COMMERCE

SEM 1
MODULE - I
Mr. Omkar Kabadi
Assistant Professor,
Department of Commere
 MODULE – I
Business
•Introduction: Concept, Functions, Significance of business.
Traditional and Modern Concept of business.

•Objectives of Business: Meaning and importance of

objective, Steps in setting business objectives, classification
of business objectives.

•New Trends in Business: Globalization – positive and

negative impact, Organisation Structure and Modern
Business Model.
 Concept

Business is an organised effort to produce

goods and services in a market place and to reap
some reward for the effort – Keith Davis
• Economic activity Features
• Exchange of goods and services
• Buying and selling
• Continuous activity
• Profit motive
• Creative
• Dynamic
• Risk
• Social obligation
 Functions
• Production – CONVERTING RAW MATERIALS TO FINISHED GOODS
• Marketing – 4Ps – WHAT TO PRODUCE?, AT WHAT PRICE TO SELL?,
WHERE TO SELL?, HOW TO SELL?

• Finance – HOW MUCH CAPITAL IS REQUIRED? HOW TO RAISE THE

FUNDS? DEBT-EQUITY RATIO?- MANAGING FUNDS

• HR – HOW MANY PEOPLE (TOP MIDDLE BOTTOM) ARE REQUIRED?

COMPENSATION OF EMPLOYEES? MOTIVATE EMPLOYEES? WHAT
SKILLS ARE NEEDED (HIGHLY, UNSKILLED)?

• Information – COLLECT DATA, DISSEMINATION OF DATA? ICT.

INTERNAL EXTERNAL TO ORGANISATION ?, USE INTERNET AND
INTRANET.
 Significance of Business
To Business To Consumer To Society

Profits Variety of products- CHOICE Government revenue –

/ foreign exchange
Goodwill/ reputation Reasonable price – LOWER Employment opportunity
Innovation Quality of product - Social welfare
IMPROVEMENTS
Consumer satisfaction – Better technology
WANT SATISFYING
PRODUCTS/ SERVICES
AVAILABLE
Consumer awareness – NO Standard of living
CHEATING
Economic development
Utilisation of resource
Investment opportunity
Efficiency of HR
1. Traditional
Meaning - Vs Modern Business
PROFIT+CUSTOMER+SOCIETY

2. Orientation - SOCIETY ORIENTED

3. Type of management- LINES OF COMM HORIZ, DECISIONS

TOGETHER

4. Area covered - GLOBAL

5. Structure- NETWORK STRUCTURE

6. Technology- MACHINES CAN BE MONITORED REMOTELY

7. Consumer preferences- COMPLEX, UNPREDICTABLE, CHANGES FAST

8. Social responsibility- NEED TO RETURN BACK TO SOCIETY

9. International role- COUNTRIES INTERESTS HAVE TO BE

ENSURED
 Business Objectives –
QUANTITY and QUALITY

GOAL – QUANTITY
TARGETS – QUANTITY

SALES SHOULD INCREASE BY 20% BY 2022

PURPOSE - QUALITY
MOTIVE - QUALITY
AIM - QUALITY
 Definition – Business Objectives

According to Koontz and O’Donell :

“Objectives are the ends towards which activities of any enterprise or department or
project within it are aimed”.

According to McFarland :
“Objectives are that goals, aims or purposes that organizations wish to achieve over
varying periods of time”
 Coca cola

Our Mission
Our Roadmap starts with our mission, which is enduring. It declares our purpose
as a company and serves as the standard against which we weigh our actions and
decisions.
To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.
 Coca cola
Our Vision
Our vision serves as the framework for our Roadmap and guides every aspect of our business by
describing what we need to accomplish in order to continue achieving sustainable, quality growth.
People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy
people's desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create mutual,
enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support sustainable
communities.
Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.
 Pepsi Co

Our Mission
As one of the largest food and beverage companies in the world, our mission is
to provide consumers around the world with delicious, affordable, convenient
and complementary foods and beverages from wholesome breakfasts to healthy
and fun daytime snacks and beverages to evening treats. We are committed to
investing in our people, our company and the communities where we operate to
help position the company for long-term, sustainable growth.
 Pepsi Co
Our Vision
At PepsiCo, we're committed to achieving business and financial success while leaving a
positive imprint on society – delivering what we call Performance with Purpose.
In practice, Performance with Purpose means providing a wide range of foods and
beverages from treats to healthy eats; finding innovative ways to minimize our impact on
the environment and reduce our operating costs; providing a safe and inclusive workplace
for our employees globally; and respecting, supporting and investing in the local
communities where we operate.
Wherever we do business, Performance with Purpose is our guide. We believe that
delivering for our consumers and customers, protecting the environment, sourcing with
integrity and investing in our employees are not simply good things to do, but that these
actions fuel our returns and position PepsiCo for long-term, sustainable growth.
 Importance or need or significance of
Objectives
1 Identify to the organization
2 Facilitates planning
3 Facilitates co – ordination
4 Guides decision – making
5 Enable performance evaluation
6 Provides direction
7 Motivation
8 Proper utilization of resources
9 Reduce wastage
 Steps in setting up Objectives
1 Review the mission and vision statements - LONG TERM,
2 Analyse environmental factors - internal and external
3 Consider value system - beliefs or ethics or morals
4 Consider management philosophy - reason for existence, mission
5 Analyse past achievement of the organization
6 Setting of objectives
 Features
1. Multiple

2. Hierarchical

3. Qualitative and Quantitative

4. Time bound

5. Integrated

6. Standards of evaluating
 Business Objectives

Economic Social Human

ORGANI
National
C
 Business Objectives
Economic Social Human National
Objectives - Objectives - Objectives – Objectives -
Earning Profit Towards customers Economic well Social justice
Being
Creating wealth Towards share Holders Motivation Employment
opportunities
Creating customers Towards employees Proper working conditions Development of backward
area
Innovation Towards government Social and psychological Contributes revenue to the
satisfaction government
Reduction in the cost of Towards creditors Promotion Production of goods as per
production marketing national priorities
Effective utilization of Towards society on the Welfare and social security Encouragement to small
scarce resources whole measures scale and cottage industry
Threefold / Organic Objectives

Survival – Short Term

Growth – Medium Term

Prestige – Long Term

 GLOBALIZATION

Globalization refers to the process of integration of an economy with the world

economy.
1 Impact on agriculture
POSITIVE IMPACT OF GLOBALIZATION
2 Impact on industrial sector

3 Impact on banking and financial sector

4 Outsourcing business process

5 Borderless world

6 International cooperation

7 Deregulation

8 Greater Mobility of Human Resources across Countries

 NEGATIVE IMPACT OF
GLOBALIZATION
1. Huge disparity

2. Company closures

3. Unemployment

4. Influence government policy

5. Risks associated with interdependence of economies

 BUSINESS ORGANISATION STRUCTURE:
7 Types of Organizational Structures (Organizational Chart Types) for
Different Scenarios:
1) Hierarchical Structure
2) Matrix Structure
3) Horizontal/Flat Structure
4) Network Structure
5) Divisional Structure
6) Line Organizational Structure
7) Team-based Organizational Structure
1) Hierarchical Structure

• The hierarchical model is the most popular organizational chart type. There are a
few models that are derived from this model.

• In a hierarchical organization structure, employees are grouped with every

employee having one clear supervisor. The grouping is done based on a few
factors, hence many models are derived from this. Below are a few of those
factors

• Function – employees are grouped according to the function they provide. The
below image shows a functional organisation chart with finance, technical, HR,
and admin groups.

• Geography – employees are grouped based on their region. For example, in the
USA employees might be grouped according to the state. If it’s a global company
the grouping could be done according to countries.

• Product – If a company is producing multiple products or offering different

A functional organizational chart, a variation of the hierarchical model
This is the dominant mode of organization among large organizations. For example
Corporations, Governments, and organized religions are hierarchical organizations with
different levels of management, power or authority.
Pros:
• Helps establish a clear line of authority and reporting within the organization
• Clarifies employee roles and responsibilities
• Establishes a clear career path for employees which can in turn keep them motivated
• Allows employees to be in-depth specialists as they are more likely to have niche
positions
Cons:
• Slow decision-making due to the complicated chains of command
• A disconnect of lower-level employees from those of the top-level management
• Inconsistencies in communication due to the vertical and horizontal levels between teams
• Restricted information due to the very little downward flow of information to the
lower-level employees
2) Matrix Structure

• In a Matrix Organisation structure, the reporting relationships are set

up as a grid, or matrix, rather than in the traditional hierarchy. It is a
type of organizational management in which people with similar skills
are pooled for work assignments, resulting in more than one manager
to report to (sometimes referred to as solid line and dotted line reports,
in reference to traditional business organization charts).

• For example, all engineers may be in one engineering department and

report to an engineering manager. But these same engineers may be
assigned to different projects and might be reporting to those project
managers as well. Therefore some engineers might have to work with
multiple managers in their job roles.
Pros:

• Helps eliminate traditional solid communications barriers

• Improved decision-making due to the availability of two chains of command
• Allows employees to use their skills in different roles
• Better use of resources which leads to increased efficiency
Cons:

• May result in confusion regarding roles, responsibilities, and priorities

• Conflict of power between the project manager and the functional manager
• Blurred lines of accountability
• Large overhead costs due to employing several managers
3) Horizontal/Flat Structure

• This is an organizational chart type mostly adopted by small companies and

start-ups in their early stage. It’s almost impossible to use this model for
larger companies with many projects and employees.

• The most important thing about this structure is that many levels of middle
management are eliminated. This enables employees to make decisions
quickly and independently. Thus a well-trained workforce can be more
productive by directly getting involved in the decision-making process.

• This works well for small companies because work and effort in a small
company are relatively transparent. This does not mean that employees don’t
have superiors and people to report to. Just that decision-making power is
shared and employees are held accountable for their decisions.
important to have an understanding of the current organizational structure of your
company.
Pros:
• Fosters better communication and collaboration between team members
• More autonomy and responsibility to employees
• More transparency due to limited bureaucracy
• Because the chain of command is shorter, it allows for faster decision-making
Cons:
• Lack of opportunities for employee progression
• Risk of power struggles arising due to the lack of a formal system
• Employees may have a lower sense of accountability because they have one
lead
• Risk of confusion because employees don’t have a clear supervisor
4) Network Structure

• Network organizational structure helps visualize both internal and

external relationships between managers and top-level management.
They are not only less hierarchical but are also more decentralized
and more flexible than other structures.

• The idea behind the network structure is based on social networks. Its
structure relies on open communication and reliable partners; both
internal and external. The network structure is viewed as agiler than
other structures because it has few tires, more control, and a bottom
flow of decision making.

• Using a Network organizational structure is sometimes a

disadvantage because of its complexity. The below example of a
network org chart shows the rapid communication between entities.
Pros:

• Promotes healthy competition, innovation, and collaboration

• Allows organizations to adapt quickly to changes in their environment
• Paves way for an environment that fosters healthy competition, innovation, and
collaboration

• Smaller, streamlined teams help save costs and contribute to improved efficiency
Cons:

• Due to teams being independent and small, large-scale tasks may prove difficult to
accomplish

• Without immediate supervision, network organizations may struggle with control over
employees

• Can create an environment where employees compete in an unhealthy manner with each
other to perform tasks
5) Divisional Structure

• Divisional types of organizational charts have their own division which

corresponds to either products or geographies. Each division contains the
necessary resources and functions needed to support the product line and
geography.

• Another form of divisional org chart structure is the multi-divisional structure.

It’s also known as M-form. It’s a legit structure in which one parent company
owns several subsidiary companies, each of which uses the parent company’s
brand and name.

• The main advantage of the divisional structure is the independent operational

flow, that failure of one company does not threaten the existence of the others.

• It’s not perfect either. There can be operational inefficiencies from separating
specialized functions. An increase in accounting taxes can be seen as another
disadvantage.
Pros:
• Makes it much easier to assign responsibility for actions and results
• Works well in markets where there is high competition as local managers can quickly
respond to changes in local conditions
• Tends to yield faster responses to local market conditions
• Helps build a culture that contributes both to higher morale and a better knowledge of
the division’s portfolio
Cons:
• Multiple divisions add more overhead costs to the organization
• When a number of functional areas are spread among many divisions, it might lead to
inefficiencies
• With skills being compartmentalized by division, it can be difficult to transfer skills or
best practices across the organization
• Since each division may have its own strategic goal, it might not always align with the
overall company strategy.
6) Line Organizational Structure

• Line organizational structure is one of the simplest types of

organisational structure. Its authority flows from top to bottom.
Unlike other structures, specialized and supportive services do not
take place in these organizations.

• The chain of command and each department head has control over
their departments. The self-contained department structure can be
seen as its main characteristic. Independent decisions can be taken
by line officers because of its unified structure.

• The main advantage of a line organizational structure can be

identified as effective communication that brings stability to the
organization.
Pros:
• It is the simplest method of administration and is easy to understand and manage
• Since it’s easy to add or remove levels of management, this approach can be beneficial
to companies that are constantly growing and changing
• Since the decision-making authority is concentrated at the top, it allows for faster
decisions
• Ensures that everyone is well-aligned with formalized rules and procedures within a line
organization
Cons:
• Being overly reliant on line officials may become an issue in instances where they
aren’t available
• Line organizational structures are rigid and inflexible, as such they maintain discipline
so rigorously that they can rarely change
• Might create a culture of favoritism based on relationships or friendship
• Since the department manager is concerned only with the activities of his own
7) Team-based Organizational Structure

• Team-based organizational structures are made of teams working

towards a common goal while working on their individual tasks.
They are less hierarchical and they have flexible structures that
reinforce problem-solving, decision-making, and teamwork.

• Team organization structures have changed the way many industries

work. Globalization has allowed people in all industries around the
world to produce goods and services cooperatively. Especially,
manufacturing companies must work together with suppliers around
the globe while keeping the cost to a minimum while producing
high-quality products.
Pros:

• Communication between employees is much more free-flowing and effective

• Since communication is more efficient, information flows faster leading to quicker
problem-solving

• Allows employees from different backgrounds and different skillsets to come together
and learn from each other

• With higher flexibility, team-based organizations find it easier to adapt to a fast-changing

industry environment
Cons:

• Personality conflicts within the team can negatively impact efficiency and group harmony
• Have less clear promotional paths for employees
• Since team accomplishments are rewarded rather than individual achievements, it might
prove difficult to keep individual employees motivated

• Underperforming employees may hide behind those who are working hard and reap the