Tag: Office Organization and Management

The incremental concept is closely related to the marginal costs and marginal revenues of economic theory. Incremental concept in managerial economics involves two important activities which are as follows:

• Estimating the impact of decision alternatives on costs and revenues.
• Emphasizing the changes in total cost and total cost and total revenue resulting from changes in prices, products, procedures, investments or whatever may be at stake in the decision.

The two basic components of incremental reasoning are as follows:

• Incremental cost: Incremental cost may be defined as the change in total cost resulting from a particular decision.
• Incremental revenue: Incremental revenue means the change in total revenue resulting from a particular decision.

The incremental principle in economics may be stated as under:

A decision is obviously a profitable one if:

• It increases revenue more than costs
• It reduces costs more that revenues.
• It decreases some costs to a greater extent than it increases other costs.
• It increases some revenues more than it decreases other revenues.

Some businessmen hold the view that to make an overall profit, they must make a profit on every job. Consequently, they refuse orders that do not cover full cost (labour, materials and overhead) plus a provision for profit. Incremental reasoning indicates that this rule may be inconsistent with profit maximization in the short run. A refusal to accept business below full cost may mean rejection of a possibility of adding more to revenue than cost. The relevant cost is not the full cost but rather the incremental cost.

A Simple problem will illustrate this point.

Suppose a new order is estimated to bring in additional revenue of Rs. 5,000/-. The costs are estimated as under:

The order at first appears to be unprofitable. However, suppose, if there is idle capacity, which can be, utilised to execute this order then the order can be accepted. If the order adds only Rs. 500/- of overhead (that is, the added use of heat, power and light, the added wear and tear on machinery, the added costs of supervision, and so on), Rs. 1,000/- by way of labour cost because some of the idle workers already on the payroll will be deployed without added pay and no extra selling and administrative cost then the incremental cost of accepting the order will be as follows.

While it appeared in the first instance that the order will result in a loss of Rs. 1,000, it now appears that it will lead to an addition of Rs. 1,500/0 (Rs. 5,000/- Rs. 3,500/-) to profit. Incremental reasoning does not mean that the firm should accept all orders at prices, which cover merely their incremental costs. The acceptance of the Rs. 5,000/- order depends upon the existence of idle capacity and labour that would go underutilized in the absence of more profitable opportunities. Earley’s study of “excellently managed” large firms suggests that progressive corporations do make formal use of incremental analysis. It is, however, impossible to generalize on the use of incremental principle, since the observed behavior is variable.

Opportunity costs are cash outflows prevented by taking one course of action instead of another. They include returns, which the entrepreneur could have earned in alternative use of his services and capital.

The concept of opportunity cost occupies a very important place in modern economic analysis. The opportunity costs or alternative costs are the return from the second-best use of the firm’s resources which the firm forgoes in order to avail itself of the return from the best use of the resources. To take an example, a farmer who is producing wheat can also produce potatoes with the same factors. Therefore, the opportunity cost of a quintal of wheat is the amount of the output of potatoes given up. Thus, we find that opportunity cost of anything is the next best alternative that could be produced instead by the same factors or by an equivalent group of factors, costing the same amount of money. Two points must be noted in this definition. Firstly, the opportunity cost of anything is only the next best alternative foregone. Secondly, in the above definition is the addition of the qualification or by an equivalent group of factors costing the same amount of money.

The alternative or opportunity cost of a good can be given a money value. In order to produce a good, the producer has to employ various factors of production and have to pay them sufficient prices to get their services. These factors have alternative uses.

The factor must be paid at least the price they are able to obtain in the alternative uses.

Suppose a businessman can buy either a washing machine or a press machine with his limited resources and suppose that he can earn annually Rs. 40,000 and 60,000 respectively from the two alternatives. A rational businessman will certainly buy a press machine that gives him a higher return. But, in the process of earning Rs. 60,000 he has foregone the opportunity to earn Rs. 40,000 annually from the washing machine.

Thus, Rs. 40,000 is his opportunity cost or alternative cost. The difference between actual and opportunity costs is called economic rent or economic rent or economic profit. For example, economic profit from press machine in the above case is Rs. 60,000 Rs. 4000 = Rs. 20,000. So long as economic profit is above zero, it is rational to invest resources in press machine.

Opportunity cost principle is related and applied to scarce resource. When there are alternative uses of scarce resource, one should know which best alternative is and which is not. We should know what gain by best alternative is and what loss by left alternative is Devenport. an American Economist explains the concept of opportunity cost with reference to an example. Suppose a girl had two kinds of fruits- one pear and one peach, and if a bad boy is after her to seize the fruits, then the best way for the girl is to drop one fruit and run with the other, so that, she can at least save one fruit, at the cost of the other. When the girl so drops by the way side one fruit and runs with the other, then the opportunity cost of the fruit she saves is the foregone alternative of the fruit she lost. This is the opportunity cost theory.

The concept of opportunity cost plays an important role in managerial decisions. This concept helps in selecting the best possible alternative from among various alternatives available to solve a particular problem. This concept helps in the best allocation of available resources.

The opportunity cost of any action is simply the next best alternative to that action or put more simply, “What you would have done if you didn’t make the choice that you did”.

The income or benefit foregone as the result of carrying out particular decision, when resources are limited or when mutually exclusive projects are involved.

In the words of Left witch, “Opportunity cost of a particular product is the value of the foregone alternative products that resources used in its production, could have produced.”

Opportunity cost is not what you choose when you make a choice it is what you did not choose in making a choice. Opportunity cost is the value of the forgone alternative what you gave up when you got something.

Example 1: If a person is having cash in hand Rs. 100000/-, he may think of two alternatives to increase cash.

Option 1: Investing in bank. We will get returns amount 10000/-

Option2: Investing in business. We get returns amount 17000/-

Generally, we chose the option 2 because we will get more returns than the option 1. Here the option 1 is the opportunity cost, that what we have not chosen.

Example 2: I have a number of alternatives of how to spend my Friday night: I can go to the movies; I can stay home and watch the baseball game on TV, or go out for coffee with friends. If I choose to go to the movies, my opportunity cost of that action is what I would have chosen if I had not gone to the movies either watching the baseball game or going out for coffee with friends. Note that an opportunity cost only considers the next best alternative to an action, not the entire set of alternatives.

The opportunity cost of a decision is based on what must be given up (the next best alternative) as a result of the decision. Any decision that involves a choice between two or more options has an opportunity cost.

The economic concepts of the long run and the short run have become part of everyday language. Managerial economists are also concerned with the short-run and long-run effects of decisions on revenues as well as on costs. The actual problem in decision-making is to maintain the right balance between the long-run and short-run considerations. A decision may be made on the basis of short-run considerations, but may in the course of time offer long-run repercussions, which make it more or less profitable than it appeared at first.

The time perspective concept states that the decision maker must give due consideration both to the short run and long run effects of his decisions. He must give due emphasis to the various time periods. It was Marshall who introduced time element in economic theory.

The economic concepts of the long run and the short run have become part of everyday language. Managerial economists are also concerned with the short run and long run effects of decisions on revenues as well as costs. The main problem in decision making is to establish the right balance between long run and short run.

In the short period, the firm can change its output without changing its size. In the long period, the firm can change its output by changing its size. In the short period, the output of the industry is fixed because the firms cannot change their size of operation and they can vary only variable factors. In the long period, the output of the industry is likely to be more because the firms have enough time to increase their sizes and also use both variable and fixed factors.

In the short period, the average cost of a firm may be either more or less than its average revenue. In the long period, the average cost of the firm will be equal to its average revenue. A decision may be made on the basis of short run considerations, but may as time elapses have long run repercussions which make it more or less profitable than it at first appeared.

illustration:

The firm which ignores the short run and long run considerations will meet with failure can be explained with the help of the following illustration. Suppose, a firm having a temporary idle capacity, received an order for 10,000 units of its product. The customer is willing to pay only Rs. 4.00 per unit or Rs. 40,000 for the whole lot but no more.

The short run incremental cost (ignoring the fixed cost) is only Rs. 3.00. Therefore, the contribution to overhead and profit is Rs. 1.00 per unit (or Rs. 10, 000 for the lot). If the firm executes this order, it will have to face the following repercussion in the long run:

(a) It may not be able to take up business with higher contributions in the long run.

(b) The other customers may also demand a similar low price.

(c) The image of the firm may be spoilt in the business community.

(d) The long run effects of pricing below full cost may be more than offset any short run gain.

Haynes, Mote and Paul refer to the example of a printing company which never quotes prices below full cost due to the following reasons:

(1) The management realized that the long run repercus­sions of pricing below full cost would more than offset any short run gain.

(2) Reduction in rates for some customers will bring undesirable effect on customer goodwill. Therefore, the managerial econo­mist should take into account both the short run and long run effects as revenues and costs, giving appropriate weight to most relevant time periods.

Personality is vital to defining who we are as individuals. It involves a unique blend of traits including attitudes, thoughts, behaviors, and moods as well as how we express these traits in our contacts with other people and the world around us. Some characteristics of an individual’s personality are inherited, and some are shaped by life events and experiences. A personality disorder can develop if certain personality traits become too rigid and inflexible.

People with personality disorders have long-standing patterns of thinking and acting that differ from what society considers usual or normal. The inflexibility of their personality can cause great distress, and can interfere with many areas of life, including social and work functioning. People with personality disorders generally also have poor coping skills and difficulty forming healthy relationships.

Types:

Eccentric personality disorders

People with these disorders often appear odd or peculiar. The eccentric personality disorders include:

Paranoid personality disorder. Paranoia is the hallmark of this disorder. People with paranoid personality disorder have a constant mistrust and suspicion of others. They believe that others are trying to demean, harm, or threaten them.

Schizoid personality disorder. People with this disorder are distant, detached, and indifferent to social relationships. They generally are loners who prefer solitary activities and rarely express strong emotion.

Schizotypal personality disorder. People with this disorder display unusual thinking and behavior, as well as appearance. People with schizotypal personality disorder might have odd beliefs and often are very superstitious.

Dramatic Personality disorders

People with these disorders have intense, unstable emotions and a distorted self-image. They also often tend to behave impulsively. These disorders include:

Antisocial personality disorder. People with this disorder are sometimes called “sociopaths” or “psychopaths.” This disorder is characterized by rash, irresponsible, and aggressive behavior, which often is expressed by a disregard for others and an inability to abide by society’s rules. People with this disorder often commit serious crimes and have a lack of remorse for their actions.

Borderline personality disorder. This disorder is marked by unstable moods, poor self-image, chaotic relationships, and impulsive behavior (such as sexual promiscuity, substance abuse, over-spending, and reckless driving).

Histrionic personality disorder. People with this disorder are shallow and constantly seek attention. They often are very dramatic, possibly even childish, and overly emotional.

Narcissistic personality disorder. This disorder is characterized by an exaggerated sense of superiority, and a preoccupation with success and power. However, this preoccupation is fueled by a fragile self-esteem. People with this disorder are very self-centered, tend to lack empathy, and require constant attention and admiration.

Anxious personality disorders

People with these disorders often are nervous or fearful. These disorders include:

Avoidant personality disorder. People with this disorder tend to avoid social contacts. This behavior is not the result of a desire to be alone but due to excessive concern over being embarrassed or harshly judged. They often miss out on many valuable social experiences because of their fear of being rejected.

Dependent personality disorder. This disorder is marked by dependency and submissiveness, a need for constant reassurance, feelings of helplessness, and an inability to make decisions. People with dependent personality disorder often become very close to another individual and spend great effort trying to please that person. They tend to display passive and clinging behavior, and have a fear of separation.

Obsessive-compulsive personality disorder. This disorder is characterized by a pattern of perfectionism and inflexibility, control and orderliness, with a strong fear of making mistakes. This fear often results in an inability to make decisions, difficulty finishing tasks, and a preoccupation with details.

Causes:

The cause of personality disorders isn’t known. However, it’s believed that they may be triggered by genetic and environmental influences, most prominently childhood trauma.

Personality disorders tend to emerge in the teenage years or early adulthood. The symptoms vary depending on the specific type of personality disorder. For all of them, treatment typically includes talk therapy and medication.

Although research on personality disorders has been limited, no study has been able to show that a person is born with a personality disorder. As is the case with many other mental disorders, the tendency to develop a personality disorder might be inherited, not the disorder itself. The disorder arises when something interferes with the development of a healthy personality.

Personality disorders might develop as a way of coping with a troubling situation or unreasonable stress. For example, a person who was abused or neglected as a child might develop a personality disorder as a way of coping with the pain, fear, and anxiety that exists in his or her surroundings. One thing is known: personality disorders develop over time. A person does not suddenly “come down with” a personality disorder.

Symptoms and their treatment

A person who is shy or likes to spend time alone does not necessarily have an avoidant or schizoid personality disorder. The difference between personality style and a personality disorder often can be determined by assessing the person’s personality function in certain areas, including:

• Work
• Relationships
• Feelings/emotions
• Self-identity
• Awareness of reality
• Behavior and impulse control

Personality disorders treated

People with personality disorders might not seek treatment on their own; and as a result, many go untreated. One reason for the failure to seek treatment might be that many people with personality disorders can function normally in society, outside of the limitations of their disorder.

Most personality disorders are constant and unrelenting, and very hard to cure. However, treatment can help relieve some of the disturbing symptoms of many types of personality disorders.

Treatment varies depending on the type of disorder, but psychotherapy (a type of counseling) is the main form of treatment. In some cases, medication might be used to treat extreme or disabling symptoms that might occur. Medications that might be used include antidepressants, anti-psychotics, anti-anxiety drugs, and impulse-stabilizing medications.

Psychotherapy focuses on evaluating faulty thinking patterns, and teaching new thinking and behavior patterns. Therapy also aims to improve coping and interpersonal skills.

The word personality itself stems from the Latin word persona, which refers to a theatrical mask worn by performers in order to either project different roles or disguise their identities.

Personality, which makes an individual to stand apart, is the impression of characteristic attributes. It is an aggregate of an individual’s physical, psychological and behavioural aspects contributing to his ‘good personality’ or no personality, according to the presence or absence of the characteristic attributes. Some of these, which are of significant nature, are worth mentioning.

1. Omnibus: This personality view is the aggregate of recognizable pattern of properties-of qualities.
2. Integration and configuration: Under this view of personality, the organisation of personal attributes is stressed.
3. Hierarchical: This aspect mainly deals with adaptation, survival and evolution of the person to the environment.
4. Distinctiveness: The definition of this category speaks the uniqueness of each personality.

Significance

Psychological and physiological: Personality is a psychological construct, but research suggests that it is also influenced by biological processes and needs.

Consistency: There is generally a recognizable order and regularity to behaviors. Essentially, people act in the same ways or similar ways in a variety of situations.

Multiple expressions: Personality is displayed in more than just behavior. It can also be seen in our thoughts, feelings, close relationships, and other social interactions.

Behaviors and actions: Personality not only influences how we move and respond in our environment, but it also causes us to act in certain ways.

Functions

1. Personality is organized and constant
2. Personality is psychological, but is used by biological needs and processes.
3. Personality causes behaviour to happen.
4. Personality is displayed through thoughts, feelings, behaviours and many other ways.

Objectives

Self-esteem is often the result of a lifetime of experiences, and particularly what happened to us as children. However, it is possible to improve your self-esteem at any age. This page provides more information about self-esteem, and some actions that you can take to improve it.

Self-esteem is actually about how we value ourselves, and our perceptions about who we are and what we are capable of.

• People with good self-esteem generally feel positive about themselves, and about life. This makes them much more resilient, and better able to cope with life’s ups and downs.
• Those with poor self-esteem, however, are often much more critical of themselves. They find it harder to bounce back from challenges and setbacks. This may lead them to avoid difficult situations. That can, however, actually decrease their self-esteem still further, because they feel even worse about themselves as a result.

Improving Your Self-Esteem

Be nice to yourself

That little voice that tells you you’re killin’ it (or not) is way more powerful than you might think. Make an effort to be kind to yourself and, if you do slip up, try to challenge any negative thoughts. A good rule of thumb is to speak to yourself in the same way that you’d speak to your mates. This can be really hard at first, but practise makes perfect.

Nobody’s perfect

Always strive to be the best version of yourself, but it’s also important to accept that perfection is an unrealistic goal.

You do you

Comparing yourself to other people is a sure-fire way to start feeling crummy. Try to focus on your own goals and achievements, rather than measuring them against someone else’s. Nobody needs that kind of pressure.

Remember that everyone makes mistakes

You’ve got to make mistakes in order to learn and grow, so try not to beat yourself up if you forget to hit CTRL+S on a super-important assignment. Everyone’s been there.

Get movin

Exercise is a great way to increase motivation, practise setting goals and build confidence. Breaking a sweat also cues the body to release endorphins, the feel-good hormones.

Do what makes you happy

If you spend time doing the things you enjoy, you’re more likely to think positively. Try to schedule in a little you-time every day. Whether that’s time spent reading, cooking or just conking out on the couch for a bit, if it makes you happy, make time for it.

Focus on what you can change

It’s easy to get hung up on all the things that are out of your control, but it won’t achieve much. Instead, try to focus your energy on identifying the things that are within your control and seeing what you can do about them.

Building Self-confidence

Confidence is, in part, a result of how we have been brought up and how we’ve been taught. We learn from others how to think about ourselves and how to behave these lessons affect what we believe about ourselves and other people. Confidence is also a result of our experiences and how we’ve learned to react to different situations.

Self-confidence is not a static measure. Our confidence to perform roles and tasks and deal with situations can increase and decrease, and some days we may feel more confident than others.

Low-confidence can be a result of many factors including: fear of the unknown, criticism, being unhappy with personal appearance (self-esteem), feeling unprepared, poor time-management, lack of knowledge and previous failures. Often when we lack confidence in ourselves it is because of what we believe others will think of us. Perhaps others will laugh at us or complain or make fun if we make a mistake. Thinking like this can prevent us from doing things we want or need to do because we believe that the consequences are too painful or embarrassing.

Over-confidence can be a problem if it makes you believe that you can do anything even if you don’t have the necessary skills, abilities and knowledge to do it well. In such situations over-confidence can lead to failure. Being overly confident also means you are more likely to come across to other people as arrogant or egotistical. People are much more likely to take pleasure in your failure if you are perceived as arrogant.

Strategies:

Planning and Preparation

People often feel less confident about new or potentially difficult situations. Perhaps the most important factor in developing confidence is planning and preparing for the unknown.

If you are applying for a new job, for example, it would be a good idea to prepare for the interview. Plan what you would want to say and think about some of the questions that you may be asked. Practise your answers with friends or colleagues and gain their feedback.

Learning, Knowledge and Training

Learning and research can help us to feel more confident about our ability to handle situations, roles and tasks.

Knowing what to expect and how and why things are done will add to your awareness and usually make you feel more prepared and ultimately more confident.

However, learning and gaining knowledge can sometimes make us feel less confident about our abilities to perform roles and tasks, and when this happens we need to combine our knowledge with experience. By doing something we have learned a lot about we put theory to practice which develops confidence and adds to the learning and comprehension.

Positive Thought

Positive thought can be a very powerful way of improving confidence. If you believe that you can achieve something then you are likely to work hard to make sure you do if, however, you don’t believe that you can accomplish a task then you are more likely to approach it half-heartedly and therefore be more likely to fail. The trick is convincing yourself that you can do something with the right help, support, preparedness and knowledge.

Grooming your personality is just as important as grooming your outward appearance. When you regularly work on developing good personality traits and minimizing bad ones, you’ll make more friends, do better at work, and feel happier overall. Your personality isn’t set in stone, even as an adult, so it’s completely possible to make some changes for the better.

Personality grooming is as important as getting your degree done. This personality development and grooming allows you to be more successful and popular among your fellows and in your professional life coming ahead.

The personality is the representation of your inner self and making it better and better with every passed day is very crucial. Here are the tips for personality grooming which will allow you to be a better person and a better student.

Study and Observe Your own self

Being a student is all about studying but you’re not required to study your course books here. Try to study your own inner self. This study will allow you to learn about yourself. The results will give you the glimpse of your negatives and positives. Keep the positives working and put your negatives under improvement.

Working on your negatives and weaknesses will gradually groom your personality allowing you to become more prominent and privileged in your appearance and personality.

Improve Your Dressing

Dressing sense is a gift only few students have got among a group of students. The appearance matters a lot. The first this which you present to the people about yourself is your personality is your appearance. Wearing graphic T-shirts and dull or embroidered clothes do not portray your positive image which ultimately damages your personality and your presence among your fellows.

Extraordinary Communication Skills

The world is very much competitive today and having excellent communication skills is the weapon you can dominate anything you want. The communication skills are not limited to your speaking only, the written communication has also a strong impact on other people.

Try to improve your communication skills by reading books and taking part in the discussions which are relevant to your area of studies. It will allow you to improve your personality as well as your knowledge.

Body Language

Not only your tongue but your body also talks. Your body speaks conveys certain messages to the people without your permission if you don’t have enough control on your body language.

Try to stand tall with shoulders pulled back, head high and tummy in to show a confident body language. Try to give positive signals with your body and do not be afraid of your surroundings. Don’t let your body speak without your permission because it may damage your personality.

Giving Your Own Opinion

Your thoughts need hearers because they will rot in your brain without being expressed to the people. Do not hesitate to put in your ideas and views. Your opinion matters and for that you don’t need to feel any sort of shame.

It is quite possible that your ideas could give solution to people’s problems and the ideas were long waited for. Don’t be afraid of being different and thinking in unconventional way.

Proper Planning for Best Performance

As a student, you become a person of plans because you have to plan your studies as well as your future goals. Proper lesson planning and study schedule will allow you to become more confident in your approach. This planning will make you able to manage your time and this factor is very much important for your studies as well as your future job.

Listen Patiently

The essential part of image building and personality grooming is listening patience, apart from your communication skills. Listening is a part of communication because when you listen to understand and answer, you answer more efficiently.

Listening just for listening will be harmful because you will not be able to concentrate and lose your image quite soon.

Be Supportive and Caring

Stop being arrogant and self-centered if you’re try to be. Make time for the people matter to you and give them some quality tie. The relations are not meant for brain but heart. This small gesture will make you a loving and caring friend and your personality will have a positive image in the eyes of your friends.

The economic development of a country is measured by the development of commerce and industry. The development of business activities in India has been going on with the changes in civilisation. There was a time when there was no commerce at all and now its development has brought the whole world together. There have been different stages through which the development of trade and industry has passed.

Barter System:

Barter is a system of exchange of goods for goods. The earlier system of producing or percuring only for one’s needs gave way to barter system. With the increase in demand for more and more goods and surplus in one’s own production, there was a search for those who wanted to exchange goods for goods. The families started producing more than their needs.

The surpluses were exchanged with those goods which they needed. At a later stage some places were fixed where people used to come for exchanging their surplus products with others. The payment for using the services of other people was also in kind. Though commerce had come into being but it was at an elementary level. There was a problem of bringing together persons who needed each other’s goods. There was no common yardstick for measuring the value of goods to be exchanged.

Village Economy:

People started setting at particular places and began to sow seeds and rearing cattle on the land which they shared with community. These tribes started producing the things which they required and it was a system of self-sufficiency. With the advent of private ownership of land and cattle, the tribe system split into families. Some families started concentrating on occupations other than agriculture.

This led to exchange of goods for satisfying family needs. There was a system of village economy and all the requirements of the village were met by the people themselves. In order to facilitate exchange, a class of people called traders also emerged. Different families started specialising in producing different goods or taking up specific jobs. All these developments led to a self-reliant village economy.

Introduction of Money:

The difficulties faced in barter system compelled people to find out some common medium for exchange. In the beginning some commodities were used as a denominator for exchange. The commodities like stones, shells, cattle, feathers etc. were used to value the goods to be exchanged. Gradually, metals like iron, copper, bronze, silver and gold were taken to be more convenient, as a medium of exchange.

The metals were weighed and stamped to fix their value. The metal money facilitated trade not only in the country but also with foreign countries. The coins were also used to make payments for various types of services availed. It was ultimately the use of paper currency which led to all round development of business activities.

Town Economy:

With the use of money for exchange purposes, the volume of trade started increasing. The system of self-sufficiency gave way to division of labour. Instead of producing for family needs people started meeting needs of the whole village. People started specialising in different products. Certain places were being fixed where people could come to buy and sell goods.

There used to be weekly mandis or fairs where people from nearby villages would come to sell their surplus products and buy goods for their needs. The mandis or fairs became a regular feature. The increased volume of trade encouraged more and more division of labour. A separate class of traders and artisans came into existence.

These persons started settling at central places and established their business premises there. These places were known as towns and became trade centres for people living in villages. The villagers brought raw materials, cattle, milk, etc. to the towns for sale. The artisans would manufacture goods as per the needs of the people. The traders became a link between farmers and artisans.

The traders also started bringing luxury goods from outside places for sale in towns. As the journey was risky, the traders used to move in caravans and with the protection of armed men. The town economy gave further philip to commerce.

Industrial Revolution:

The word ‘Industrial Revolution’ is used to describe a series of changes in the industrial field in England during the period between 1760 and 1850. The changes of far reaching effects took place during this period. Generally, the word ‘Revolution’ is used for an abrupt change but in this case it is used to describe ‘fundamental change’.

A number of inventions took place in England which changed the entire technique of production. Some of the important inventions were the Spinning Jenny of Hargreaves, the Water Frame of Arkwright, the Mule of Crompton and the Power-loom of Cartwright. With the help of these inventions industrial production started at a mass scale.

The machinery was used for production, division of labour was introduced and the modes of transport were improved. The use of steam-engine in place of labour helped to increase production manifold. The use of machines required more capital investments and it led to the change in ownership from a sole proprietorship to a joint stock company.

According to Mr. L.C.A Knowles, “The so-called Industrial Revolution comprised of six great changes or developments-all of which were inter-dependent”.

These changes were:

(i) Development of Engineering:

Industrial revolution brought about a change in engineering skill. Engineers were required to design machines for textile and coal-mixing industries. The tool making for repairing ships and locomotives were also essential. There was a need for sufficient number of trained persons for taking up these jobs. The development of trained people was a part of industrial revolution.

(ii) Revolution in Iron-making:

The casting of iron for manufacturing machines was the other need of this revolution. A sufficient quantity and goods of iron was the need of the time. This development helped in producing sufficient number of machines.

(iii) Use of Steam Power in Textiles:

The use of mechanical devices in textile industry raised its production. First steam power was used in spinning. It created a surplus of yarn because man-made and traditional methods of weaving could not cope with the situation. It necessitated the use of power for weaving purposes also. The use of power was also extended to other aspects of textile industry.

(iv) Rise of Chemical Industry:

The use of power in textile industry necessitated suitable changes in the processes like bleaching, dying, finishing or printing so that production could be accelerated to keep pace with the output of piece goods. All this was possible only with the development of chemical industry.

(v) Development of Coal Mining:

The development of coal mining was inter-dependent on other developments. The coke was needed for smelting and refining iron and pig iron respectively in blast furnaces as also for producing the steam power which had also become the motive power of the industry.

(vi) Revolution in Transport:

The above-mentioned developments could not have been possible without the improved modes of transport. The horse driven carriages could not cope with the needs of large-scale production. The moving of inputs to centres of industrialization and then distribution of manufactured goods to places of consumption will be possible only with better transport means.

The industrial revolution led to large scale production. The production large scale reduced prices of goods. The commodities which were considered luxuries earlier were within the reach of a common man. The division of labour was introduced in factories and this led to specialisation.

Revolution in Transport and Communication:

Industrial production increased manifold after the mechanisation of production methods. There was a need for more and more markets to sell the goods. The discovery of new sea routes, opening of Suez Canal, introduction of railways, steamships, aeroplanes and automobiles revolutionised transport system. The movement of goods among different countries became easy and fast. The trade crossed national boundries.

The trade expanded from local to national and from national to international boundries. The facilities such as insurance and banking also gave philip to the development of trade. The revolution in communication methods has further facilitated the growth of business activities.

The use of telephone, telegraph, radio, T.V. etc. has helped in creating world market for goods. The latest edition of internet, intranet, e-commerce and advanced IT methods has radically changed the structure of trade and commerce both at national and international levels.

Advancements in Modern Business:

A number of advancements have occurred in commerce and industry in the last fifty years. These changes have revolutionised production and distribution.

Some of these changes are described as follows:

(i) Improved Methods of Production:

The use of latest technology has revolutionised production methods. The rate of production has increased substantially. Mechanisation and automation have also helped in controlling wastes and reducing cost of production. Productivity of workers has also gone up.

(ii) Large Scale Production:

The growth of multinational companies has increased the scale of production. The goods are not produced for local or national markets only but international demand is taken into consideration.

(iii) Specialisation:

The division of labour has led to specialisation in every industrial activity. Industrial units produce small number of components but specialise in them. Big industrial units also encourage specialisation in small units. The specialisation helps in raising productivity and competitive strength of the units. Even at international level countries produce only those goods in which they can specialise and have natural advantage. This specialisation has further increased international trade.

(iv) Research and Development:

The focus of industrial units is to devise better and better products on a regular basis. This has necessitated an emphasis on research and development. The thrust now is on revolution and not on evolution. Research and development helps in controlling costs, increasing production and raising standards of living of people.

(v) Expansion of International Trade:

International trade is expanding at a greater pace. The organisations like WTO are helping to bring together the whole world by removing various hindrances imposed by countries in the flow of goods and services. The whole world is now becoming one big market.

Growth of Public and Private Enterprises:

Industrialisation in India mainly started after 1947. British rulers wanted India to be the supplier of raw materials and consumer of their finished goods. After independence the government devised specific roles to public and private sectors. Basic and strategic industries were developed under public sector and consumer goods industries were left to be developed under private sector.

There were a number of changes in industrial policy from time to time. The public sector enterprises could not provide the required quantum for industrial development. It was in 1991 when government decided to limit the role of public sector only to a few industries and rests of the industries were left to be developed by private sector. Foreign entrepreneurs were freely allowed to set up unit in India.

A number of multinational companies, especially in automobile sector and durable consumer goods, have set up their manufacturing facilities in India. Foreign investors are allowed to own majority of equity in a number of Indian industries.

There are basic structural changes in Indian industrial sector in the last 15 years. Under world trade treaties every country has to .allow free access to foreign goods. Indian industries are now operating under intense competition from foreign undertakings. This competition has created awareness about quality and cost among Indian entrepreneurs. Indian exports are now finding good foreign markets.

Businessmen are exploring newer and better foreign markets for Indian goods. The government is also giving proper attention to export promotion. Though public sector is also continuing but the thrust has shifted to private sector. Private sector will have to show results in a fairly competitive environment.

Business is all around us and it is the mainspring of modern life. But very few people understand its true nature and its role in society. The study of business is essential for training oneself for a career. Study of the principles and practices of business organisation helps in understanding events in their right perspective and in tackling the problem of satisfying human wants through the use of available resources.

Every human being is busy in one activity or the other to satisfy his unlimited wants and desires. The sum total of human activities may broadly be divided into two categories-economic activities and non-economic activities. Economic activities are designed to attain and use the material resources of life. They are concerned with the production, distribution and consumption of goods and services. Human being as undertake economic activities in order to earn their livelihood.

According to L.R. Dicksee, “Business is a form of activity pursued primarily with the object of earning profit for the benefit of those on whose behalf the activity is conducted.” Business involves production and/or exchange of goods and services to earn profit, or to earn a living. However, profit is not the sole objective of the business. It may have other objectives like promotion of welfare of the workers and the general public.

“Business is an institution organised and operated to provide goods and services to society under the incentive of private gain.” :B.O. Wheeler

“All the activities including the production and sale of goods or services may be classified as business activities.”: William Spriegel

Characteristics

(i) Continuous Economic Activity:

In business an economic activity must be repeated again and again because if an entrepreneur does not do that it will not be treated as business. For example, if a person sells his own house, this activity does not come under the framework of business.

(ii) It is a Human Activity:

Business is a human activity which makes available goods and services to the society. It is not only dependent on making available the goods and services or the mere production of these but also depends on the exchange of value which is provided in return because if you are engaged in giving gifts to somebody then it will not be treated as business.

(iii) Profit Motive:

Any economic activity which leads to generation of profit is considered as business. Therefore, intension should be to earn profit otherwise if a person is engaged in social service or preaching about the religion cannot be treated as business.

(iv) Creation of Utility:

A man does not produce anything in a way, he only converts the form of resources which are provided by the nature. The business changes the form, place and possession utility of goods and makes them available in usable form. The business creates the utility of the things so that these can be consumed.

(v) Entrepreneurship:

One cannot run any sort of business without the element of entrepreneurship irrespective of the size of the business. Business can only be run by a daring person who has the ability to face risk of loss. Because no business is there where the element of risk is missing. Involvement of element of risk of loss makes the business world more challenging and to face financial challenge is not everybody’s cup of tea.

Objectives

A business objective may be defined as the purpose or the reason for the existence of the business in the society. The objective provides the direction towards which all business activities will be directed.

Though profit motive constitutes the primary objective of business activities, it should not lead us to conclude that profit is the sole objective of a business. The objectives of the business are to be laid down keeping in view the prevailing social, economic and political environment. Objectives of a business are multi-dimensional in nature.

They can be classified into four categories, namely:

(1) Economic objectives

(2) Social objective

(3) Human objectives

(4) National objectives

These objectives are inter­related in nature.

(1) Economic Objectives:

The economic objectives of a business are discussed below:

(i) Earning of Profits: Profits are needed to provide adequate reward to the entrepreneur and to provide funds for future growth. Entrepreneurship is one of the important factors of production. Just as other factors get their rewards, the entrepreneur must get reward for his efforts and taking of risk. Moreover, every businessman will like to see that the business he is managing should grow. This is possible only if the business earns sufficient profits for investing them into the business for expansion.

(it) Satisfaction of Customers: The survival of the business depends upon the satisfaction of customers. Thus, the business must aim at winning and satisfying the customers. Peter F. Drucker has rightly said, “There is only one valid definition of business purpose, i.e., to create a customer.” Customers are created through advertisement and sales promotion and delivering them ‘want satisfaction’.

(iii) Innovation: Innovation means developing new technology, new products and their multiple uses. Business cannot succeed without designing new products and finding their new uses.

(iv) Effective Utilisation of Resources: Business requires the use of men, machines and materials which are considered scarce resources. Every business is expected to make the best possible use of these resources. This objective can be achieved by employing efficient personnel, making full utilisation of machines and reducing wastage of raw materials.

(2) Social Objectives:

Social objectives of a business denote its obligations towards various stakeholders including customers, employees, community and the government.

The important social objectives include the following:

(i) Supply of Quality Goods at Fair Prices: The business must supply quality products as desired by the customers. The products should be durable, genuine (not duplicate) and safe. The prices charged for the goods should also be reasonable.

(ii) Adoption of Fair-Trade Practices: The business should follow fair business practices at all times. It should avoid anti-social practices like hoarding, black-marketing, over-charging the buyers, etc. It should also not indulge in unfair trade practices like spurious products or misleading advertisements.

(iii) Generation of Employment Opportunities: Every business should grow and expand its operations to create new jobs for the society. Further, a business should employ suitable people without any discrimination based on caste, creed, sex or religion.

(iv) Employees’ Welfare: It is an important responsibility of the business to promote the welfare of its employees. Besides providing fair wages, the business should also provide good working conditions, canteen facility, housing, transport and medical facilities, etc., to the employees.

(v) Community Service: Modern business organisations engage in community service to fulfil their social responsibility and thereby enhance their public image. Community service may be carried out by running dispensaries and schools, encouraging social activities and setting up training centres for the unemployed youths in the backward areas.

(vi) Protection of Environment: Every business house should ensure safety of the local surroundings and the protection of neighbourhood environment. It should take adequate measures to check air, water or noise pollution.

(3) Human Objectives:

A business is directly linked with two important groups, namely, (a) customers, and (b) employees. Both these groups must have a feeling of having been treated as human beings by the business enterprise. As human beings, customers expect courteous service and fair dealings from the business.

The employees look forward to the business enterprise for the following objectives:

(i) The employees are treated as partners in the business and not as inferior lot; they should get fair wages and healthy working conditions;

(ii) They are able to acquire and develop new skills in the process of employment; and

(iii) They derive job satisfaction.

(4) National Objectives:

These objectives are concerned with the goals of the nation.

Every business enterprise must contribute to the national goals such as:

(i) Achievement of self-sufficiency in production of goods and services,

(ii) Import substitution and export promotion,

(iii) Development of small scale and ancillary industries,

(iv) Development of backward regions,

(v) Economic development of the nation.

A modern business is that which use the latest in technology on their benefit, in order to maintain a competitive advantage over their competitors.

Committed deeply to delivering individual, social and environmental value. That is tightly aligning with the creation of economic value for its stakeholders.

The Modern Business would rethink these three key business areas:

• Customers experiences are changing. Customers expect seamless transactions and consistent interactions throughout their entire life cycle with the business i.e. from pre-sales to after-sales support.
• You need the right talent to succeed so that means having the right talent for the right job and having streamlined communication and collaboration to meet business goals.
• To perform the way market demands would require rich insights into the business and rapid planning cycles with the ability to agility of execution of strategies.

Modern business has a number of features. Understanding of these would help to appreciate and organize business activities in a highly professional way.

1. A Business Organization is an Economic Unit

Every business organization is engaged in transforming inputs into output to meet the requirements of the people. The selection of input and size of procurement will depend upon, the size of the organization. This would also depend upon the nature or product or service extended/by the business unit. All these are attended with the objective of making profit or surplus. Only when there is surplus achieved, can the business units grow. Hence creation of surplus in a business becomes the focal point and this is best achieved through optimal utilization of resources. That way, all business units have to achieve the maximum output with minimum inputs which in other words is the effort to achieve economic efficiency. Only economic efficiency can enable firms to be efficient in every other sense. Therefore, business organizations are only economic units in nature.

2. Business is an Economic Activity

Business involves organizing activities to satisfy human plants. These activities may result in the manufacture or production of a commodity or extension of a service. When a good or service is produced, resources are involved. Resources like human resources, physical resources and financial resources are all required to realize output to meet human needs. These resources are limited in supply, and so business involves identification of resources, evaluation of resource qualities, buying these resources and utilizing these resources. These resources being scarce in relation to their demand, the resources carry some value [i.e., price]. They cannot be procured at any cost to produce anything to meet human wants. So automatically selection among various resources come up which is made on the basis of requirement and cost. Once they are procured, then they are used in a very judicious manner so that there is no waste. That is optimal utilization-of resources is to be achieved. In this context, several decisions like resource selection, resource procurement, resource mix, resource utilization, etc. are all involved. As in all these stages, choice among alternatives is involved, every business activity is to be treated as economic in nature. Depending upon the business activity, the approach to selection among alternatives would differ. For example, in a manufacturing business, the choice is about input selection to supply quality output, in a service organization the choice is about-inputs and delivery process, in a government organization it is about production and equitable distribution of output, in an institution like bank, provision of various investment opportunities of short term and long term to the public, etc.

3. Business Decisions Making is essentially an Economic Process

All business decisions involve selection from alternatives. In other words, the rational choice of inputs is implied in every business decision. Hence, to be rational, a business unit goes through the process of : determining objectives, identifying opportunities, generating alternatives, classifying these alternatives as feasible and  in-feasible  alternatives, then rank the feasible alternatives on some criteria and then select those alternatives fulfilling the constraints. For example, if the objective of a business unit is to maximize profits, then this would call for minimizing cost and maximizing revenue. On the cost side, the business unit have to identify, procure and utilize resources in the optimal way and on the revenue side, the business unit should determine the price which would facilitate maximization of revenue. Price determination again would depend on various factors like demand, supply, competitive scenario, government interference, statutory compulsions, conflicting interests of the stake holders of the business, etc. Therefore, every decision made in a business would automatically depend on the economic process.

Changing Concept of Business

It has been stated already that the concept of business has undergone a vast change. From a producer driven stage business has become consumer centered and driven stage. While the earliest concept was ‘sell what is produced’ and the modern concept is ‘produce what is wanted.’ So every business depends on consumers and their ever changing needs. Any business unit which has successfully understood its customers and offer the product or service meeting their requirements alone is successful. But in this process, business units have to manage pressures from its owners and other stake holders. It should take into account the requirements of the workers and the trade unions. It should abide by the rules and regulations of a number of government agencies and institutions. It should meet the challenges and threats from competitors. Most important, it has to fulfill its social obligations. To survive every business unit has to also consider: the revolutionary changes in technology, market expansion, information explosion, competitor strategies. These are days when the consumers are better informed and so no business unit can afford to ignore consumer awareness and preferences. Technological development has brought with it the compulsion to use modern methods and techniques. Social obligations have made business units to meet pollution norms, etc. Trade union pressures have made them to design satisfactory service conditions for the work force. Then there is compulsion to provide for development of human resources in the organization to achieve organizational development. All these have made modern business ‘tight rope walking.’

Business & Profession