Business and Government Lecture -1

What is Business?

Any Economic activity carried on with the object of earning a return on income i.e. profit is called business

Characteristics
-Dealing in goods and services
-Production and/or exchange
-Regularity of transaction
-Profit Motive
-Element of risk

Risk

-Risk arises out of uncertainty
-Uncertainty takes place because of
Changes in technology
Changes in consumer tastes, habits and fashions
Shortage of raw materials, power, fuel etc
Change in market competition
Wrong management decision with regard to management control and other resources
Changes in socio-economic-political condition
Natural Calamity

Risk & Uncertainity
-Key to turning poor countries into rich ones
-Creating public institutions having ability to convert uncertainty into risk
-Uncertainty is imprecise knowledge about potential future events
-Risk is uncertainty that can be systematically assessed---- I.e.
measured
priced ----- and, most important…
shared (Capital & Collusion by Hilton Root)

Environment
-Environment is the framework within which business operation takes place
-Two broad heads
Indogenous environment is the firm or unit specific
Exogenous environment are external factors which influence the operation of business

Exogenous Environment
Exogenous factors could be further classified into
-Domestic
-Political
-Economic
-International