Course Name Fundamentals of Class BA,AD,B.
COM BS,
Business BEd, MA/MSc,
MEd, MPhil and
PhD
Course Code 463 Semester Spring 2025
Assignment No 1 Due Date 12-06-2025
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Total Assignment 2 Last Date 20-08-2025
[Link]
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اسائ من ٹ ورک ا ی ک فراڈ ہے لہ ذ ا اس فراڈ سے چ ی ں ۔۔۔: ن وٹ
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Q. 1: What is capitalism? How does it encourage people to become entrepreneurs?
Explain the benefits of capitalism over socialism.
Capitalism is an economic system where private individuals or
businesses own and control the means of production, distribution, and
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exchange of goods and services. In a capitalist economy, the production
of goods and services is guided by the profit motive, and market
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competition determines prices, supply, and demand. Individuals and
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organizations are free to pursue their economic interests, accumulate
wealth, and reinvest in businesses.
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How Capitalism Encourages Entrepreneurship:
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1.Profit Motive: Capitalism provides the opportunity to earn profits.
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This financial incentive motivates individuals to innovate and start
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new businesses.
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2.Freedom of Choice: Entrepreneurs have the freedom to choose
the products or services they wish to provide, as well as how to
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organize their businesses.
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3.Competition and Innovation: In a capitalist economy, competition
drives innovation. Entrepreneurs are encouraged to develop new
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ideas, technologies, and products to stay competitive in the
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market.
4.Ownership Rights: In a capitalist system, entrepreneurs have the
right to own and control their businesses, which gives them full
authority over the profits and decisions.
5.Resource Allocation: Capitalism allows resources to be allocated
efficiently through market forces, ensuring that businesses can
access the resources they need to grow.
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Benefits of Capitalism Over Socialism:
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1.Increased Efficiency: In capitalism, businesses compete to offer
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better products and services at lower prices, which leads to
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greater efficiency in the economy.
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2.Innovation and Growth: Capitalism promotes innovation and
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technological progress due to the rewards given to entrepreneurs
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who successfully meet consumer demands.
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3.Consumer Choice: Capitalism offers a wide variety of goods and
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services, providing consumers with more options to choose from
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based on their preferences and needs.
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4.Wealth Creation: Capitalism encourages investment and savings,
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leading to increased wealth and economic growth.
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5.Limited Government Intervention: Unlike socialism, which
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involves significant government control, capitalism allows
individuals and businesses to operate with minimal government
interference.
Q. 2: Differentiate between public and private limited companies. Discuss the benefits
of forming a company over a partnership firm.
Public Limited Company (PLC):
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● A public limited company is a type of business organization that
can offer shares to the public. Its shares are listed on the stock
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exchange and can be bought and sold by anyone.
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● Legal Status: It is a separate legal entity from its owners
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(shareholders).
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● Ownership: Ownership is divided into shares, which are traded
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publicly.
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● Liability: Shareholders have limited liability, meaning they are only
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responsible for the amount they invested in the company.
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● Regulations: PLCs are subject to stricter regulations and must
disclose financial information regularly to shareholders and
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regulatory authorities.
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● Fundraising: PLCs can raise capital by issuing shares to the public.
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Private Limited Company (Ltd):
● A private limited company is a type of business where the shares
are held by a small group of people, and the shares are not
available for public trading.
● Legal Status: It is also a separate legal entity.
● Ownership: Shares are privately held, typically by a small number
of individuals or entities.
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● Liability: Shareholders enjoy limited liability, similar to a PLC.
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● Regulations: Private limited companies have fewer regulatory
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requirements compared to PLCs.
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● Fundraising: Private limited companies cannot raise capital by
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offering shares to the public. They rely on private investors or
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loans for funding.
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Benefits of Forming a Company Over a Partnership Firm:
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1.Limited Liability: In a company, shareholders' liability is limited to
their investment, while in a partnership, partners are personally
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liable for business debts.
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2.Separate Legal Entity: A company is a separate legal entity, which
means it can own assets, incur liabilities, and enter into contracts
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in its own name. In a partnership, the business and partners are
legally the same.
3.Perpetual Succession: A company continues to exist even if
shareholders change or pass away. A partnership, however, may
dissolve if one partner leaves or dies.
4.Easier Access to Capital: Companies can raise funds by issuing
shares or bonds, which is more difficult for a partnership.
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Partnerships rely on personal savings or loans.
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5.Expansion and Growth: A company structure provides more
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opportunities for growth and scalability, whereas a partnership is
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generally limited by the partners' resources and expertise.
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Q. 3: Keeping in view the existing financial system of Pakistan, what are the various
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sources from where businesses can obtain funds for their expansion plans?
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Businesses in Pakistan can obtain funds for expansion from several
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sources within the existing financial system:
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1.Bank Loans: Businesses can apply for loans from commercial
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banks and financial institutions. Banks offer a variety of loan
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products, including term loans, working capital loans, and
overdrafts.
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2.Equity Financing: Companies can raise funds by issuing shares to
the public or private investors. This method is common for public
limited companies that are listed on the stock exchange.
3.Venture Capital: Startups and growing businesses can seek
funding from venture capital firms that invest in high-risk,
high-reward projects. This is particularly common in the
technology and innovation sectors.
4.Government Grants and Subsidies: The government of Pakistan
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provides various financial assistance schemes, including subsidies
and grants, especially for small and medium enterprises (SMEs) to
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support their growth and development.
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5.Private Investors and Angel Investors: Entrepreneurs can seek
funding from wealthy individuals or angel investors who are
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willing to invest in promising businesses in exchange for equity or
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debt.
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6.Islamic Finance: Businesses in Pakistan can obtain funds through
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Islamic financial institutions that offer Shariah-compliant financing
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options, such as Murabaha, Ijarah, and Musharakah.
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7.Trade Credit: Suppliers may offer trade credit to businesses,
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allowing them to delay payments for goods and services
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purchased. This helps businesses to manage their cash flow during
expansion.
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8.Crowdfunding: This is an emerging method where businesses
raise small amounts of money from a large number of people,
typically via online platforms.
9.Leasing: Companies can opt for leasing arrangements to finance
the acquisition of equipment, machinery, or real estate without
upfront capital.
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Q. 4: Every business requires strong management. What is business management?
Explain the function of planning and organizing in detail.
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Business Management is the process of planning, organizing, leading,
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and controlling resources to achieve organizational goals. It involves
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setting objectives, coordinating activities, managing resources, and
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ensuring that the business operates efficiently and effectively to meet
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its targets.
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Functions of Business Management:
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1.Planning:
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○ Planning is the process of determining the business's goals
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and deciding how to achieve them. It is the foundation of
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management because it provides direction and purpose.
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○ Types of Planning:
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■ Strategic Planning: Long-term goals and direction.
■ Tactical Planning: Shorter-term plans to implement
strategies.
■ Operational Planning: Day-to-day plans for operational
activities.
○ Steps in Planning:
■ Defining the objectives.
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■ Analyzing available resources.
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■ Identifying the constraints.
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■ Setting a timeline and determining the actions
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required.
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■ Allocating resources to achieve the goals.
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2.Organizing:
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○ Organizing involves arranging resources and tasks to achieve
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the business’s objectives. This function focuses on creating a
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structure that helps achieve efficiency in operations.
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○ Key Elements of Organizing:
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■ Division of Work: Tasks are divided among employees
based on their skills and expertise.
■ Authority and Responsibility: Clear lines of authority
are established to ensure that employees know their
roles and responsibilities.
■ Coordination: Ensuring that activities are coordinated
among different departments and teams.
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■ Resource Allocation: Allocating resources such as
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manpower, equipment, and materials to achieve
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business objectives.
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○ Organizational Structure: The way a business is structured
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(e.g., hierarchical, flat) influences how organizing is done. A
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well-organized business can respond to challenges
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effectively and efficiently.
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Q. 5: Without marketing, a business will not be able to make sufficient profits. What is
the marketing mix? Explain its elements.
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The Marketing Mix refers to the combination of key factors that a
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business uses to promote its products or services and satisfy customer
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needs. It is often referred to as the 4Ps of marketing: Product, Price,
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Place, and Promotion.
1.Product:
○ This refers to the goods or services that a business offers to
its customers. The product should meet the needs and wants
of the target market. It includes aspects such as quality,
design, features, brand, and packaging.
2.Price:
○ Price refers to the amount customers are willing to pay for
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the product or service. Pricing strategies may include
penetration pricing, skimming pricing, or psychological
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pricing. The price should reflect the value of the product and
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be competitive in the market.
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3.Place:
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○ Place refers to the distribution channels used to deliver the
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product to the customer. It includes locations, logistics, and
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methods of reaching the target market (e.g., retail stores,
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online platforms, wholesalers).
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4.Promotion:
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○ Promotion involves activities to communicate the benefits of
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the product to potential customers. It includes advertising,
public relations, sales promotions, personal selling, and
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social media marketing. Effective promotion helps to create
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awareness and drive sales.
The marketing mix ensures that businesses consider all the elements
needed to satisfy their target customers and achieve organizational
success.
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