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Course Code : ECO- 01
Course Title : Business Organization
Assignment Number : BCA (1)/01/Assignment/2022- 23
Maximum Marks : 100
Weightage : 30%
Last Dates for Submission : 31st October, 2022 (For July Session)
: 15th April, 2023 (For January Session)
There are five questions in this assignment which carried 100
marks. Answer all the questions. Please go through the guidelines
regarding assignments given in the Program Guide for the format of
presentation. Attempt all the questions:
Q1. What are the essential features of business? List different objectives of business. Ans:- The essential features of business are as follow: (a) Deals in goods and services. ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI (b) Sale or exchange of goods and services. (c) Regular exchange of goods and services. (d) Requires investment. ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI (e) Aims at earning profit.
(f) Involves risk and uncertainty of income. We shall discuss each of these characteristics: (a) Deals in Goods and Services: People in business are engaged in production and distribution of goods and services. The goods may be consumer goods like bread, butter, milk, tea, etc. or capital goods like plant, machinery, equipment, etc. The services may be in the form of transportation, banking, insurance, warehousing, advertising and so on. (b) Sale or Exchange of Goods and Services: ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI If a person produces or buys a product for self consumption or for gifting it to another, he is not engaged in business. But when he produces or buys goods to sell it to somebody, he is engaged in business. Thus, in business the goods and services produced or purchased must be exchanged for money or for goods (under barter system) between the buyers and sellers. Without sale or exchange of goods the activities cannot be treated as business. (c) Regular Exchange of Goods and Services: The production or buying and selling activities must be carried out on a regular basis. Normally, an isolated transaction is not treated as business. For example, it Raja sold his old Maruti car to Harish it is not considered as business, unless he continues to carry on buying and selling of cars on a regular basis.
members, an organization can greatly benefit from these skills.
- Reduce employee turnover and increase satisfaction. ... ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI Employees are typically more likely to contribute valuable projects and ideas if they enjoy working at a company. So, to reduce employee turnover, your business objective should focus on improving employee satisfaction.
- Reach out to more community members. ... Being active and engaged in the community is a great way to connect with potential local customers and can help you establish stronger relationships, build trust and boost brand recognition. with potential customers.
- Maintain or increase profits. ... Especially with start-up businesses, maintaining a steady profit can be challenging over the first few years. Setting an objective with supporting goals for maintaining profits is an effective way to ensure a business remains financially stable.
- Strengthen customer service
To ensure customers and clients have a positive experience with your team,
create an objective that motivates by offering incentives to both your
employees and your customers. Also, communicate how important an
outstanding customer experience is every time you interact with customers.
Q2. What is capital structure? Describe factors that determine the capital structure. Ans- Capital structure refers to the specific mix of debt and equity used to
finance a company's assets and operations. From a corporate perspective, equity
represents a more expensive, permanent source of capital with greater financial
flexibility.
Factors Determining Capital Structure
- Trading on Equity- The word “equity” denotes the ownership of the company. Trading on equity means taking advantage of equity share capital to borrowed funds on reasonable basis. It refers to additional profits that equity shareholders earn because of issuance of debentures and preference shares. It is based on the thought that if the rate of dividend on preference capital and the rate of interest on borrowed capital is lower than the general rate of company’s earnings, equity shareholders are at advantage which means a company should go for a judicious ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI blend of preference shares, equity shares as well as debentures. Trading on equity becomes more important when expectations of shareholders are high.
- Degree of control- In a company, it is the directors who are so called elected representatives of equity shareholders. These members have got maximum voting rights in a concern as compared to the preference shareholders and debenture holders. Preference shareholders have reasonably less voting rights while debenture holders have no voting rights. If the company’s management policies are such that they want to retain their voting rights in their hands, the capital structure consists of debenture holders and loans rather than equity shares.
- Flexibility of financial plan- In an enterprise, the capital structure should be such that there is both contractions as well as relaxation in plans. Debentures and loans can be refunded back as the time requires. While equity capital cannot be refunded at any point which provides rigidity to plans. Therefore, in order to make the capital structure possible, the company should go for issue of debentures and other loans.
- Choice of investors- The company’s policy generally is to have different categories of investors for securities. Therefore, a capital structure should give enough choice to all kind of investors to invest. Bold and adventurous investors generally go for equity shares and loans and debentures are generally raised keeping into mind conscious investors.
- Capital market condition- In the lifetime of the company, the market price of the shares has got an important influence. During the depression period, the company’s capital structure generally consists of debentures and loans. While in period of boons and inflation, the company’s capital should consist of share capital generally equity shares. ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI
Advertising can contribute to national income by generating more consumptions, demand, and production.
3. Employment Opportunities: ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI It can ease unemployment problems by generating more employment opportunities. 4. Commercialization of Inventions: Advertising is useful to commercialize or materialize new useful inventions. New inventions benefit the society. 5. Public Acceptance: ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI Advertising prepares people to accept and use new and standard products. 6. Informative: Advertisement is a good source of information. It can increase awareness about different products and special offers related to products. Availability of adequate information can help customers select the most suitable products/brands. Arguments Against Advertising
- Advertising leads to higher prices: Many hold the view that advertising leads to higher prices of goods. Advertising involves considerable expenditure. If that, expenditure is avoided, the cost of goods may be reduced and the consumer can get the product at a cheaper price. If the money spent on advertising is used for improving the quality of the product, consumers may get a better product for the same price.
- Advertising leads to monopoly: It is well known that large business firms establish brand image through advertising. Consumers develop brand loyalty. Then it becomes difficult for new producers to enter the market. In other words, advertising enables the existing large producers to block new competitors from entering the market. Thus, advertising acts as a barrier to entry and thereby leads to monopoly. Moreover, increased advertising often results in increased sales. Due to this possibility, established firms spend more and more on advertising and increase their sales. In this process they earn larger profits which enable them to spend even more on advertising. Thus, new entrants who do not have large financial resources find it difficult to compete with such established firms.
- Advertising results in inefficient resource allocation: Advertisements are intended not so much for the benefit of consumers. They are mainly directed to influence the consumer demand to fit whatever has been produced. In other words, advertisements are aimed mainly to change the tastes of people so that they will buy whatever is manufactured. This leads to distortion in consumption expenditure and increases the producers’ market power. Thus, advertising indirectly determines what people should consume. In this process productive resources i.e., land, labour and capital, may not be used in the best interest of the society.
- Advertising causes undesirable social effects: There are certain other criticisms about the social effects and cultural impact of advertising. a) Objectionable appeals like sex, horror, etc., are used in advertisements to attract the customers’ attention. b) Consumers are exposed to hundreds and thousands of product appeals which they may not be able to buy and enjoy. This may create frustration and disappointment in many cases. c) Advertising is used for promoting objectionable and harmful goods like cigarettes, liquors, etc. ADVERTISEMENTS: SUBCRIBE OUR YOUTUBE CHANNEL- ARPITA SHILPI d) It influences the values and life styles of people in society. Often it is used to promote products that satisfy the materialistic requirements of consumers Advertising is, thus, accused of promoting materialistic values in the society. e) Advertisements occasionally portray certain things objectionable to some sections of the society creating tensions between different groups of people.
- Advertising may act against the freedom of press: Mass media earn huge income from advertisements. If the media are dependent on income from advertisements sponsored by
Identifying Risks If and when a risk becomes a reality, a well-prepared business can minimize the impact on earnings, lost time and productivity, and negative impact on customers. For startups and established businesses, the ability to identify risks is a key part of strategic business planning. Risks are identified through a number of ways. Physical Risks Building risks are the most common type of physical risk. Think fires or explosions. To manage building risk, and the risk to employees, it is important that organizations do the following: Make sure all employees know the exact street address of the building to give to a 911 operator in case of emergency. Make sure all employees know the location of all exits. Install fire alarms and smoke detectors. Hazardous material risk is present where spills or accidents are possible. The risk from hazardous materials can include: Acid Gas Toxic fumes Toxic dust or filings Poisonous liquids or waste Location Risks Among the location hazards facing a business are nearby fires, storm damage, floods, hurricanes or tornados, earthquakes, and other natural disasters. Employees should be familiar with the streets leading in and out of the neighborhood on all sides of the place of business. Human Risks Alcohol and drug abuse are major risks to personnel in the workforce. Employees suffering from alcohol or drug abuse should be urged to seek treatment, counseling, and rehabilitation if necessary. Some insurance policies may provide partial coverage for the cost of treatment. Technology Risks A power outage is perhaps the most common technology risk. Auxiliary gas-driven power generators are a reliable back-up system to provide electricity for lighting and other functions
Strategic Risks
Strategy risks are not altogether undesirable. Financial institutions
such as banks or credit unions take on strategy risk when lending to
consumers, while pharmaceutical companies are exposed to strategy
risk through research and development for a new drug
Q5. Comment briefly on the following statements: (4 x 5)
a) An entrepreneur is a good judge of which
products will sell.
Ans- Entrepreneurship is about helping people see the benefit of a new way of doing
things; it’s about having an idea and having the passion and perseverance to make it come alive. What sets an entrepreneur apart from any other businessperson is that fact that she is
willing to assume risk to make a profit. So with that in mind, let's look at the
six types of products or services and the pros and cons of each.
Business type 1: Apps (tools) ...
Business Type 2: Products. ...
Business type 3: Done for you (DFY) ...
Business type 4: Teach a skill. ...
Business Type 5: Consulting. ...
Business Type 6: Coaching
b) Stock exchange plays a very important role in
the economic development of a country.
Ans- Role of stock exchange in economic development of a
country
The Stock exchange has an important role in the world economy by serving as the
anchor of the modern national economic system. Stock exchanges enable
companies to raise funds for expansion. They also give people a chance to make
investments in corporations.
Facilitates liquidity: The most important role of the stock exchange is in ensuring a ready platform for the sale and purchase of securities. This gives investors the confidence that the existing investments can be converted into cash, or in other words, stock exchange offers liquidity in terms of investment. Well-functioning exchanges enable economic growth and development by facilitating the mo- bilisation of financial resources - by bringing to- gether those who
