CHSE Odisha Elective BSM key terms

Any organised activity that produces or exchanges goods and services with the aim of earning profit by satisfying human wants, and which involves risk, uncertainty and continuous dealings.

The two branches of business activity: industry covers extraction, manufacturing, construction and genetic production, while commerce covers trade and the auxiliaries to trade such as transport, banking, insurance and advertising.

The surplus of revenue over total cost that remains with the owner after all expenses are met; it rewards risk-bearing and provides funds for growth, but is not the only objective of modern business.

A business owned, financed and managed by a single individual who enjoys all profits and bears unlimited personal liability for the debts of the firm, with no separate legal identity.

An association of two or more persons who agree to carry on a lawful business and share its profits, governed in India by the Indian Partnership Act, 1932, with mutual agency among partners.

The rule that every partner is both an agent of the firm and of the other partners, so an act done by one partner in the ordinary course of business binds the whole firm.

A voluntary association of persons registered under the Companies Act, having a separate legal entity, perpetual succession, a common seal and transferable shares, and owned by shareholders whose liability is usually limited.

The position in which an owner or shareholder can lose only the amount invested or the unpaid balance on shares, and is not personally answerable for the debts of the organisation beyond that.

A condition where the owner's personal assets may be used to settle business debts, because the business has no separate legal identity distinct from its owners.

The characteristic of a company by which it continues to exist as a legal person despite the death, insolvency, resignation or transfer of shares by its members; it ends only by winding up.

A voluntary association of persons who join to promote their common economic interest on the basis of one member one vote, service rather than profit motive, and distribution of surplus as dividend or patronage refund.

A business owned and controlled wholly or partly by government, set up by a special statute, by registration under the Companies Act, or as a departmental undertaking to serve public interest along with commercial returns.

The process of getting things done through and with other people by planning, organising, staffing, directing and controlling resources so that stated objectives are achieved efficiently and effectively.

Efficiency means doing a task with the least waste of resources, that is, doing things right; effectiveness means completing the intended activity and reaching the goal, that is, doing the right things.

The vertical division of managerial work into top management, which frames policy; middle management, which interprets policy and coordinates departments; and supervisory or operational management, which directs workers daily.

Fayol's principle that an employee should receive orders from and be accountable to only one superior, so that conflicting instructions and divided responsibility are avoided.

The unbroken line of authority running from the highest executive to the lowest operative, along which communication normally passes; Fayol allowed a gang plank for quicker lateral contact between equals.

Deciding in advance what to do, how to do it, when to do it and who will do it; it is a primary, continuous, future-oriented and intellectual function that bridges the gap between where we are and where we want to be.

The process of identifying a problem, developing alternative courses of action, evaluating them against criteria, selecting the best alternative and implementing and reviewing the choice made.

Herbert Simon's idea that managers cannot gather or process all information, so they settle for a satisfactory option rather than the perfect one, a behaviour called satisficing.

Estimating future conditions such as demand, prices or costs on the basis of past data and present trends, so that plans rest on reasoned assumptions rather than guesswork.

The managerial function of identifying and grouping work, defining responsibility and authority, and establishing relationships among people so that they can work together effectively towards common goals.

The framework of formal relationships, positions and reporting lines that shows how tasks are divided and coordinated; it may be line, line and staff, functional, divisional, matrix or informal in nature.

The number of subordinates who report directly to one superior; a narrow span produces a tall structure with close supervision, while a wide span gives a flat structure with more autonomy.

The downward transfer of a part of a superior's work along with the necessary authority to a subordinate, who then becomes accountable for performance, though the superior remains answerable.

Authority is the right to give orders and command resources; responsibility is the obligation to perform an assigned duty. Authority should be equal to responsibility, and responsibility cannot be delegated away.

The function of estimating manpower needs, recruiting and selecting suitable people, placing and training them, appraising their performance, and providing for promotion, transfer and compensation.

Recruitment is attracting a pool of prospective applicants through internal or external sources; selection is the subsequent screening of that pool through tests and interviews to choose the most suitable candidate.

Training builds the specific skills a present job demands, while development prepares employees for wider responsibilities in future roles; both improve competence and are continuous processes.

The systematic periodic evaluation of an employee's work against set standards, used to give feedback, decide increments and promotions, identify training needs and support control.

The function of instructing, guiding, motivating, supervising and communicating with people so that they contribute willingly to organisational objectives; it is continuous and largely interpersonal.

The inner drive that activates and sustains behaviour towards a goal; managers may use financial rewards such as pay and bonuses, or non-financial means such as recognition, responsibility and participation.

A theory arranging human needs in five ascending levels: physiological, safety, social, esteem and self-actualisation; lower needs are generally satisfied before higher ones motivate behaviour.

The ability to influence individuals and groups to work willingly towards shared goals; leadership styles include autocratic, democratic and laissez-faire, each suited to different situations.

The process of synchronising the activities of different departments and persons so that they pull together without conflict; it is often described as the essence of management rather than a separate function.

Comparing actual performance with planned standards, identifying deviations, analysing their causes and taking corrective action; the steps are setting standards, measuring, comparing and correcting.

A principle of control under which managers attend only to significant deviations from standards, leaving routine matters within tolerance limits to subordinates.

The proportion of long-term funds raised through equity, preference shares, debentures and retained earnings; it affects the cost of capital and the financial risk borne by owners.

Funds invested in current assets such as stock, debtors and cash to meet day-to-day operations; it is the excess of current assets over current liabilities for the firm.

The planning, raising, allocating and controlling of funds, covering investment, financing and dividend decisions, so as to maximise owners' wealth while balancing liquidity and profitability.

The set of controllable variables a firm combines to reach its target market, traditionally product, price, place and promotion; services extend it with people, process and physical evidence.

Dividing a heterogeneous market into smaller homogeneous groups of buyers with similar needs or behaviour, so that a distinct marketing mix can be designed for each chosen segment.

The typical sequence of stages a product passes through: introduction, growth, maturity and decline; each stage calls for different pricing, promotion and distribution strategies.

The sum of internal and external factors such as economic, social, legal, technological and political conditions that surround a firm and influence its decisions and performance.

A framework that matches a firm's internal strengths and weaknesses with external opportunities and threats to identify a suitable strategy; it is a tool of environmental scanning.

The reduction of government controls over business, such as licensing, price regulation and restrictions on foreign investment, intended to increase competition and efficiency in the economy.

The growing integration of national economies through trade, investment, technology and capital flows, which opens foreign markets but also exposes domestic firms to international competition.

The process of identifying an opportunity, arranging resources and taking calculated risks to create a new venture or improve an existing one, driven by innovation and initiative.

A business unit whose investment in plant and machinery and turnover fall below the limits notified by government, typically run by an owner-manager and supported by special credit and subsidy schemes.

The obligation of business towards shareholders, employees, consumers, government and the community to act in ways that protect and improve social welfare along with earning a fair return.

The set of moral principles and standards that guide business conduct, such as honesty, fairness, transparency and respect for stakeholders, going beyond mere legal compliance.