. These enterprises engaged in agriculture, forestry and fish culture are the examples of genetic industries. Though these industries mainly depend upon nature but human skill plays an important role in their production.
For example, agriculture depends upon nature but the intensive application of human skill such as proper cultivation, timely watering, quality seeds coupled with finance and number of workers would add to its production. Similar is the condition of other genetic industries.
(iii) Manufacturing Industries:
Manufacturing industries are concerned with processing of raw materials into finished goods. The iron and steel works, spinning and weaving mills, leather industries, etc. are the examples of manufacturing industries.
(iv) Constructive Industries:
These industries relate to the construction of buildings, dams, bridges, canals, roads, etc.
IV. Direct Services:
Like buying and selling the goods, the services are also bought and sold. A person satisfies other wants by rendering direct services and in exchange he takes money. For example, doctors, advocates, teachers, engineers, typist etc. directly render (sell) their services to the people and in exchange take money (in the form of fee etc.) from them.
5. Project Report on the Concept of Social Responsibilities of Business:
Business means the total enterprise of the country in manufacturing industries, finance, commerce and banking. It is gradually gaining acceptance as a way of life. This implies the obligations that a business house owes to the society. All life is a trust and all power carries with its obligations.
About trusteeship, Gandhian principle expresses the inherent responsibility of business concern to its customers, employees (or workers), shareholders and the community and the mutual responsibilities of these to one another.
Every business has many responsibilities to make the best possible use of its resources. An enterprise is a corporate citizen. Like a citizen it is esteemed and judged by its actions in relation to the community of which it is a member and by its economic performance.
Management has the chief responsibilities today for developing the corporate concern which is everywhere replacing the family and family business as the unit of work in technological society. A company is responsible to give security of employment with fair wages. Equal opportunity for personal growth and development within the company is a requirement of justice and the means of getting efficient management.
Collective bargaining and representation by a trade union is the right of workers. Responsibility to the consumer means setting up and keeping standards of quality and service, besides fair price. If concern behaves as a good citizen and with complete knowledge of the facts, the need for legislation is reduced.
Responsibilities of Business to Different Group:
Business has responsibility towards the different groups: shareholders, employees, consumers, suppliers, the government, the public and so on.
The extent of responsibilities which business owes to these various groups are discussed in the following ways:
1. Responsibility towards the Owners (or Shareholders) of the Business:
The business must provide to the owners (or shareholders) of the business:
(i) Safety of investment.
(ii) Fair return on the capital invested by them.
(iii) Complete and correct information as to the working of business.
(iv) Communication of programmes and policies.
(v) Listing of shares in organised Stock Exchange Market.
2. Responsibility towards workers (or employees):
Workers are, in reality, the pillars of the industry. Hence it is needful to keep them satisfied and give them their due.
The business owes to the workers to provide them:
(i) Fair wages.
(ii) Healthy working conditions.
(iii) Social protection.
(iv) To ensure scope for future advancement.
(v) Training and education.
(vi) Right to participate in decisions of working.
(vii) Adequate opportunity for collective bargaining.
(viii) Stability of employment.
(ix) To recognize their work and give them rewards.
3. Responsibility towards the Consumers:
Production is meant for consumption. And hence, the satisfaction of the consumers should be the primary concern of the business sector.
The business must provide the consumers:
(i) Good quality products at the lowest possible price.
(ii) Setting up and keeping standards of quality of goods and services.
(iii) Control on monopoly tendencies.
(iv) Courteous to their customers.
(v) Fair trade practices.
4. Responsibility towards Suppliers, Creditors, etc.:
The business is charged with the responsibility of promoting fair and healthy business relations with suppliers, creditors, dealers, competitors etc.
The business enterprise has responsibilities to these parties as follows:
(i) To pay the suppliers a fair price for the raw material etc. which they have supplied to the business concern.
(ii) Suppliers should not be exploited.
(iii) Creditors must be paid at the promised dates.
5. Responsibility towards Government:
Government is the guardian of the community.
Businessmen owe a lot to the government, as:
(i) To comply with the laws passed by the Government.
(ii) They should provide constructive ideas to the government for rapid growth and development of industries.
(iii) To pay taxes and other dues in time.
6. Responsibility towards Society:
The business owes the society also in the following ways:
(i) To produce for the benefit of the society.
(ii) To follow the principle of non-hoarding.
(iii) To devote attention to housing and workers’ living condition.
(iv) To provide employment opportunity.
(v) To promote health education and recreational activities.
(vi) An attention to social uplift.
7. Responsibility towards fellow Businessmen:
Businessmen owe responsibility to the fellow businessmen to prosper and to perform all legitimate activities, some of them are as follows:
(i) To create an atmosphere for healthy competition.
(ii) To avoid cut-throat competition.
(iii) To promote cooperation among the businessmen.
6. Project Report on the Essential Requisites for Success of Business:
The business is said to be successful if it is capable of rendering worthwhile service or make a worthwhile product which can be sold at profit.
(i) Company Objectives:
The most essential and fundamental requisite of a business is the establishment of definite and clear objectives; for aimlessly no organisation can function, what to speak of success. The business should also clearly establish long-range and short range objectives. They must be definite and so that those could be clearly described and realistic in nature so that those could be achieved.
(ii) Planning:
Planning is another corner stone on which the success of an enterprise depends. Planning in clear terms is an analysis of a problem and thereupon phasing the steps that must be taken to reach the objectives defined in the solution.
The planning means making a forward programme for guiding that future from the present and of making attempts to determine how the enterprise can make use of the difference between the present and the proposed future.
The planning enables the enterprise to meet the contingencies and to raise the enterprise from failing. It makes an assessment of the future problems, anticipates the future contingencies and finalises the ways and means to tackle the problems successfully. The whole and sole object is to place the enterprise on more and more sound footings.
(iii) Research:
Research may be defined as a systematic search for new knowledge. If it is conducted solely to probe the unknown, it is called pure research that is an investigation in the quest of knowledge for the sake of knowledge itself as in the field of sciences. If research is made for commercial purposes it is known as applied research and pure research is not however, sufficiently clear and the applied research is often the result of pure research.
In these days of expanding technology, increasing competition, the new methods of buying and selling goods and of dealing with the new methods of buying goods and of dealing with the people, the success of business to a large extent depends upon the improved methods of production, selling and ability to management by getting along with them. The only way of doing all this is by getting new and up-to-date facts which are supplied by research.
Applied research in industry is known as Industrial Research and is usually concerned with (i) marketing, (ii) materials (iii) product, and (iv) equipment and processes.
These are explained below:
(i) Marketing Research:
This is the study of consumers and the market with a need to testing consumer acceptance of products and to developing data for production schedules and prices.
(ii) Material Research:
This is linked with product development. For instance research in metals, coal, oil and chemicals has played a big part in recent years in bringing forth new alloys, synthetic rubbers, plastics, rexins, fibres etc.
(iii) Product Research:
This involves creating a new product and improvement of existing ones.
(iv) Equipment and Process Research:
This is usually directed towards the methods of manufacture, tools and equipment, as well as handling devices that level to increase productivity.
In addition to the above, the industrial relation research and research in Industrial psychology have proved of great advantage to industry in man-power management. Industrial relation research may relate to general social and economic relationship in employment or it may take up specific problems, such as absenteeism, labour turnover, employee grievances and frustrations. Research in industrial psychology attempts to study individual differences as a basis for selection, placement and promotion.
Besides the above, it is equally important that there is sound organisation manual with competent personnel whose authorities, responsibilities and duties are well-defined.
Further, adequate finance is highly essential for the running of an enterprise. Finance is the life blood of a business, without which the question of establishing enterprise dose not arise. In addition, the proper location of plant, its layout and size contribute to the success of the business.
Apart from the above, the effective and efficient management is probably the most important requisite of a successful business; for it is through management that the economic forces are utilised to the best advantage of the enterprise.
In nutshell, the ability to buy right, to manufacture correctly, to keep costs down, to sell, to keep records, to conserve resources and to get along with other go a long way to make the business successful.