Evolution and foundation of Business

Business is an economic activity consisting of production, distribution, exchange and auxiliary functions to satisfy the changing needs and demand of customers to meet the economic goal of business. The business of present stage has been developed from the very beginning of human civilization. It has been evolved from self-sufficiency stage of a modern technological stage. Industry and commerce are the two major components of business which is related to earning the profit and generating wealth. The evolution of business can be studied into two parts:

• Evolution of Industry
• Evolution of Commerce

Evolution of Industry

As we know that, Industry includes all those activities that produce goods or services by the use of human and mechanical power. Agriculture development contributed a lot to develop the industry up to the present stage. The development of industry can be explained through the following five stages:

1. Handicraft Stage
2. Guild System
3. Domestic system
4. Industrial revolution
5. Present stage

1. Handicraft stage
   This is the beginning stage of the evolution of the industry. The process of production was simple and many machines were not used. They used local materials to produce handicraft products. At that time the only family was the unit of industrial organization. In the beginning, people were engaged in production only for the fulfillment of their requirement but later they started to produce excess products for the purpose of exchange with foods and other articles.

2. Guild system
   The origin of the guild system marked the beginning of the organized activities. These organized groups were the groups of craftsmen or assistance or traders. Guilds may be classified into merchant guilds and craft guilds. Merchant guilds emerged as the association of merchants. It tries to regulate their business and standardize their products. Similarly, craft guilds emerged as the association of skilled workmen or artisans. It tries to maintain quantity and the quality of production. The main objective of craft and merchant guilds is to provide equal production to their members and protect their business interest by avoiding unhealthy competition among themselves.

3. Domestic system
   After the concept of guild system was gradually declining, the domestic system started. At this stage, a smart person with an ability to take a risk (called entrepreneur) collected artisan and craftsmen and begin a job of production. They took responsibility for collecting resources and selling output to the market. He sells the product at the profit for his risk factor and investment. This is the beginning stage of the factory system of production.

4. Industrial revolution
   The industrial revolution started in the 18th century from England. This revolution replaces the domestic system of production by large-scale factory system. The major inventions and discoveries of this stage were a steam engine, the wave machine, the textile machine, coal mining, energy development, and transportation system. This had made large-scale production easier. The cost of output was minimized.

5. Present stage
   The present stage of industrial revolution is categorized by industrialization and globalization. The industrial revolution of the 18th century has brought massive change in production. The present stage is categorized by an introduction of automatic machine, computer, automatic powers, space communication, wire, and the internet and much more. The scientific invention and discoveries have brought many changes in industrial production distribution. At this stage, products produce in one corner of the world is available in all countries.

Evolution of Commerce

In the earlier stage, people were self-dependent. They used to produce goods and service they need by themselves. The concept of commerce was developed gradually when people started to live in the river bank and engaged in agriculture farming. Those who were skilled in one activity and have resources produce certain products. The evolution of commerce and the stage of economic development is explained with the help of the following points:

1. Self-sufficient Economy
2. Primitive Barter System
3. Money Economy
4. Town Economy
5. National Economy
6. International Economy

1. Self-sufficient economy
   At the beginning stage of commerce, people were self-dependent. Their needs were limited, people fulfilled their own needs by hunting and agriculture farming. At this stage of commercial development, there ware no system of exchange, people of that period didn't exchange their goods with others. Actually, there was not a concept of commerce.

2. Primitive barter system
   This is the real beginning stage of commerce. At this stage, people started to exchange their surplus (extra) product with other product that they do not have. In the barter economy, people were not self-dependent in every product. At barter economy products were exchanged against the product. It is the age of commercial starting. The development of the barter system was the first practice of commerce.

3. Money economy
   In this third stage of commerce evolution, money was introduced as a medium of exchange. People who have the surplus product used to sell the product in the market for money. In the beginning currency of shale, metal and other valuable materials were introduced. But later paper money was used for exchange. Those people who need the product used to buy the product by paying money. As the result, the rapid change in commerce emerged.

4. Town economy
   The reproduction of money as the medium of exchange has played a significant role in the development of a business. At this stage, people used to purchase the product from the different place and bring them to a specific place call row. Here traders from various locality came together to form the local market. The development of communication and strain deportation facilities has brought many changes in the promotion of business. The town became the center of commercial activity.

5. National economy
   The gradual development of production and distribution lead to expansion and growth of a business. In this stage, people were concerned with the specific location for production. The development of supporting activities of a trade like communication, transportation, banking, insurance etc. had made commerce easier. The product produced at one location is distributed throughout the country.

6. International economy
   The mass development of industry has led to the development of commerce at an international level. This is the current stage of commercial development. At present, no individual country is self-sufficient in every product. A country having resources in one product is engaged in the production of that product and imports other product from other countries. The development of a modern system of communication, net facilities, and modern transportation facilities like road, seas, air transportation has played an important role in the development of an international economy.

Consideration Before Starting Business and Requisites of Business Success

Consideration Before Starting Business

At this competitive age, many factors are to be considered before starting a new business. A businessman needs to complete some mental exercise and legal documentation. A well-planned business ensures success in the future. The investors (businessman) must be confident that his/her investment decision in new business is his/her good decision. An investor does not want to lose his investment. Hence, a businessman has to consider the following factor before starting a new business:

1. Identification of Business
2. Detailed Investigation
3. Forms of Business
4. Provision of Capital
5. Selection of Staff
6. Government Policy
7. Selection of Location of Business
8. Office Equipment and Materials

1. Identification of business:
   It is necessary to understand and explain what kind of business is to be started. A businessman must know: what is the nature of the business, what are the products, who are its customers, etc. Before selecting a new business a businessman must consider the following points:

• Personal knowledge and Interest
• Level of risk
• Availability of resources
• Nature and size of business
• Possibility of futures growth expansion

2. Detailed Investigation and Research:
   Once the idea of business is developed, a businessman has to make detail research about his business. He has to build confidence regarding the success of business after making research. In this activity, a businessman makes the in-depth study of the kind of business he/she is going to start. Generally, the investigation is made on the following topics:

• Availability of resources
• Probable economic growth of business
• Probable change in government policy
• Financial analysis
• Pricing of products

3. Forms of business organization:
   There are different forms of business organization like a sole proprietorship, partnership firm, joint venture company, joint stock company, and multinational company. Depending upon nature and size of business, one must select the appropriate form of business. For example, a small business can be started individually whereas large size organization can be started in joint stock form.

4. Provision of capital:
   Capital is life-blood of any business. It is required for establishment as well as giving continuity of it. Business needs a large sum of money at startup. A businessman must take a decision regarding the easiest and cheapest source of capital before starting a new business.

5. Selection of staffs:
   Human resources are the most important assets of the business. They are the key source for business success. Depending upon the nature and size of business, different kinds of skilled, semi-skilled and unskilled employees are required. A businessman has to develop an appropriate system for getting talented and skilled employees before starting a new business.

6. Government policy:
   The policies of the government regarding promotion and control largely affect the success of a business. The government formulates and enacts different rules and regulations for the healthy development of the business. A businessman has to make a detailed study of present business policy, industrial policy, commercial policy and legal procedures before starting a new business. All the business organization has to perform their business within rules and regulations provided by the government.

7. Selection of location of business:
   The location of a business is most important factors of success. The location may have its own advantage and disadvantages. Once the location is selected and business is being established, it is very difficult and costly to shift it. Therefore, a businessman selects the appropriate location for his proposed business. For example, location far from the public residence is appropriate for manufacturing company whereas high public dense is required for retail Supermarket Company.

8. Office equipment and materials
   The office is the center for all business organization. All the managerial function like planning, organizing, leading and controlling are performed in an office. The equipment and materials like a table, chair, phone, and the computer should be provided before starting any business. A well-equipped an organized office material helps to perform business activities efficiently and effectively. Therefore, proper arrangement of office equipment and materials is necessary before starting a new business.

Requisites of Business Success

Business has to perform many activities. To become a success in a complex environment, business has to consider many factors. A systematic business has to fulfill a basic requirement which ensures the success.

1. Establishment of an Organization
2. Proper Planning
3. Sound Organization Structure
4. Sound Management
5. Adequate Finance
6. Efficient Marketing System
7. Motivational Relation with Employees
8. Scope for Research
9. Personality of Chief

1. Establishment of Organization:
   The objective is the ultimate goal of an organization. They are the reason for business existence. Therefore, it is necessary to set the objectives in an easier and simple language. Without the establishment of objectives, an organization couldn't get its existence.

2. Proper Planning:
   Planning is the process of deciding in an advance for what is to be done next. Planning guides and directs the activities of employees towards the achievement of objectives. It defines the complete set of policies, program and methods of completing work. Therefore, it is necessary to formulate appropriate plans to ensure that objectives are achieved.

3. Sound Organization Structure:
   Sound organization structure ensures the success of any business. The appropriate decision of distribution of work responsibility and authority is required for the sound organization. A sound organization structure also ensures the effective communication from the top level to lower level organization. Therefore, a sound organization structure is required to ensure the success of the business.

4. Sound Management:
   Management is the backbone of the organization. To be successful, a business organization needs technically and theoretically managed teams. The management of the organization must be effective in all managerial function like planning, organizing, leading, controlling etc.

5. Adequate Finance:
   Finance is the lifeblood of any organization. Money is required for establishment of business as well as giving continuity to the business. Business needs initial capital to purchase land, building, furniture etc. whereas business needs working capital to purchase raw materials to pay the salary of staff’s etc. Therefore, the appropriate provision should be made to ensure the business success.

6. Efficient Marketing System:
   Marketing is a most important activity of a business. It is concerned with informing customers and selling products to them. In the modern age, products couldn't be sold without appropriate marketing system. To gain success, a business has to develop the most effective marketing system.

7. Motivational Relation with Employees:
   Employees are the most important human assets of the business. In order to successfully achieve the objective of the business, a business has to maintain motivational relation with employees. Employees will not work because of fear and pressure. Therefore, the management must have convincing relation with employees. A motivated worker gives higher performance.

8. Scope for Research:
   The environmental factors like customer taste, preference, habits, technology, government policies etc. are changing day by day. To understand the changes and adopt the new environmental business, research is most important.

9. Personality of Chief:
   The chief executive manager is the key person in the organization. The personalities of the chief executive manager are dressing, body structure, the way of communication and the image of business in society. Therefore, for the success of business, its chief executives must have the attractive personality.

Business Environment

The sum total of all factors and forces that affect and influence the operation of a business is called business environment. It is surrounding where the business organization exists. Business starts, operate and die in an environment. Business environment either provide opportunities or threat.

According to S.P Robbins, "Environment refers to the institution or forces that affect business performance."

According to Keith Davis, "Business environment refers to institutions or forces that affect the organization's performance."

Business is surrounded by many factors like employees, politics, technologies, suppliers, customers etc. A business institution gets the input from the environment and transfers them into the output to supply again in an environment. When the environment in the business is supportive it will be a reason for success. In another case, it will import the threat to business.

In conclusion, the business environment refers to the aggregate of all the factor which influences the business operation. It is composed of an internal and external environment. The internal environment is controlled by business whereas externally is not controllable by business.

Components of Business Environment

The business environment is broadly categorized into two types that is an internal and external environment.

Internal Environment

The sum total of all factor and process that are inside the business and affects the operation of a business is called internal environment. The environmental factors such as employee, organization structure, corporate culture, employees, union etc. compose the internal environment. Internal environment makes the organization stronger or weak if they are supportive and against the business respectively. Internal environment factors are controllable and can be managed by the business. The elements of the internal environment are as follows:

1. Employee
2. Organizational Structure
3. Co-operativeCulture
4. Shareholders
5. Employee Union

1. Employee
   They are the people who work in the organization for salary. They provide mental and physical ability when employees are talented, skilled, and experienced, this will make the business strong. In the opposite case, the organization will be weak.

2. Organizational Structure:
   The flow of communication and proper position relation in business is called organizational structure. It is a framework of an organization. The structure of the organization has an impact in operation of the business. When the organization structure is simple and easy to understand it will help in the achievement of an objective.

3. Co-operative culture:
   The norms, values, system, and beliefs of the organization refer to the organization culture. The organizations that have co-operative culture help in achieving goal effectively. The non-cooperative and conflicting culture makes organization weak. Therefore, co-operative culture is an important internal environment to affect the business operation.

4. Shareholders:
   They are the investor of business. They are the key people to elect the board of directors. Therefore, the shareholders of the company are important internal environmental factors.

5. Employees Union:
   It is a preventive body of employees. It helps and solves the employee's problem when employees union is stronger. It also makes the organization weak. To operate successfully, a business needs supportive employees union.

External Environment

The sum total of all the factor and forces that are outside the business and affects the operation of a business is known as the external environment of business. The environmental factors like legal, political, technological, social, competitors, customers, suppliers etc. are the elements of the external environment. As these factors are outside the business they can't be controlled by business. Business has to accept and adopt the external environment that will provide opportunities and the threat to business.

The external environment is broadly classified in the following ways:

1. General Environment
2. Specific/Task environment

1. General environment:

The environmental factor that belongs to the external environment and business has long-term effects with this. Some of the factors of the general environment are as follows.

• Political/Legal Environment:
  The number of political parties and their ideology represent the political environment. The legal environment such as the legislature, executive, judiciary etc. has an impact on the operation of a business. A business must be proactive to know the changes in this environment and to adopt in this business because this environment is not the controllable factors.

• Economic Environment:
  The Economic system determines the economic environment. The factors like level of income (per capita income), the output of a country, a rate of influences etc. make economic environments. A business has a higher chance of growths expansion in a good economic environment.

• Socio-cultural environment:
  It involves norms, values, and beliefs of society. The culture of society provides the basis for accepting specific business and its product. A business has to accept and respect the social culture where it does exist. Therefore, socio-culture is an important external environment to determine business success or failure.

• Technological Environment:
  The method and forces of converting raw materials into output largely depend upon the level of technology. The application of modernized technology in business operation will help in the achievement of objectives efficiently and effectively. The technological factors like new methods of production, new communication tools, and modernized equipment are the key factors for business success. Therefore, a business has to consider the technological environment.

2. Task/Specific Environment:

The environmental factors which are outside the business and are not controllable but can be managed are called task/ specific environment. The effects in the task environment in business can be seen directly in the general environment. The task environment is composed of the following factors:

• Customers:
  They are the people who purchase product or service by paying money. A satisfied customer is an important element for business success. Therefore, a business must understand changing needs, interest, and preference of a customer.

• Suppliers:
  They are the people and institution who provides resources and materials to business. To become successful, an enterprise has to maintain a warm and healthy relationship with suppliers.

• Competitors:
  They are the business institution who provides similar kind of product or services. If the business doesn't give a care about competitor’s activities, the business may lose its customers. Therefore, a manager must be careful regarding the activities of competitors.

• Government:
  It is a regulatory institution who provides laws and facilities for business control and growth. A business has to understand changing rules, regulation, and laws of government regarding business because business cannot go against government rules.

• Pressure groups:
  The organization like customer rights association, social clubs, media clubs, environmental list etc. form pressure group for business. For any business, to be successful, it has to maintain a healthy relationship with pressure groups.

• Financial Institution:
  It consists of commercial and development bank, finance companies, insurance, etc. These institutions provide loan facilities to business in case of money shortage. Therefore, a business has to maintain good relation with financial Institution.