Business Organisation

Every human being is busy in one activity or the other to satisfy his unlimited wants and desires. Human activities can be broadly classified into: a) economic activities and b) non-economic activities. Economic activities are meant to generate and use material resources of life. They are concerned with the production, distribution and consumption of goods and services. E.g. Doctor working in a hospital, worker engaged in a factory and so on.

On the other hand, non-economic activities are carried out not for earning money but for human sentiments like charity, love, sympathy, patriotism, religion, etc. E.g. Mother cooking food etc.,

Economic activities, which is otherwise known as human occupation, may be further classified into three categories, viz.a) Business, b) profession, and c) employment or service.

ProfessionProfessions are those occupations that require rendering of personal service of a special and expert nature. Eg. A doctor, a lawer, a Chartered Accountant and so on. Not any body can render these kinds of services because it requires specialize knowledge and expertise. Hence, minimum education qualifications are prescribed for entry into these kinds of profession and it requires high degree of formal education & training. These professional are expected to follow the professional code of conduct.

Employment / ServiceService or employment involves working under a contract of employment for or under someone known as employer in return (quid pro quo) for wages or salary. There is an employer and employee relationship. The employer assign the job and the employee completes the job as instructed.

Business – meaning and definition

The literal meaning of the word ‘business’ is busyness or state of being busy. As every activity involves being busy, this can’t be the correct meaning of the word ‘business’. Business means an economic activity concerned with earning money and creation and/or acquisition of wealth. It can be defined as the human activity directed towards the acquisition of wealth through the production and exchange of goods and services.

Business also means an institution engaged in earning money and creation and /or acquisition of wealth. As such, a business may be defined as an institution engaged in the creation and/or distribution of goods and services in order to earn profits and create/acquire wealth.

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Characteristics of Business

1. Sale, transfer or exchangeThis is the most fundamental characteristics of business. All business houses would be directly or indirectly selling, transferring or exchanging goods or services for a price. Either sales or transfer will be there, that too for a price. Price is what you pay for what you get. Without this there could be no business. Production and purchase of goods/services for personal use do not constitute business as there is no sale or transfer for a price

2. Dealing in goods and services There could be no business without using or dealing with goods and services. All business houses deal with goods and services in two aspects. 1. They purchase, produce and sell goods for a price so as earn income and wealth. 2. To run a business, they need to use various goods and avail of various services.

3. Continuity in dealings. There is continuous dealings in goods and services. The term business is used to denote for the exchange of goods and services undertaken continuously or at least recurrently. A single transaction, like selling of old car, will not constitute a business. A business is in business continuously.

4. Profit motiveOne of the foremost objective of running a business is to earn profit and acquire wealth. It is in the hope of making profit that people start business. If this hope or profit motive is not there, people will not start business. If a business does not generate profit, the owner will not continue in the business. Profit is the reward for the owner that encourages him to be in the business. Otherwise he will simply quit.

5. Risk and uncertaintyRisk means possibility of loss. Anything can happen to business. That is risk. There is no guarantee that there will be profit. There could be some natural calamity and the entire business may be destroyed. There could be fire and theft. People may not buy your product, there may not be any demand for your products, there could be some labour unrest, there could be power cut, required raw material may not be available and so on. Nothing is guaranteed in business. There could be risk because of the following factors. 1.Change in technology, 2. Change in consumer tastes, preferences, styles and fashions, 3.Mismanagent or wrong management of affairs of business, 4. Labour problem, 5. Shortage of raw material and other inputs, 6. Severe competition and increase in prices of inputs and 7. Natural causes.

Divisions of Business

Business activities can be classified into 1) Industry and b) Commerce. Industry is concerned with the production of goods and services and commerce is concerned with their distribution.

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Industry

Industry is that branch of business which is concerned with the production of goods and services. The term industry is used to refer to the processes by which useful things are extracted from the environment and transformed, processed, fabricated and multiplied into other products. The products of industry may be used by the final consumer (consumer goods) or by another industry (capital goods) for further production of goods and services. In some cases, an industrial concern may produce materials which will be further processed by yet other concerns for conversion into finished goods which are known as intermediate goods. Industry is of the following types:

Types of Industry

Industry may be broadly grouped into four catagories. 1. Extractive Industries , 2. Genetic Industries, 3. Manufacturing Industries and, 4. Construction Industries.

1. Extractive Industries: These industries extract or draw out various products from natural sources such as earth, soil, water, air, etc. The products raised to these industries are provided by nature and collected by human beings. Agriculture mining, hunting, fishing, lumbering, oil-exploration, quarrying, etc. are examples of extractive industries. The products of such industries are used by manufacturing and construction industries. These include: hunting, fishing, mining, fruit-gathering, agriculture, afforestation etc.

2. Genetic Industries: Genetic implies heredity or parentage. Genetic industries involve multiplying or reproduction of certain species of plants and animal with the object of making profit. Forestry plant breeding nurseries, cattle breeding farms, poultry farms, fish farms, hatcheries and commercial kernels are examples of genetic industries.

3. Manufacturing Industries: These industries are concerned with the conversion or transformation of raw materials and semi-finished products into finished products. Such industries, therefore, create form utility. Manufacturing industries supply most of the products for daily use. Goods supplied by these industries are known as factory production. Manufacturing industries are of the following types:

(a) Analytical. In an analytical manufacturing industry, a basic raw material is analysed or separated into a number of products. Different products are produced from the same raw material. For instance, an oil refinery separates crude oil into kerosene, gasoline, diesel oil, lubricating oil and petrol.

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(b) Synthetic. In these industries, two or more materials are combined or mixed together to manufacture a new product. For example, cement is produced by mixing concrete, gypsum and coal.

(c) Processing. These industries are engaged in the processing of raw materials through different stages before the final product is produced. Example of processing industry include textiles, sugar, steel, etc.

(d) Assembling. In this case, various components or parts are brought together to produce a finished product. Manufacture of bicycles, radios, televisions, watches, automobiles, are the typical examples of assembling industry.

4. Construction Industries. These industries are engaged in the erection or construction of buildings, bridges roads, dams, canals, etc. Construction industries use the products of extractive industries, e.g., stone, marble, bricks. etc. and also the products of manufacturing industries such as cement, iron and steel, wires, etc. These industries create the basic infrastructure for development by employing the process of fabrication. The distinguishing feature of these industries is that their products are made or fabricated at fixed sites or on sites. Their products are not carried to the market for sale.

Commerce

Commerce is an activity whereby goods transferred to those who need them. Commerce embraces all those activities which ensure a free and smooth flow of goods and services from producers to consumers. It consists of trade and the activities which facilitate trade. It establishes the necessary link between producers and consumers by embracing all those

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functions which are essential for free and uninterrupted flow of goods and services between them.

It covers not only the function of buying and selling and handling goods but also the many services which must be provided to finance, insure, store and transport goods in the course of these exchanges. Commerce is thus, an organised system for the exchange of goods and services between the members of the business world. It bridges the gap or hindrances between producers and consumers.

The principal function of commerce is to remove these hindrances so as to ensure a free and uninterrupted flow of goods and services from producers to consumers. These hindrances are :

1. Hindrance of Person. The manufacturers and ultimate consumers of goods are often unknown to each other. They are not always situated at the same place. Therefore, certain persons called traders are required to bridge the gap between them. Various types of traders such as wholesalers, retailers and mercantile agents help to remove the hindrance of person. Trade removes the hindrance of person by establishing a contact between sellers and buyers.

2. Hindrance of Place. Producers and consumers are separated by distance. Goods are produced at places far away from the points of consumption. This type of hindrance I removed by transport. Various means of transport remove this barrier of distance and help to establish a link between the two. Packaging of goods to protect them from damage and pilferage in the course of transit also helps to remove the hindrance of place and thereby creates ‘place utility’. By removing this hindrance, goods are made available where it is wanted.

3. Hindrance of time. Goods are generally produced in anticipation of demand. Therefore, it becomes necessary to store them and make them available as and when the consumers demand them. Warehouses perform this function of storage thereby balancing the time leg between production and consumption. They help to create ‘time utility’. By removing this hindrance, goods are made available when it is wanted.

4. Hindrance of Risk. During transportation and storage, goods are subject to several types of risk. Goods may be stolen or damaged. Fire, flood, earthquake, storm, riot, etc. and other calamities may result in the destruction of goods. Insurance removes this hindrance by covering the risk of loss or damage to goods.

5. Hindrance of Exchange. Goods produced by various industries are exchanged by them for money. This requires safe and economical arrangement for the payment of price. When, how and in what form money/price is to be paid - should be settled for the exchange to take place. Money serves as the medium of exchange and thereby removes the hindrance of exchange. Banks facilitate exchange by providing credit in various forms. Banking is regarded as an important function of commerce in removing this hindrance.

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6. Hindrance of knowledge. Exchange of goods can take place only when the seller brings his products to the notice of prospective buyers. Advertising and publicity provide the necessary information to prospective buyers about the utility and features of various products. In this way, they help to remove the hindrance of knowledge.

To sum up, commerce is the sum total of all those processes which are engaged in the removal of hindrances of person (through trade), place (through transportation), time (through storage), risk (through insurance), exchange (through banking), and knowledge (through advertising and publicity).

1. Trade

Trade refers to the sale, transfer or exchange of goods & services. It involves the buying and selling of goods and services. Trade is at the centre of commerce because all commercial services like transportation storage, insurance, banking, packaging, advertising, etc. revolve around trade. Trade is of the following types:

A. Internal or Home Trade. This is also known as domestic trade or inland trade. It is concerned with the buying and selling of goods within a country. Payment is made in local/national (Indian) currency either in cash or through the banking system. Internal trade may be further classified into two categories as follows:

(a) Wholesale trade. It refers to the purchase and sale of goods in bulk or large quantity. A wholesaler buys goods in large quantities directly from manufacture(s) and sells them in comparatively small quantities to the retailers. Wholesale trade constitutes a link between the producers and the retailers.

(b) Retail trade. It involves the sale of goods to the ultimate consumers. A retailer buys goods from wholesalers or manufacturers and sells them to the final consumers. He serves as the last link in the chain of distribution.

B. International or Foreign Trade. It consists of the exchange of goods and services between persons or organisations operating in two or more countries. International trade involves the use of foreign currency (known as foreign exchange) and international means of transport. International trade may be further classified into the following categories.

(a) Import Trade. It involves purchase of goods from foreign countries for use in the domestic market.

(b) Export Trade. It is concerned with the sale of domestic goods to foreign buyers or in foreign markets.

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(c) Entrepot Trade. Entrepot or re-export trade involves the import of foreign goods with a view to re-export them. For instance, India may buy wheat from Australia to supply the same to Bangladesh.

2. Auxiliaries to Trade (Aids to Trade)

In addition to trade, commerce includes several ancillary services which facilitate exchange of goods and services. These auxiliary services or aids to trade are described below:

(i) Transportation. Transportation carries goods from producers to traders and finally to consumers. It bridges the geographical distances and thereby performs a useful function in commerce. Transportation provides the wheels of commerce. It is because of transportation that a producer can sell his goods in different parts of the world. It creates ‘place utility’.

(ii) Warehousing or Storage. It refers to the holding and preservation of goods until they are finally consumed. Goods have to be stored at every stage in the process of exchange. It helps to make available the seasonally produced goods throughout the year. In the absence of warehousing, a producer will have to dispose of the goods as soon as they are produced. Warehousing creates ‘time utility’.

(iii) Insurance. It facilitates trade by providing a cover against the loss or damage of goods in the process of transit and storage. By getting their goods insured, producers and traders can avoid the risk of loss due to fire, theft, pilferage, etc. packaging also helps to protect the goods during transit and storage.

(vi) Banking. Banks are traders of money and credit. They help in the buying and selling of goods by providing a convenient and safe mode of payment. Banks also grant credit to businessmen with which they can carry on larger volume of trade.

(v) Advertising. Advertising brings goods and services to the knowledge of prospective buyers. It helps to highlight the distinctive features and utility of different products. With the help of such knowledge, consumers can obtain better value for their money.

Comparison between Industry, Commerce and Trade

S. No

Basis of Comparison Industry Commerce Trade

1. Meaning Extraction, reproduction, conversion, processing and construction of useful products

Activities involving distribution of goods and services

Purchase and sale of goods and services

2. Scope Consists of all activities involving conversion of materials and semi-

Comprises trade and auxiliaries to trade

Comprises exchange of goods and services

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finished products into finished goods

3. Capital Generally large amount of capital is required

Need for capital is comparatively less

Capital needed to maintain stock and to grant credit

4. Risk Risk involved is usually high

Relatively less risk is involved

Relatively less risk is involved

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Objectives of Business

An objective is something you want to achieve. Business objectives are something which a business organization wants to achieve or accomplish over a specified period of time. For Example, a few years back Tata Motors had the objective of producing and selling a car for common man of India, at Rs.100000.

These may be to earn profit for its growth and development, to provide quality goods to its customers, to protect the environment etc. These are the objectives of business. A business is established and it exists to achieve these multiple objectives. Generally profit motive is considered to be the primary objective of business. But this cannot be the sole objective of business.

Every business concern must spell out its objectives clearly. These objectives may be grouped as below.

1. Organic objectives 2. Economic objectives3. Social objectives 4. Human objectives5. National objectives 6. Global objectives

1. Organic objectivesAs a business entity, it has to pass through different stages of life, like human beings. The first concern of any business is to ensure its survival. Once it crosses this stage, it will attempt to grow and expand. The following are the organic objectives:

a. Survival – Unless a business survives, no other objectives can be achieved. This is the first objective – a company wants to ensure that has existence.

b. Growth & diversification – Once the company survives, it may think of growing. Growth may be measured in terms of size, investment, market share, etc. Growth brings higher profits, economic and social power, etc.

c. Prestige and recognition – a business enterprise with good image or goodwill can easily attract customers, invertors and good employees. This helps to ensure the survival and growth of a business.

2. Economic objectivesEconomic objectives of business refer to the objective of earning profit and also other objectives that are necessary to achieve the profit objective, which include, creation of customers, regular innovations and best possible use of available resources.

a. Profit earning. Profit is the lifeblood of business, without which no business can survive in a competitive market. Profit making is the primary objective for which a business unit is brought into existence. Profits must be earned to ensure the survival of business, its growth and expansion over time. Profits help businessmen not only to earn their living but also to expand their business activities by reinvesting a part of the profits.

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b. Creation of customers. A business unit cannot survive unless there are customers to buy the products and services. Again a businessman can earn profits only when he/she provides quality goods and services at a reasonable price. For this it needs to attract more customers for its existing as well as new products. This is achieved with the help of various marketing activities.

c. Innovations. Innovation means changes, which bring about improvement in products, process of production and distribution of goods. ‘Innovate or die’ is the modern business mantra. Use of power-looms in place of handlooms, use of tractors in place of hand implements in farms etc. are all the results of innovation. Through innovation, we can reduce cost and increase profit by adopting better methods of production and also increase their sales by attracting more customers because of improved products. businessman.

d. Best possible use of resources. Business activities require various resources like men, materials, money and machines. The availability of these resources is usually limited. Thus, every business should try to make the best possible use of these resources. This objective can be achieved by employing efficient workers, making full use of machines and minimizing wastage of raw materials.

3. Social ObjectivesSocial objectives are those objectives of business, which are desired to be achieved for the benefit of the society. Since business operates in a society by utilizing its scarce resources, the society expects something in return for its welfare. No activity of the business should be aimed at giving any kind of trouble to the society. If business activities lead to socially harmful effects, there is bound to be public reaction against the business sooner or later.

a. Production and supply of quality goods and services. The objective of business should be to produce better quality goods and supply them at the right time and at a right price. It is not desirable on the part of the businessman to supply adulterated or inferior goods which cause injuries to the customers. They should charge the price according to the quality of the goods and services provided to the society.

b. Adoption of fair trade practices. In every society, activities such as hoarding, black-marketing and over-charging are considered undesirable. Besides, misleading advertisements often give a false impression about the quality of products. Such advertisements deceive the customers and the businessmen use them for the sake of making large profits. The business unit must not create artificial scarcity of essential goods or raise prices for the sake of earning more profits.

c. Contribution to the general welfare of the society. Business units should work for the general welfare and upliftment of the society. This is possible through running of schools and colleges for better education, opening of vocational training centres to train the people to earn their livelihood, establishing hospitals for medical facilities and providing recreational facilities for the general public like parks, sports complexes etc.

d. Providing employment. Another important social objective is the creation of gainful employment opportunities for the people. This is true for a country like India where there are many unemployed people.

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e. Well being of socially and economically backward people. Business units being inseparable parts of society should help backward classes and also people those are physically and mentally challenged. This can be done in many ways. For instance, vocational training programme may be arranged to improve the earning capacity of backward people in the community. While recruiting it staff, business should give preference to physically and mentally challenged persons. Business units can also help and encourage meritorious students by awarding scholarships for higher studies.

4. Human ObjectivesWithout people, a business cannot exist. Human beings are involves in all spheres of business and they are most valuable asset of any organisation. Therefore, if a business wants to be successful, it has care for the welfare of human beings. Human objectives refer to the objectives aimed at the well-being as well as fulfillment of expectations of employees. They may include economic well-being of the employees, social and psychological satisfaction of employees and development of human resources.

a. Fair deal to the employees. In business employees must be provided with fair remuneration and incentives for performance, benefits of provident fund, pension and other amenities like medical facilities, housing facilities etc. By this they feel more satisfied at work and contribute more for the business.

b. Satisfaction of employees. It is the duty of business units to provide job satisfaction to its employees. This is possible by making the job interesting and challenging, putting the right person in the right job and reducing the monotony of work. Opportunities for promotion and advancement in career should also be provided to the employees. Further, grievances of employees should be given prompt attention and their suggestions should be considered seriously when decisions are made. If employees are happy and satisfied they can put their best efforts in work.

c. Development of human resources. Business can prosper if the people employed can improve their skills and develop their abilities and competencies in course of time. Employees as human beings always want to grow. Their growth requires proper training as well as development. Thus, it is important that business should arrange training and development programmes for its employees.

5. National ObjectivesThey are concerned with fulfillment of national needs, aspiration, and implementation of national plans and policies in tune with government. Every business must have the objective of fulfilling national goals and aspirations. The goal of the country may be to provide employment opportunity to its citizen, earn revenue for its exchequer, become self-sufficient in production of goods and services, promote social justice, etc. Business activities should be conducted keeping these goals of the country in mind, which may be called national objectives of business. The following are the national objectives of business.

a. Creation of employment. One of the important national objectives of business is to create opportunities for gainful employment of people. This can be achieved by establishing new business units, expanding markets, widening distribution channels, etc.

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b. Promotion of social justice. As a responsible citizen, a businessman is expected to provide equal opportunities to all persons with whom it deals. It is also expected to provide equal opportunities to all the employees to work and progress. Towards this objective special attention must be paid to weaker and backward sections of the society.

c. Production according to national priority. Business units should produce and supply goods in accordance with the priorities laid down in the plans and policies of the Government. One of the national objectives of business in our country should be to increase the production and supply of essential goods at reasonable prices.

d. Contribute to the revenue of the country. The business owners should pay their taxes and dues honestly and regularly. This will increase the revenue of the government, which can be used for the development of the nation.

e. Self-sufficiency and Export Promotion. To help the country to become self-reliant, business units have the added responsibility of restricting import of goods. Besides, every business units should aim at increasing exports and adding to the foreign exchange reserves of the country.

f. Development of skilled personnel. Developing human resources and skilled personnel is essential for economic growth of a country. Business can contribute to skill formation through training and development of managers and technicians.

6. Global objectivesDue to globalisation the entire world has become a big market. Goods produced in one country are readily available in other countries. So, to face the competition in the global market every business has certain objectives in mind, which may be called the global objectives. They are:

a. Raise general standard of living. Growth of business activities across national borders makes available quality goods at reasonable prices all over the world. The people of one country get to use similar types of goods that people in other countries are using. This improves the standard of living of people.

b. Reduce disparities among nations. Business should help to reduce disparities among the rich and poor nations of the world by expanding its operation. By way of capital investment in developing as well as underdeveloped countries it can foster their industrial and economic growth.

c. Make available globally competitive goods and services. Business should produce goods and services which are globally competitive and have huge demand in foreign markets. This will improve the image of the exporting country and also earn more foreign exchange for the country.

Business Promotion

The process of conceiving an idea of starting a company and developing it into a concrete reality through incorporation is called promotion. It is the process of exploration, investigation, planning and organisation of necessary resources with the objective of setting up a new business. According to Gerstenberg, “Promotion is the discovery of business opportunities, and the subsequent organisation of funds, properties and managerial ability into business concern

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for the purpose of making profits therefrom”. In short it can be said that the process for creating a business is known as promotion and the people who carry out this process are known as promoters.

The person who undertakes the responsibility of bringing a company into existence is called a promoter. The promoter may be a single individual or group of individuals. The promotion may be undertaken for or starting a new business or expansion of an existing business or for combining two or more business units. The various stages in promotion are:

Stages in business promotion

1. Discovery of idea: The idea of starting the business enterprise is conceived by the promoter. The idea conceived should be applicable and feasible. The idea cay refer to the starting of a new business or the taking over of an existing undertaking. The idea may come different sources, like unsatisfied demand, an unexplored area, unexploited resource from a new invention etc. At this stage, the promoter makes a rough estimate of probable incomes and expenditures.

2. Preliminary Investigation: Preliminary investigation constitute the second important stage of company promotion. At this stage the feasibility/soundness of the business is studied by the promoter. The soundness of the venture is studied by ascertaining the hidden weakness of the plan and also finding whether the venture is suitable for the consumer or not. The promoter makes a rough estimate about the cost of the project, estimated sales and estimated income resulting from the venture.

3. Detailed Investigation: The first and second stage of promotion has given a wide range of encouragement to the promoter and he got inspired at this stage. After preliminary investigation, the promoter goes for detailed investigation of his ideas with the help of different experts like engineer, chemist, financial experts and market analysis experts. Detailed investigation gives a good picture regarding the soundness of the project because at this stage the promoter is in a better position to know the capital requirement, place of location, size of the unit, demand for the product in the market and the probable prices of the product. The knowledge about the various branches are obtained from the experts. Detailed investigation involves study of market-demand, availability and cost of raw material, machinery, and other factors of production, degree of potential competition, probable selling price and profits etc.

The promoter puts entire details in written form called ‘project report or feasibility report/study’. This report reveals overall feasibility and viability of the business idea with details. This also helps procuring licenses and finances from government and other agencies. The report contains the data collected, estimates cost and revenue, expert’s opinion and recommendation.

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4. Assembling: When all the parameters of starting a company are found favorable at detailed investigation stage, the promoter goes for giving a concrete shape to the business. At detailed investigation stage, the promoter is satisfied regarding the practicability and profitability of the proposed venture. After being satisfied he proceeds for the next stage called assembling which means getting the support and consent of some other persons to act as directors or founders arranging suitable site for the company and arrangement for patents. At this stage all the steps for setting up a company is accounted for. The promoter also enter into contract with the government and other agencies for necessary clearance and license of the business.

5.Financing the proposition: Finance is the life blood of each and every business unit. In financing stage the promoter approaches bankers, financing institutions, underwriters, prospective investors and creditors to help in financing the proposition. The promoter also prepares prospectus which is written invitation to the public to subscribe for the paid-up capital. Promoter also takes necessary steps for incorporating a company and getting certificate of commencement. For incorporating a company and getting certificate of commencement a lot of legal formalities are maintained and he has to comply for these legal formalities.

Qualities of a successful businessman

1. Knowledge of business. The businessman should have a thorough Knowledge of his business. It should be supplemented by the knowledge of trade, Finance, marketing, income tax laws, etc.

2. Ability to plan and organize. An entrepreneur, if he/she has to shine in Business, must have the ability to plan and organize it.

3. Foresight. A good businessman has an eye on the past performance of his business, its capacity to produce for the future demand of his products, etc. If he has the necessary foresight to plan its operations for a period ahead, the Business will be a success and the entrepreneur earns profit.

4. Initiative and creativity. An entrepreneur should have the ability to take initiative by producing new things, new methods of marketing the products and services. The business Opportunity, creative imagination is regarded a priceless asset in the business World.

5. Steadfast and courageous. A good businessman should be firm, steadfast ant courageous. If he is upset and discouraged by initial setbacks and cannot face the business obstacles, he shall then have to close the business soon.

6. Adaptability to changes. The physical and technological sciences are yielding new products’ and flare efficient methods of production. A good businessman should have the aptitude for research and adaptability to apply scientific findings, to compete and stay in business.

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7. Industrious / hard working. A good businessman must be a balanced man of cool temperament and capable of working hard for long hours. If he avoids hard work and cannot bear the business strain, he will be left behind in the competitive race of business.

8. Sound financial management. Sound financial management is the key to the success of a business and is regarded an essential quality of a good entrepreneur.

9. Technical Skill. An entrepreneur-should have sufficient technical skill for understanding, carrying out and completing a particular job which he has undertaken to perform.

10. Honesty. A businessman should be honest in dealing with others.

11. Good Appearance. This is a prominent quality required in a businessman. Good appearance is a rare quality and depends on a combination of many other qualities of head and heart. It is the capacity of attracting and influencing other people without conscious effort. A businessman with sound personality can easily win the confidence of his prospect and convince him about his point of view.12 Well Balanced. A businessman must be a well balanced man of talent. He must have a consistent mind for clearness, steadiness and firmness in his dealings with others. He must never be prey to moods, by being of complacent temper today.

Problems in business promotion

1. Product analysis and market survey. Customer is the base of all business. It is really difficult to understand what the customer wants, what are his preferences, and so on. Market survey is done so that the business man will have data about the customer and their preferences.

2. Determining the size of the plant and firm. The size of the firm and plant size is important factor in physical planning of the new unit. The size should be such that it minimizes cost and maximizes efficiency.

3. Location. Another important problem with respect to promotion of a new business is the decision regarding location of business. Choosing a proper location will decide the success or failure of a business. Utmost care must be exercised in this regard.

4. Selection and organisation of physical facilities. Next problem is concerned with taking decision regarding process of production and equipment to be installed. The choice of processes and equipment will depend upon the design chosen and the required volume of production.

6. Financial planning. Financial planning involves : a) the determination of amount of funds required for the enterprise with reference to the physical plans, b) the estimation of profits in relation to investment and its comparison with the profits of existing concerns to find out whether the proposed investment will be profitable enough, c) the determination of a proper capital structure, and d) determination of the time appropriate for financing the enterprise.

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7. Building the organisation structure. The entire functioning of the business has to be divided into different department, putting all the similar work in one department. The department may be further divided into sections. For all departments, functional heads are determined. The functions of all the positions at various levels are clearly laid down and their interrelationship may be properly defined.

8. Tax planning. Tax planning is an essential part of the overall planning foe new business. A business man had to consider a number of tax laws into consideration while trying to launch his business.

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