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Various definitions to Economics have been presented by economists.

• Some definitions describe the scope of Economics whereas some definitions
  describe the methodology of Economics.
• Economics studies how people behave in an Economic way in society, and the
  methodology used.
• The Economics is a social science since it studies the economic behavior of the
  people in society
• Economics is considered a science because Economic theories and principles are
  based on scientific methods

Economics differs from the natural sciences for the following factors

• The theory of Economics examines the behaviour of people in the context of
  Economics.
• Theories of Economics cannot be proved inside laboratories.
• Theories of Economics change in terms of factors such as: time ,region and
  ethnic group.
• The way of thinking according to Economics is making decisions logically by
  comparing the marginal benefits and marginal cost.

Economics is important for groups to take logical decisions

• To producers
• To votes
• To employees
• To employers.
• To consumers
• To government administrators

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Following components are generally include in a business plan:

• Executive summary
• Business description
• Marketing plan
• Operations plan
• Human resources plan
• Financial plan

Executive summary

• The executive summary is the section in which the basic facts in a business plan are briefly stated.
• Importance Of executive summary:
  • Executive summary creates a foreview about the entire business plan
  • It gives a guideline about the business plan
  • It builds up confidence about the business plan
• The executive summary should be always brief and attractive.

Business Description

• This should reveal what the business is, what type of a good or a service is manufactured or sold, the benefits enjoyed by customers and also its
  speciality.
• The following details also should be there:
  • Name and address of the business
  • Goals/ objectives
  • Pioneers/ Promoters
  • Organization structure
  • The type of organization
  • Director board

Marketing Plan

• The section which describes the facts such as the market, competition, marketing
  strategies, sales forecasting is known as the marketing plan.
• Importance Of  Marketing plan:
  • It points out that there is an adequate and expanding market for the product
  • It points out that there is a possibility to face the market competition
• Following elements are included in a marketing plan:
  • Analysis of industry and the market
  • Expected good or service to be sold
  • Target market
  • Analysis of competition
  • Expected sales
  • Marketing strategies of competitors
  • Proposed marketing strategies of the entrepreneur
  • Sales forecast
  • Marketing expenses

Operational Plan

• The section consisting the details about production procedure, production machines & equipments, required quantity of products, locating the factory, national and international standards followed is known as the operation plan.
• Importance Of Operational plan:
  • Ability to have a clear awareness about the future operations early
  • Ability to minimize the possible wastages and delays in the process of
    manufacturing
  • Ability to improve the quality of the product
  • Ability to maintain the continuity of the manufacturing process
• Following components are included in an operational plan:
  •  Production plan
  • Machines & equipments requirements
  • Raw material requirements
  • Employee requirement
  • Manufacturing overheads
  • Total manufacturing cost and the unit cost
  •  Factory layout plan
  • Disposal of wastage and environmental influence

Human Resource Plan

• The schedule of future human resources requirements for the achievement of goals and objectives of a particular institute is known as the human resouce plan.
• Importance Of Human resource plan:
  • Ability to forecast the future employee requirements and the cost
  • Ability to utilize the human resource more efficiently
  • Ability to prevent breakdowns of business activities due to pre recognition and
    preparation for the future human resource requirements
  • Ability to minimize the recruitment cost that may occur due to unplanned
    requirements
  • Ability to recognize the training and development needs of the employees
  • Getting the opportunity to recruit highly competent employees
• Details included in a human resource plan are stated as follows:
  • Organization structure and organization chart
  • Positions and responsibilities
  • Annual expenditure for the human resource

Financial Plan

• The section in which all the estimated financial information are included is known as the financial plan.
• Importance Of Financial plan:
  • To determine and provide the amounts of funds required for business affairs
  • To make investiment decisions on the funds available in the business
  • To identify the periods when financial shortcomings may arrise and to decide possible solutions
  • To identify the periods when there can be excess funds in the business and make effective investment decisions
• The facts to be included in a financial plan can be categorised as follows:
  • Estimated project cost (Capital requirement)
  • Estimated profit & loss (income) statement
  • Estimated cash flow statement
  • Loan repayment chart
  • Estimated balance sheet

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• The intention originated in an entrepreneur about a product which could satisfy a need or a want of an individual or an organization is known as a business idea.
• A decision should be taken about a business opportunity through macro and micro analyses of those business ideas.
• A business plan should be prepared for that finally selected business opportunity.
• A business plan is prepared for a new business opportunity and also in following
  occations:
  • When expanding a prevailling business
  • When amalgamating businesses
  • When modifying a business
  • When purchasing a business

Importance Of  Business Plan

• To guide the business operations
• To give an awareness about the business to the interested parties
• To get financial facilities required by the business

External Environment is everything outside an organization that might affect it.

TASK ENVIRONMENT

• Task Environment is specific organizations or groups that affect the organization.
• Forces of the task environment of a business are given below:
  • Customers
  • Suppliers
  • Competitors
  • Producers of substitutes
  • Potential businessmen

GENERAL/MACRO ENVIRONMENT

• Macro / General environment is the set of broad dimensions and forces in an organizations’s
  surroundings that influence its overall activities.
• Forces in the macro environment which influence businesses can be listed as below:
  • Political and legal environment
  • Economic environment
  • Social and cultural environment
  • Technological environment
  • Demographic environment
  • Natural environment
  • Global environment

• Comparing the actual performance with planned performance, identifying the
  variances if any and taking necessary actions to correct them can be said as controlling.

Steps Of Controlling

• Establishment of standards
• Measure the performance
• Recognize deviations
• Take corrective actions

Types Of Control

• Feedforward control
• Concurrent control
• Feedback control

Importance Of  Controlling

• To ensure the quality of the product
• To minimize the cost
• To minimize the faults or bring them down to the zero level
• To change according to the environmental changes
• To evaluate the progress and correct the faults
• To confirm that the performance of the organization is up to the expected
  level

INTERNAL ENVIRONMENT

• Internal environment is the forces and conditions within an organization.
• Internal environmental forces of the business are given below.
  • Owners
  • Managers
  • Employees
  • Organizational culture
  • Organizational structure
  • Resources

• The environment which influence business activities.

Advantages of studying the business environment

• To identify the strengths
• To identify the weaknesses
• To identify the opportunities
• To identify the threats

The business environment can be classified as below:

Classification of the business environment can be presented in a diagram as below: