Lecture 01: Introduction to Business
Business
Definition:
Any activity carried out to earn profit.
Derived from the word “busyness.”
Entrepreneurship
A process where a person identifies opportunities and tries to exploit them.
Components of Business
- Industry
- Commerce
Industry
Conversion of raw materials into finished goods (Form Utility)
Types of Industry
- Primary Industry
- Extractive (e.g., mining)
- Genetic (e.g., agriculture, breeding)
- Secondary Industry
- Manufacturing (raw → finished goods)
- Construction (buildings, roads, bridges)
- Tertiary (Services)
- Banking, consultancy, law, design, etc.
Commerce
Activities from producer to final consumer.
Types of Commerce
- Trade → Buying & selling
- Aids to Trade → Banking, insurance, transport, etc.
Factors of Production
- Labor → Workforce
- Capital → Investment
- Entrepreneurship → Management ability
- Physical Resources → Land, machinery, etc.
Economic System
System for allocation of resources
Types:
- Planned Economy
- Free Market Economy
Environmental Forces
- Internal (Controllable)
- External (Uncontrollable)
SWOT Analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
Lecture 02: External Environment
Economic Factors
- Per capita income
- Employment level
- Economic growth
- Exchange rate
- Inflation
Demographic Factors
Study of population
- Total population
- Gender distribution
Population determines:
- Market size
- Customer behavior
Political & Legal Factors
- Government policies
- Taxation
- Import/export laws
- Labor laws
- Child labor laws
Technological Factors
- Businesses must adapt to new technologies
Socio-Cultural Factors
- Religion influences buying behavior
Natural Factors
- Natural disasters (Acts of God)
- Resource availability
Lecture 03: Sole Proprietorship & Partnership
Sole Proprietorship
Definition: Business owned by one person
Advantages
- Easy formation
- Full control
- Quick decisions
- Secrecy
- Easy dissolution
Disadvantages
- Limited capital
- Unlimited liability
- Limited life
Partnership
Business owned by two or more persons
Governed by Partnership Act 1932
Advantages
- More capital
- Shared responsibility
- Better decisions
- Easy formation
Lecture 04: Partnership (Continued)
Disadvantages
- Unlimited liability
- Short life
- Conflicts
- Slow decisions
- Limited capital
Types of Partners
- Active Partner
- Sleeping Partner
- Secret Partner
- Senior Partner
- Junior Partner
Types of Partnership
- Partnership at Will
- Limited Partnership
- Particular Partnership
Termination of Partnership
- By notice
- By death
Partnership Deed
Legal document of partnership
Contents
- Business name & nature
- Capital contribution
- Profit-sharing ratio
- Duties of partners
- Withdrawal rules
- Conflict resolution
Rights of Partners
- Participate in business
- Share profit
- Take salary (if agreed)
- Access records
Lecture 05: Duties & Companies
Duties of Partners
- Maintain accounts
- Follow agreement
- Provide correct info
- Share losses
- Keep business secrets
Joint Stock Company
Business formed under Companies Ordinance 1984
Advantages
- Limited liability
- More capital
- Long life
- Easy transfer of shares
- Professional management
Disadvantages
- Complex formation
- Less secrecy
- Double taxation
- Slow decisions
Public vs Private Limited Company
| Feature | Public Ltd | Private Ltd |
| Members | Min 7 | Min 2 |
| Shares | Public | Restricted |
| Name | Ltd. | (Pvt) Ltd. |
| Reports | Public | Private |
| Transfer | Easy | Restricted |
Lecture 06: Company Formation
Stages of Formation
1. Promotion Stage
- Idea generation
- Market research
- Legal requirements
- Registration process
2. Documents Preparation
- Memorandum of Association (MOA)
→ Name, objective, capital - Articles of Association (AOA)
→ Rules & regulations - Prospectus
→ Invitation to public
3. Incorporation Stage
- Submit documents to registrar
- Receive certificate of incorporation
4. Capital Collection
- Share issuance
- Public investment
Key Terms
- Share: Smallest unit of capital
- Stock Exchange: Market for shares
- Debenture: Loan instrument
Memorandum Clauses
- Name clause
- Office clause
- Objective clause
- Capital clause
- Liability clause
Articles of Association Includes
- Share capital rules
- Meetings & voting
- Appointment of directors