Times Biz

The term ‘promoter’ means an individual, firm or institution which undertakes to form a company with reference to a given object and sets it going and takes the necessary steps to accomplish that purpose.  It is not a terms of law but of business.  Tata, Birla, Ambani are well-known promoters in India.
The role of promoters may be described as follows:

• Discovery of Business Opportunities: Promoters identify the opportunities which could be undertaken as business concerns.  They carry out a preliminary study of the market to judge whether a new product or service will sell.  They also consult experts in the field for this purpose.

• Detailed Investigation: Promoters conduct detailed examination to judge the prospects and profitability of business proposals.  They analyze the probable cost of production, nature of competition in the market, availability of required technology and raw materials,. Expected sales volume, amount of refit expected, etc.

• Assembling Resources: Promoters take steps to ensure the availability of necessary capital, materials, machinery, personnel, etc.  They enter into contracts with brokers, underwriters, bankers, etc.

• Canvassing: Promoters approach the appropriate persons and persuade them to join in the formation of the company.

• Launching the Enterprise: Promoters take steps to get the Oman incorporated.  They set the necessary documents prepared a filed so that the company is formed and can commence business operations

Promotion is the process of identifying some business idea or opportunity and taking steps to implement it through the incorporation and flotation of a company. It involves detailed study of the proposed business and formation of a company to carry on the business.
The steps involved in promotion are as fools:

• Discovery of a Business Idea: First of all, the idea of starting a business is born in his mind of the promoter. The idea may relate to manufacturing or selling a new product by new methods, introducing a product within uses, selling a product in new market or commercial use of an invention or patent.  The promoter identifies the areas for profitable investment and takes all preliminary work to analyze the opportunity.

• Detailed Investigation: This step involves a detailed analysis of the capital investment, required expected volume of seas, degree of competition in the market, expected cost of production, degree of risk involved etc.  The purpose of detailed investigation is to ascertain the profitability and possibility of the proposed business.

• Assembling the Resources: Ones the promoter is satisfied about the feasibility and viability of the project, steps retaken to collect financial and other resources for the proposed venture.  Preliminary agreements dare made for purchase of assets. Appointment of personnel, etc.  Decisions are taken regarding the size, location, layout, etc of business.

• Incorporation: It means getting the company registered under the Companies Act.  For this purpose, various documents are prepared and filed with the Registrar of Companies. Memorandum of association and articles of association are the main documents.  A suitable name of the company is selected.  The promoter appoints bankers, brokers, underwriters and solicitors of the company.

A promoter is neither an agent nor a trustee of the company set by him.  He is not an agent of the company because a non existent principal (company before its incorporation) cannot have an agent.  Therefore, a promoted is personally liable for the preliminary contracts if they are not ratified by the company after incorporation. Though a promoter is not a trustee, he must observe good faith in the promotion of the company.  He must nutmeat any secret profits out of his dealings.  In case there are nay profits on the purchase of machinery and other assets for the company, he must disclose them to the company.

Promotion means the discovery of business opportunities and subsequent organization of funds and managerial skills into a business enterprise for the purpose lovemaking refits there from.
A promoter is a person who identifies a business opportunity, analysis its prospects and takes steps to form a company with reference to the business opportunity.  The promoter conceives the idea of a business, analysis its prospects, brings together the required resource and gets a company incorporated.  The promoter may be an individual firm or even company.
The objects of promotion of a company are as under
to start a new business enterprise;
to expand an existing enterprise, and
to amalgamate or combine tow or more existing enterprise into one enterprise.

Earning of profits is very necessary in business

Business is full of risks. No one will take the risk without the incentive of profit. Profit is the motivating force because it serves as a reward for bearing the risks of business.

No business can survive for long without earning profits. profits are the lubricants that drive the wheels of business. A business can maintain its profit earning capacity by replacing its obsolete assets.

Profits are he internal source of finance or the expansion of business. A business can grow if it continues to develop new products services markets and processes. For this purpose continuous research and development is necessary .Profits provide the capital for research and development. Reinvestment of earnings is the best method of financing expansion and growth of business.

A profit –making business commands prestige and recognition in society. Goodwill helps business to obtain funds and attract talented employees.

Profit is the indicator of success in business. More efficient a business is greater are its profits. Profit is the index of performance of businesses.

Profits provide the means of livelihood to businessmen and their families.

Business is an integral part of society and it must therefore fulfill the expectations of society.  Business activities should be carried on in a socially desirable manner. In fact profits can best be earned in the long run by putting the needs of society above profit.  In other words service first and profit next should be the motto of business because business has no meaning unless it can serve and satisfy customers at a profit.

Social objectives of business are as under:

Supply of desired Quality at Fair Prices: Business is expected to supply the goods of good quality at reasonable price.  Consumers prefer to buy a product which is pure safe or durable in quality and is available at reasonable rice.  Therefore producing and selling goods of proper quality at reasonable prices is an important social objective of business.

Avoidance of anti-social and Unfair Trade Practices: A businessmen should not indulge in anti-social practices like hoarding black marketing and adulteration to make quick money.  Some businessmen make money by misleading and exploiting people through false advertising.  Such anti-social practices not only spoil the image of business but also lead to punishment.  Therefore businessmen should avoid these undesirable means of increasing profits.

Generation of Employment: Another social objective of business is to provide employment to people.  Poor handicapped and other weaker sections of the society should be given preference at the item of recruitment.  This practice improves thee economic status of these people.  Training is imparted to them to make them moan efficient in their jobs and useful to society.  Business firms which generate employment and income in society improve their public image.

Welfare of Employees: Business should provide healthy working and living conditions to employees who contribute to the success of the enterprise.  Business must pay satisfactory wages and salaries to its employees as well as ensure adequate regulation of working hours.  Large business firms provide housing and medical facilities for the employees and their families.  Businessmen should take decisions affecting the employees in consultation with the representatives of employees.  The lives of employees must be accorded the meaning and dignity they require to perform efficiently and make useful contribution to society.  Such welfare facilities help to improve the efficiency of employees and the profitability of business.

Service to Community; Large business firms are expected to undertake community services like setting up training centers for the unemployed charitable dispensaries and schools and making donations for social do religious junctions sponsoring games and sports etc.  Such community services help to improve the public image and reputation of business.  Business is expected to adopt environment friendly practices and to follow the regulations prescribed by the Government.

The economic objectives of business are as follows

The primary objective of business is to earn profits.  This is because no business can survive without profits for a ling time.  People enter into business in the hope of earning money.  Profits into only serve as the source of livelihood for businessmen but also help them to expand their businesses activities. The growth of every business depends largely on its ability to earn profits.  Profitability of business firm enables it to gain recognition and prestige in society.  Success of business is therefore measured in terms of it profits.

Profit can be earned only when thunder is customer’s toss buy goods and services.  It is there fore necessary for every business to create and sustain demand for its products and services.  Demand is created through advertising and other methods of promotion.  According to Ducker “There is only one valid definition of business purpose: to create a customer…. It is to supply the customer that society entrusts wealth producing resources to a business enterprise”.
But it is not enough to create customers.  Business must establish a place for itself in the market and protect itself from competition.  Businesses have to acquire a reasonable share of the total market and preserve and enhance its market share.

In a competitive market a business can be successful if it strives continuously to achieve new or improved products or services new methods of production ad distribution.  Exploring and discovering new and better ways and means of increasing costumer satisfaction is call innovation.  It involves introducing better products improved methods of production exploring new markets and using better methods of distribution.  Producing color television in place of black and white sets using power looms in place of hand looms for weaving distributing the product through the manufacturer’s own retail shops instead of dealers are examples of innovation.  Thus innovation is an important economic objective off business.

A business should also aim at increasing efficiency of operations in order to minimize per unit cost of production and distribution.  This requires making the best use of scarce resources like materials manpower machinery etc.  This objective can be achieved by reducing wastage of raw materials making efficient use of machines and employing efficient and dedicated employees.  Economic objectives of business refer to the aims of earning money by increasing the efficiency of business operations.  On the other hand social objectives imply rendering service to customers employees and other sections of society.  With regard to economic objectives financial gain is the primary motive whereas with regard to social objectives service is the main consideration

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