BUSINESS ENVIRONMENT AND ENTREPRENEURSHIP

1 ISTUDY MATERIALFOUNDATION PROGRAMMEBUSINESS ENVIRONMENTANDENTREPRENEURSHIPPAPER 1 ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727email website THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSM onday to FridayOffice Timings to Dealing TimingsWithout financial transactions to financial transactions to , Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, andPrinted at M P Printers/10000/February 2012iiiiiFOUNDATION PROGRAMME IMPORTANT NOTEThe study material has been written in lucid and simple language and conscious efforts have been made toexplain BUSINESS ENVIRONMENT , different forms and functions of organizations, basic elements of businessand mercantile laws and concept of ENTREPRENEURSHIP .

2 This study material has been divided into three mainparts Part-ABusiness ENVIRONMENT ,Part-BBusiness Laws, andPart-CEntrepreneurshipThe institute has decided that the first examination for Foundation Programme under new syllabus will be heldfrom December 2012 session in the Optical Mark Recognition (OMR) format, whereby students are required toanswer multiple choice questions on OMR sheet by darkening the appropriate choice by HB pencil. One markwill be awarded for each correct answer. There is NO NEGATIVE mark for incorrect specimen OMR sheet is appended at the end of the study material. There are two self test question papersin the study to acquaint students with the pattern of examination. These are for practice purpose only, not to besent to the supplementing the information contained in the study material, students may refer to the economic andfinancial dailies, commercial, legal and management journals, Economic Survey (latest), CS Foundation CourseBulletin, Suggested Readings and References mentioned in the study material and relevant objective of the study material is to provide students with the learning material according to the syllabus ofthe subject of the Foundation Programme.

3 In the event of any doubt, students may write to the Directorate ofAcademics and Professional Development in the Institute for clarification at due care has been taken in preparing and publishing this study material, yet the possibility of errors,omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that theInstitute shall not be responsible for any errors, omissions and/or discrepancies or any action taken on the basisof contents of the study there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged ifthe same are brought to its notice for issue of corrigendum in the CS Foundation Course 1: BUSINESS ENVIRONMENT AND ENTREPRENEURSHIPL evel of Knowledge: Basic KnowledgeObjective: To give orientation about different forms of organizations, functions in organizations, businessstrategies and ENVIRONMENT , along with an exposure to elements of BUSINESS laws and A: BUSINESS ENVIRONMENT (30 MARKS)1.

4 BUSINESS ENVIRONMENT Introduction and Features Concepts of Vision & Mission Statements Types of ENVIRONMENT : Internal to the Enterprise Value System, Management Structure and Nature, Human Resource, Company Image andBrand Value, Physical Assets, Facilities, Research & Development, Intangibles, CompetitiveAdvantage External to the Enterprise Micro: Suppliers, Customers, Market Intermediaries Macro: Demography, Natural, Legal & Political, Technological, Economy, Competition, Socio-cultural and International BUSINESS ENVIRONMENT with reference to Global Integration2. Forms of BUSINESS OrganizationConcept and Features in relation to following BUSINESS models: Sole Proprietorship Partnership Company Statutory Bodies and Corporations HUF and Family BUSINESS Cooperatives, Societies and Trusts Limited Liability Partnership Other Forms of Organizations3.

5 Scales of BUSINESS Micro, Small And Medium Enterprises Large Scale Enterprises and Public Enterprises MNCsv4. Emerging Trends in BusinessConcepts, Advantages and Limitations: Network Marketing Franchising BUSINESS Process Outsourcing (BPO) E-Commerce M-Commerce5. BUSINESS Functions Strategic: Planning, Budgetary Control, R&D, Location of a BUSINESS , Factors affecting Location,Decision Making and Government Policy Supply Chain: Objectives, Importance, Limitations, Steps, Various Production Processes Finance: Nature, Scope, Significance of Financial Management, Financial Planning (ManagementDecisions Sources of Funds, Investments of Funds, Distribution of Profits) Marketing: Concept, Difference Between Marketing and Selling, Marketing Mix, Functions of Marketing Human Resources: Nature, Objectives, Significance Services: Legal, Secretarial, Accounting, Administration, Information and Communication TechnologyPART B: BUSINESS LAWS (40 MARKS)6.

6 Introduction to Law Meaning of Law and its Significance; Relevance of Law to Modern Civilized Society; Sources of Law;Legal Terminology and Maxims; Understanding Citation of Cases7. Elements of Company Law Meaning and Nature of Company; Promotion and Incorporation of a Company; Familiarization with theConcept of Board of Directors, Shareholders and Company Meetings; Company Secretary;E-Governance8. Elements of Law relating to Partnership Nature of Partnership and Similar Organizations - Co-Ownership, HUF; Partnership Deed; Rights andLiabilities of Partners: New Admitted, Retiring and Deceased Partners; Implied Authority of Partnersand its Scope; Registration of Firms; Dissolution of Firms and of the Partnership9. Elements of Law relating to Contract Contract - Meaning; Essentials of a Valid Contract; Nature and Performance of Contract; Terminationand Discharge of Contract; Indemnity and Guarantee; Bailment and Pledge; Law of Agency10.

7 Elements of Law relating to Sale of Goods Essentials of a Contract of Sale; Sale Distinguished from Agreement to Sell, Bailment, Contract forWork and Labour and Hire-Purchase; Conditions and Warranties; Transfer of Title by Non-Owners;Doctrine of Caveat Emptor; Performance of the Contract of Sale; Rights of Unpaid Seller11. Elements of Law relating to Negotiable Instruments Definition of a Negotiable Instrument; Instruments Negotiable by Law and by Custom; Types ofviNegotiable Instruments; Parties to a Negotiable Instrument - Duties, Rights, Liabilities and Discharge;Material Alteration; Crossing of Cheques; Payment and Collection of Cheques and Demand Drafts;Presumption of Law as to Negotiable InstrumentsPART C: ENTREPRENEURSHIP (30 MARKS)12. ENTREPRENEURSHIP Introduction to Concept of ENTREPRENEURSHIP , Traits of Entrepreneur, ENTREPRENEURSHIP : Who isan Entrepreneur, Why ENTREPRENEURSHIP Types of Entrepreneurs: Idealist, Optimizer, Hard Worker, Sustainer, Improver, Advisor, Superstar,Artiste, Visionary, Analyst, Fireball, Juggler, Hero, Healer.

8 Distinction Between Entrepreneur and Manager ENTREPRENEURSHIP and Intrapreneurship: Definition, Features, Examples and Difference13. ENTREPRENEURSHIP Creativity and Innovation Entrepreneurial Venture Initiation: Sensing Entrepreneurial Opportunities, ENVIRONMENT Scanning,Market Assessment Assessment of BUSINESS Opportunities: Identification of Entrepreneurial Opportunities, Selectionof an Enterprise, Steps in setting up of an Enterprise Entrepreneurial Motivation: Meaning and Concept, Process of Achievement Motivation, Self-efficacy,Creativity, Risk Taking, Leadership, Communication and Influencing Ability, Mentoring and PlanningAction Developing Effective BUSINESS Plan14. Growth & Challenges of Entrepreneurial Venture Strategic Planning for Emerging Venture: Entrepreneurial Opportunities in Contemporary BusinessEnvironment Financing the Entrepreneurial BUSINESS : Resource Assessment -Financial and Non Financial,Fixed and Working Capital Requirement, Funds Flow, Sources and Means of Finance.

9 Managing the Growing BUSINESS : Effecting Change, Modernization, Expansion, and Diversification. viiLIST OF RECOMMENDED BOOKS*PAPER 1 : BUSINESS ENVIRONMENT AND ENTREPRENEURSHIPREADINGS1. ShuklaA Manual of Mercantile Laws; Sultan Chand & Company, New KapoorMercantile Law; Sultan Chand & Co., New Kapoor & BUSINESS Laws and Management; Sultan Chand & Pagare4. KuchhalMercantile Law; Vikas Publishing House, New P. P. S. GognaA Textbook of BUSINESS Law; Sultan Chand & Company, New Poonam GandhiBusiness Studies; Dhanpat Rai & Company Private Limited, NCERTB usiness Studies Text Book for Class 10+28. D. Chandra BoseBusiness Laws; PHI Learning Pvt. Sen & MitraCommercial Law; The World Press Pvt. Ltd., Ian Wirthington &The BUSINESS ENVIRONMENT ; Pearson Education Ltd., Britton3. Raymond KaoEntrepreneurship and Enterprises Development*This study material is sufficient from the point of view of syllabus.

10 The students may refer these books for further knowledge and studyof the A: BUSINESS ENVIRONMENTLESSON 1 BUSINESS ENVIRONMENTI ntroduction3 Meaning of BUSINESS Environment3 Features of BUSINESS Environment4 Importance of BUSINESS Environment4 Vision and Mission Statement5 Types of BUSINESS environment6 Internal Environment6 External Environment8 Micro Environment8 Macro Environment10 Review Questions12 Global Integration and BUSINESS Environment12 Liberalisation13 Privatisation13 Globalisation14 LESSON ROUND UP16 GLOSSARY17 SELF-TEST QUESTIONS18 LESSON 2 FORMS OF BUSINESS ORGANISATIONI ntroduction20 Forms of BUSINESS Organisation21 Sole Proprietorship22 Characteristics22 Advantages of Sole Proprietorship23 Disadvantages of Sole Proprietorship24 Review Questions24ixPageHindu Undivided Family25 Meaning25 Characteristics25 Advantages of Joint Hindu Family Business26