Significance of Businessmen

A businessmen or the producer can't earn maximum profit so long he knows the art of optimum combination of the factors of production. Similarly, he should know the adjustment of supply with the market demand, should know the causes of boom and slumps in the business, should have knowledge about the import and export policies of the Government. The same are the secrets of business success which are exposed by the study of economics.

Distribution of Wealth

The economies which are working on Capitalistic or Free Enterprise System, have the serve problem of inequitable distribution of wealth. The rich, in these economies, are very rich while the poor are extremely poor. Minority if rich over the majority of poor. Consequently, the society is bifurcated into two classes, rich and poor, due to which class conflict creates clashes destroying the whole of economic structure. The study of science of Public Finance teaches how to transfer wealth from rich to poor class making distribution of wealth equitable.

Micro Financing

Most of the country is a developing country and it is also suffering from the chronic problem of poverty. if the poor people are provided with finance, they have enough motivation to become self-employed and start cottage industries. This will supplement the large scale industries and other sectors of the economy. The example of Bangladesh in using micro finance to solve unemployment and poverty is a recent example.

The Availability of Substitutes

This is probably the most important factor influencing the elasticity of a good or service. In general, the more substitutes, the more elastic the demand will be. For example, if the price of a cup of coffee went up by $0.25, consumers could replace their morning caffeine with a cup of tea. This means that coffee is an elastic good because a raise in price will cause a large decrease in demand as consumers start buying more tea instead of coffee.

Marginal Rate of Subtitution

A consumer tries ti maximize his utility by consuming a combination of goods as permitted by his income. For consuming more one good, he has to forgo some units of the other good. For example, if a customer can spend his income on ice cream and snacks. For consuming more snacks, the customer will have to forgo some ice cream.
Marginal rate of substitution captures the rate of substitution between goods from one point to another as the customer modifies his consumption pattern to maximize utility.

Deficit Financing

Government is continually facing fiscal deficit, current account deficit and adverse balance of payment situation. To finance this, government borrows and pays interest. To finance this expenditure, government increase money supply and this creates inflation.

Change in Reserve Ratio

Every schedule bank has to put in reserve a certain ratio of its deposits with the central bank. This is called the required reserve ratio. If the government increases this ratio, banks will have less money to give on credit due to which money supply decrease. Conversely, if the government decreases this ratio, banks will have more money to give on credit due to which money supply increases which causes inflation.

Concept of Reserve Price

The buyers want to buy the good and services at the cheapest prices. The sellers want to sell their goods and services at the highest prices. The interaction of these forces in the market comes at equilibrium prices. Sometimes, in the market sellers get lower prices for goods and sometimes they get higher prices of their goods. The minimum price at which are willing to sell serve as a benchmark for them and is referred to as " Reserve Price". Therefore, reserve price is not the market price but is a price where sellers will not want to exhaust their supply. It is sometimes equal to market price and sometimes it is not equal to market price.

Promotion of Private Sector

Even though the Government intervenes in the need of hour, it sill provides incentive to the private sector and a level playing field to compete with the public sector. In industries where public sector and private sector coexist, government let the market forces work and does not crowd out the private sector.

Public Sector and Social Objectives

Usually the Public Sector is responsible to provide transport, communication, defense, currency management, utilities like telephone water, gas electricity etc. Government provides huge subsides to public enterprises so that these enterprises do not increase their prices to cover their losses. Government sometimes bears losses to avoid public displeasure in the form of inflation.

Optimum Factor Combination

A producer always tries ti achieve largest volume of output from a given outlay on factors such that these factors are combined in an optimal or most efficient way. The producer maximizes his profits and produces a given level of output with at least cost combination of factors. This level of least cost combination of factors will be optimum for him.

Social and Psychological Factors

Psychological factors and the nature of people also affect their consumption patterns. Due to the motive of precaution against future, people decrease the level of consumption in the present. Some people decrease their current consumption in a hope for a higher consumption in future. Some people decrease their current consumption because they have certain obligations to perform in the future which require money like performing some religious activities , marriage of their sons and daughters. Some people due to their generous nature consume all of their income in excess of personal consumption in the way of God.

Technical Economies

Advancement in technology is the single most important tool to reduce cost of production and increase productivity. But, technological breakthroughs are achieved after extensive spending on research and development. A large scale producer can afford research and development spending and achieve increase in productivity.

Perfect Competition on Long Run

In the long period, the firm reaches the equilibrium in the long period also when its marginal Cost becomes equal to marginal revenue. But in the long period, the firms marginal cost becomes equal to price and the price becomes equal to average cost. If the price is higher than normal profit due to which new firms would enter the industry. Entry of the new firms would increase the supply due to which price would decrease to average cost. In this way, so long even one firm is earning more than normal profit, the new firm would continue so much so profits of all the firms are converted into normal.

Imperfect Market

the Imperfect Market could be defined as:
Imperfect Market is the situation of the market when a single buyer or seller or limited group of the buyers or sellers is capable to purchase or sale of a commodity in such a manner that it could influence the price of the market.

Kinds of Imperfect Market:

• Duopoly
  
• Oligopoly
• Monopolistic Competition
  

Perfect Market

Perfect Market or Perfect Competition is the kind of market which comes into being due to the competition. This is the market where the competition is perfect and perfect competition prevails due to the following reasons:

1. Unlimited Sellers
2. Unlimited Buyers
3. Single Commodity
4. Perfect Knowledge of the Market
5. Open Market
6. Mobile Factors
7. No Transport Cost
8. Rule of one price
   

Classification of Market

A market is classified or given a particular name on the basis of following grounds:

1. On the basis of AREA like Local Market, national market or international market.
2. On the basis of Time like very short period market short period market, long period market or secular market.
3. On the basis of nature of Competition like competitive market or non competitive market.

The kind and nature of a market depends on the intensity of the competition prevailing in the market while the competition, in the broader sense, can be classified into two, Perfect Competition and imperfect Competition.

Time

The third influential factor is time. If the price of cigarettes goes up $2 per pack, a smoker with very few available substitutes will most likely continue buying his or her daily cigarettes. This means that tobacco is inelastic because the change in price will not have a significant influence on the quantity demanded. However, if that smoker finds that he or she cannot afford to spend the extra $2 per day and begins to kick the habit over a period of time, the price elasticity of cigarettes for that consumer becomes elastic in the long run.

Monetary Economics

Every economy, if the money supply is not according to the monetary needs of the country, may be the victims of problems of inflation or deflation. Inflation when money supply exceeds the demand for money and deflation would prevail on other wise situation. Money therefore, plays a crucial role. Demand and supply of money and the determination of the value are discussed under Macroeconomics.

Store Division

Store Division keeps the record of goods available for sale on all the departments of the stores. If the goods fall short at any department, the store division is informed which provides the required supply. Every department sands its requisite to this division which is catered by this division. As a result of proper organization, available stock of the goods in any department does not go below a particular level.

Control Division

Control Division is responsible for the finance and accounting of the stores. This division keeps the accounting record of all the cash and credit sale of the stores. Moreover, it also realize the credit created to credit sale.

Merchandise Division

Merchandise division is responsible is to organize the activities concerned with buying and selling of the different departments. The organizer of this division is termed as "General Manager Merchandise" who purchases the goods for the concerned department and is also held responsible for the sale of the same.

Limited Opportunities

As the personal business, due to the limited capital, is established and run on small scale therefore, not only the workers get low remunerations but they don't have the opportunities for their promotions. Whatever the posts and pay the workers get at the time of joining the business, they continue to get the same for a long time. The workers do not take keen interest in their performance due to limited opportunities.
The business, no doubt, is being expended every day in the modern time due to constant expansion in the production technology and this is the reason that the sole proprietorship business has been facing a severe competition with the partnership or the Joint Stock Company business. Nevertheless, the necessity and the significance of the sole proprietorship can't be denied. This is the fact that whatever.

Sense of Absolute Ownership

The profits in the sole proprietorship goes, no doubt, to the lot of the owner but no body comes forward to share the losses therefore, both profits and losses go to the lot of the owner only. Obviously, a rational business man will make his outermost to increase his profits and decrease the losses. Consequently, the owner of the business should take the keen interest to make his business a success. The owner keeps all the raw materials are the process therefore, neither time nor the raw materials are wasted. As a result of personal efforts and vested efforts further. On the country , lack of interest is felt in the joint stock company or the partnership because there is no concept of sense of absolute ownership

Frozen Investment

Partnership suffers from lack of public confidence as it is has no legal existence apart from its partners. The partnership, form is a poor choice from the view point of liquidity and transferability. It is easy to invest in partnership but difficult to withdraw the same. So the investment in partnership from of business is a frozen investment. If a partner dies or retire, the firm in the absence to an agreement to the country., is dissolved when full investment may not realized. Even if the remaining partners or outsiders are willing to purchase the vacated interest, it is often extremely difficult to arrive at a fair price.

Business Secrets

In partnership , the partners themselves handle the business matters the business secrets remain confidential. Business secrets may mean the formulas, the processes, the contracts with suppliers and customers, future planing, sales and production program research results, secret information, and so on. Since there are more than one owner they handle these matters themselves and do not delegate to employee however trusted they may be.

Mode of Payment

Present business world is running on the basis of credit. Goods are purchased on credit by the wholesaler from the manufacturer, retailer purchases on credit from the wholesaler and the final consumer could purchase on credit from the retailer. Credit can be classified into two on the basis of time; short term credit and long term credit. If the buyer purchases on credit and promises to pay soon, he may get concession in price or the price will be fixed at a lower level otherwise higher price will be determined.

Market Size

Market size is also very important factor in economic environment. It help in determining the level of output or productivity. The larger a market is, in terms of customers and purchasing power, the more of a given product can be sold and the more sheerly it can be made by means of blond scale production. This need for a large market exposes why Japan is so keenly interested, in the maintenance of a high degree of freedom in international trade. Other Countries has relatively small national and international market because of quality and price of her produce.s

Level of Productivity

It is the productivity which determines how much labor and capital is requires in a business. Productivity is measured by considering to total amount produced per employee. When we say that there has been an increase in output per labor hour, we do not necessarily mean that increase was caused by labor. The increase in productivity may be the result of the use of improved equipments, skilled workers, better manage or other factors.
For increasing our standard of living we must realize the importance of level of productivity and we must produce more efficiently.

Customers

The purpose if business is to create customers, Without customers,of course a business can not exist. Customers are people who want the product a service a business offer and have the money to buy it. Naturally, business produce what people want and sell it at as low as price as possible. As a result the forces of competition tend to keep price, costs and profits low. But this us not applicable on monopolies.

Joining Small House

Rewards and opportunities are clearly visible and if sized intelligently make you moving to the top in no time but here again one has to be intelligent, hard working and accomplishing to achieve a broad experience in variety of fields to go to the top by sheer will to work hard and competing intelligently, picking up knowledge of purchasing and selling accounting and financing and leading the business well to profitable entity with the of course leadership.

Element od Social Envrionment

Business must live with its environments, social economic, technological, legal , political and it must be alive to its total environments and surroundings and while paying major attention to economics, he must respond to social and other compatible problems as well. Anticipation them well in advance and trough Research and Development be quick in application so that expanding employment opportunities emerges, qualified man power, better houses, congenial sanitary environments with healthy growth may result with adequate lights and comfortable transport.

Business Analysis

Business analysis involves study of pros and cons of the proposed product in the light of market demand, firm's objectives, sales costs and profit as well as the capability to manufacture or produce the product within the stipulated period.

Screening Ideas

Ideas so generated required a through evaluation and study to see whether they match the objectives of the enterprise. Hence in the phase of screening ideas, those that do not match enterprise's objectives are rejected. Further, screening product ideas also involves a general assessment of the enterprise's resources. In the process, the largest number of product ideas are rejected due to their being impracticable, un-realistic, or not as per objective of the enterprise.

Functions of Central Bank

According to DeKock, a Central Bank must perform the following functions:

1. Monopoly of note issue
2. It is Government Bank
3. It is Banker's Bank
4. It is controller of Credit
5. It is the custodian of Foreign Exchange
6. It is the Lender of the last Resorts.
7. Miscellaneous Functions.

• It publishes the financial statements.
• Some Central Bank performs ordinary banking functions.
• It takes every efforts for the development of banking system.
• It has special agricultural credit department to look after rural credit.
  

Use of Business Talents

Business talents can be helpful in solving business problems, but business talents can be borrowed to help deal with social problems, Business need to be innovative,cost conscious concerned with consumers and generally competent and responsible because they have to face competition in the market. If more qualities are used by Government against and universities are might get more and better service from them at lower cost.

Social And Cultural Environment

Every kind of business whether privately or publicity owned must operate within the social and cultural environment. Social environment is built on total population of the country. It is important to study the total population and its composition in the light of gender, age groups, level of educational attainment and income per household. It will help in assessing the type or types of needs of people and their purchasing power, Similarly, cultural environment which his built on attitude, desires, beliefs, customs, habits and practices of people, should be looked in to enable the businessmen determine types of goods that should be made available to them, the services they need and the facilities they are in search of.

Leasing Company

Leasing Companies are those which lease assets to business houses. Insurance companies often purchase building and lease them back to the users, as do many individual investor. It is an important means of obtaining finance which is most commonly used by individual and business in Western Countries and in U.S.A. People rent houses and furniture and business firms rent stores, offices , factory , building and warehouses. A lease is an agreement between the property owner and he uses the property for a specific period. It is a contractual agreement between property owners known as lessor and the user of the said part of the property known as Lessee. In conveys the right to the lessee to use said part or portion of the property for this use for a specific period of time. An essential element of lease deed is that the lesser conveys less that the total interest in the property.

Statutory Company

This company is created by passing some special Act of Parliament, that is by the Government of the country. All the rules and regulations are passed in the form of Act which relates to particular organization for which it is framed and passed. In our country at the beginning when private capital was shy and private persons were afraid investing their money in business, Government took initiative and created National Bank of every country. An industrial Development Corporation like, State Bank , or Head Bank of every country, its functioning is more or less the same as of registered companies Government controls majority of shares them the public. It is created as an artificial person having separate entity.

Transport In International Trade

The establishment and organization of purchases department will depend mostly on the size and nature of big concerns, where generally the volume of purchase is larger, the articles purchased are of various types, and designs, technical and export knowledge is essential on the part of buyers, the price is changing nature etc, a separate and an independent purchasing department is established. But when the concern is small and separated establishment of purchasing in not economically justified,the function of purchasing is either attached with sales or manufacturing department. When the merchandise is purchased with a view to resell them, purchasing may be placed with the seller.