B.B.A. LL.B. (Five Years) Sem 1 Business Environment 2017 Dec Question Paper with Solutions

For full marks, cover: a definition of business, in your own words and from a writer; its essential features in brief; what an objective is and what makes a good one; the objectives grouped as economic, social, human, national and global; how the objectives differ between forms of business organisation; how conflicts between objectives are balanced; a worked example; tables; and a conclusion on how profit and the other objectives fit together.

Meaning of business

Business is any regular economic activity in which goods or services are produced, bought or sold for a price. Its aim is to earn a profit. The word comes from "busy-ness", the state of being busy. In economics, it means being busy with activities that create wealth.

Two classic definitions are often quoted:

1. L. H. Haney described business as human activities directed towards producing or acquiring wealth through buying and selling of goods.

What an objective is

An objective is the end a business wants to reach. It guides plans, decisions and the use of resources. It also gives a standard against which results are measured. A modern business organisation has several objectives at once, not one.

Good objectives share some qualities.

1. Clear and specific. "Raise sales in Karnataka by 10 per cent this year" guides action. "Do better" does not.
2. Measurable, so that progress can be checked.
3. Realistic, within the firm's resources.
4. Time-bound, with a date for the result.
5. Consistent with each other and with the law.
6. Flexible, so that they can change when the environment changes.
7. Known and accepted by the people who must achieve them.

Objectives of business

The objectives of a business organisation are usually grouped under five heads.

1. Economic objectives

5. Protecting the environment by controlling pollution and saving resources.
6. Supporting the community, for example through schools, health care and help in disasters.

3. Human objectives

These concern the people who work in the business.

1. Fair wages and good working conditions.
2. Job security and chances of promotion.
3. Training to develop skills.
4. Participation of workers in decisions that affect them.
5. Respect and job satisfaction, so that work is not only a means of earning money.

4. National objectives

1. Producing goods the nation needs, in line with national priorities.
2. Balanced regional development, by setting up units in backward areas.
3. Earning foreign exchange through exports.

Objectives in different forms of business organisation

The same five heads apply to every organisation. But the weight given to each differs with the form of the organisation.

1. A sole trader puts profit first because it is his livelihood, and he alone bears the loss.

Management balances them in several ways.

1. It treats profit as a target to be earned fairly, not to be maximised at any cost.
2. It sets priorities for each period and reviews them.
3. It involves stakeholders, such as workers' representatives and customers, in decisions that affect them.
4. It follows the law and the code of conduct as limits that no objective may cross.
5. It looks at the long run, where honest dealing and profit usually agree.

A worked example

Take a medium-sized biscuit maker in Hubballi.

1. Its economic objective is to earn a profit and to win new buyers in other towns.
2. Its social objective is to sell biscuits that are safe and correctly labelled.
3. Its human objective is to pay its workers fairly and to keep the factory safe.
4. Its national objective may be to buy wheat and sugar from local farmers and to employ local people.
5. Its global objective may be to export to Gulf countries.

Conclusion. Business is a regular economic activity of producing or exchanging goods and services for profit. In Drucker's words, its purpose is to create a customer. The objectives of business organisations are economic, social, human, national and global. Their weight differs with the form of organisation, from the sole trader's profit to the co-operative's service to members. Profit remains the central objective of most businesses, because a business must survive and grow. But profit lasts only when the business also serves its customers, workers and society. The task of management is to balance these objectives, not to pursue profit alone.