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Definition

Business involves all the activities enabling

exchange of goods and services for money in

the market

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Types of Governmental Systems

Command system Dictatorship

Free market system Make their own decision

Mixed economy Combination of both

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Types of market

Perfect competition Numerous buyers &

sellers

Oligopoly Few buyers & sellers Monopoly Single seller (generally

government sector )

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Business Environment

Macro environment Common to no of

industrial sectors .

Ex : Political,Legal environment Micro environment External but within

macro

Ex : Suppliers,competitors International environment International

factors

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Role of Entrepreneurship

Entrepreneur Business promoted by the

person

Generally Government plays the role ofentrepreneur but now a days individual take

up the job too ..

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Need for Business History

BH Bio data of a business

Traces of the past

Judging present & future trends

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Ancient History in brief

Barter system India not a single country but made up of no of

kingdoms

Generally family run business

Inter kingdom trade Transaction between twodifferent kingdoms

International trade Exports & Imports

Exported goods Cotton,silk & Wool etc Imported goods Horse,ceramic ware,Chinese

silk etc

Banking Bankers were called Seth

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15 th century onwards (era of

European trading companies )

15 th century Portugese made incursions

into Goa ,Western India

Early 17 th century- Dutch East India Coentered

Mid 17 th century British East India

Company commenced trade with India

Duty exemption in Bengal by the Mughal

emperor

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18 th century French established their

presence by entering Pondicherry Population of India in 1800AD 100 million

Arab,Egyptian,Chinese, Persian & Armenian

merchants

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Details of British Operations

British East India Company Joint stock

company ,level of control increased from time

to time by its legal measures ,so the co was

firmly under Govt control .

Merchants began to oppose abolished

By this time India was under British control

except for certain areas .

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Industrial revolution in UK

Started from late 18 th century

Gave rise to factory system of large scale

production India easy market for manufactured goods

Raw materials like cotton exported from

India finished textiles were imported .

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Agency houses

Free merchants agency houses for

commercial activities

AH acted as agent of firms in UK from whom

they charged a fee for their service .

1st AH Forbes & Co

AH Entrepreneurial abilities but abused formalpractices

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Trade Balance

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Early 20th century

India one of the wealthiest economy began

to decline from 19 th century

By19

20

,USA

was the worlds largest economy

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Rise of native Indian entrepreneurs

from later part of19 th century

Textiles prominent industry in India

First formed by Dawar in 1854

Prominent names are Morarji Goculdas,Khatau,Thackersey , Sassoon,Hukumchand ,Juggilal ,Jamshed Tata.

Birlas trading in silver,sugar,cotton etc

Due to lack of regulation exploitation intextile mills ,to reduce the plight Factories Act1881 was passed

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Other industries & Trade

Tagore purchased coal mines 1840

First railway line opened in 1854

First 3 universities were established

Calcutta Electric supply corporation wasregistered in 1857

Tata hydro elcetric power supply in 1910

Ahmedabad Electric co in 1913

Andhra valley power supply ofTata group in 1916

Tata power in 1919

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Electricity being used in textile industry

Post & Telegraph stations have been set up

Bombay share market - 1875

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Banks

Banks set up by Indians between 19 th

century to 1911

PNB , Bank of India , Central bank of India ,Bank of Baroda , Punjab & Sind Bank , Indian

bank .

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Pre independence era in Indian

Business

Between world war 1915 to 1947

Momentum in growth of Indian business

Increase in domestic demand due to war

Opportunity for Indian business to grow

Swadeshi spirit increased

Indian industrial commision & Fiscalcommision on Tariff protection to protect

Indian industry

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Industrial sector substantial progress .

Share of native indians in Indian companies 13% to 34 %

European counterpart 72 to 40 %

Indian industry no longer confined to textilesbut spread to sugar , steel , cement , coal ,

shipping , paper , chemicals & airline .

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World war II

Demand for Indian goods increased

Price increased & the industry made large

profits

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Performance of Indian selected

Business Houses Tata

Birla

Walchand

Kirloskars

Singhanias

Thapars

Modis

Lala sriram

Dalmia

Mafatlal

Bajaj

Godrej

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Growth of joint stock companies (Pre

independence)

India - joint stock companies mid 19 th

century

Europe 17

th century Family controlled

Growth

1851 1892 1149 Co were registered ,only505 survived

1939 11114 with a capital of 290 crores

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1948 22675 with a capital of570 crores

During 1920s & 30s big internationalcompanies entered namely

Unilever,ICI,Dunlop, General Motors ,Ford

motors etc.

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Chamber of commerce & industry

1st chamber of commerce was set up in France in

1599.

In India , Coc was started in Bengal,Bombay &

Calcutta by the British with a few Indians in 1830

Chambers at Cochin,Karachi & upper India during

the 19th century

1905-1947 - Coc - founded by Indian businesshouses ,they laid their own standards & practices

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Federation of Indian COC &

industry(FICCI) 1st set up by the initiative of G.D.Birla & Thakur das in1927.

Southern Indian COC was founded in 1909.

Indian merchant chambers traders and small

industrialist to protect their interest. Associated Coc large business interest mainly British

Specific associations to industry

Ex : Indian Tea association 1885

Mining association- 1892

Paper association 1895

Fiscal commision & Tariff board set up in 1930

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Labour relation(Pre independence)

Exploitation phase Labour exploited ,difficult working condition

,heavy working hours

Cotton mills 1

3 to15

working hrs a day Condition of female workers deplorable

Child labour

Jute mills Child labour

Factories Act was passed but with no specificeffect.

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Organised labour movement

There were periodic strikes

1st strike in Bombay with 120000 workers mostly

from textile industry not a success

3 yrs later strike by plantation workers - not a

success By mid of1921 - stike took place in Madras

Strike mainly for profit sharing & higher wages .

Trade Union movement protect worker interest.

In 1918 AITUC (All India Trade Union Congress

)was formed

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Post independence era in Indian

business

Socialistic economy :

Economic policy resolution adopted at thekarachi session of congress in 1931.

At the time of independence India anagricultural country

Before 1947 exploitation was present

After 1947 demand to built the country

1947-there were 1811 strikes 1950- there were 814 strikes

Later Unionism became more militant

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Industrial policy resolutions- Basic

infrastructure & regulatory system

Business activity after independence guided

by Industrial policy resolution of Govt of India

1948 & Industrial resolution of1956

Resolution of1948 greater participation by

Govt in economic activity & role of private

capital in a regulatory framework

Emphasize mainly on continuous increase in

production & equitable distribution .

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1st five year plan 1951-56 priority to agricultural sector .

Industrial sector emphasize on basic industrieslikeiron,steel,metal,heavyengineering,cement,chemicals,fer

tilizers,power. 5 yr plans is still continued.

Industrial Finance Corporation of India was set up after1948 policy resolution

Main objective providing concessional finance in

backward areas. National Small industries Corporation of India (NSCI)

,IDBI,Industrial re finance Corporation of India (IRCI)

Imperial Bank of India (1955)- nationalised to become SBI

Life insurance business nationalised to become - Lifeinsurance Corporation of India (LIC)- providing basi financialinfrastructure

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Industrial policy resolution 1956

Gave more specific directions relating to the

responsibility of the state towards industrialdevelopment

Obj : accelerate rate of economic growth,speedup industrialization,develop heavy industries &

machine making industry,expand public sector &build up co operative sector,reduce disparities inincome & wealth,prevent monopoly.

The policy also dealt with providing financial &

technical assistance, balanced development ofdifferent regions,maintenance of industrialpeace,accelerating growth of village in smallscale.

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Policy stmt divided industry into 3 categories

Schedule A 17 industries responsibility of

state Ex:Atomicenergy,Railways,Aircraft,Airtranspor

t,defence, telecommunication etc.

Schedule B progressively state owned withstate initiative to set up new units but private

enterprises would be allowed to supplement

Ex : Sea transport,machine tools,fertilisers etc Schedule C Left to private sector but subject

to licencing regulation

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Regulatory System

To implement a planned economy regulatorysystem needed

National need projected by planning

commission with roles of public & private sectordefined

Industries act was passed in 1951-System ofindustrial licencing was introduced

Pricing & distribution of specific industries like oil-controlled by Essential Commodities Act .

Import & Tariff policies to conserve foreignexchange

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Foreign Exchange Regulations Act (FERA) ctrl

entry & operations of foreign co in India Pricing of shares & public issues controlled

by Controller of Capital issues

1969

MRT

P Commission check growth ofmonopoly

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Emergence & growth of Public sector

After 1956 policy resolution no ofenterprises were set up in public sector bothby central & state Govt.

Schedule A IOC,BHEL,NLC,ONGC etc

Schedule B Indian Tourism development,Indian drugs & pharmaceuticals etc .

Canalising of International trade

Nationalisation Banking , general insurance,coal & oil enterprises were nationalised in1970s

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Growth Phase : Majority public ,but

drastically slowed down since reforms of

1991.

Pros & Cons- Pros : Advantage of Govt

resource & support

Cons Too many restrictions

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Growth of Private sector

Private sector grew within the licence permit system Post 1956 policy statement concession to private

sector

Liberalisation in 1973 policy statement

Private sector began to get Govt support

Investment from industrial houses & foreign Co werepermitted

Industrial policy statement of1980-attention forpromoting competition , technological upgradation &

modernisation 1985-86 increasing productivity,reducing cost &

improving quality.

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Indian private Business Houses

Tata

Birla

JKGroup Kirloskars

Thapars

Mafatlal

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Co operatives

Policy resolution of1956 role of

cooperatives

NCDC (National cooperative Development

corporation)

National cooperative sugarmills federation

National cooperative marketing federation

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Large cooperatives

IFFCO

KRIBHCO

Amul

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Joint sector

Get the benefit of private participation & Govtinvolvement .

Agricultural Business :

One of the prominent sector -8

% of Indiasimports

Govt role providing infrastructure & financialresources for agriculture

Green revolution 1970 increase in Indiaswheat production

Trade in agriculture

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Position of consumers

Preference of consumers did not matter

Labour militancy & rise of unions Pre

independence labour was exploited

AITUC & INTUC was formed soon after

independence followed by BMS & CITU

Bargaining power is strong where trade unions

are present

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Appropriate technology choices :

Time of independence- technology

underdeveloped

Man power plenty but low technical skill

Over a period of time technical & business skill

grew resulting in a gradually more complex

technology