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Concepts of Business

The document discusses the key concepts and objectives of business. It defines business and outlines its main economic activities like production, distribution and exchange. It also categorizes different types of economic activities such as profession, employment and business. Furthermore, it explains the important features of business including the production and sales of goods and services, profit motive, risks involved and the role of satisfying human wants. The objectives of business discussed are earning reasonable profits, increasing productivity and competitiveness, utilizing resources efficiently and fulfilling social responsibilities.
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0% found this document useful (0 votes)
55 views43 pages

Concepts of Business

The document discusses the key concepts and objectives of business. It defines business and outlines its main economic activities like production, distribution and exchange. It also categorizes different types of economic activities such as profession, employment and business. Furthermore, it explains the important features of business including the production and sales of goods and services, profit motive, risks involved and the role of satisfying human wants. The objectives of business discussed are earning reasonable profits, increasing productivity and competitiveness, utilizing resources efficiently and fulfilling social responsibilities.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 1

2CONCEPTS OF BUSINESS
❑Business
Topics
❑Barter
❑Economic Activities of Human Being
❑Types / Classification of Economic Activities
❑Difference Between Economic And Non-economic Activities.
❑Features of Business
❑Objectives of Business
❑Industry
❑Types of Industry
❑Commerce
❑Types of Commerce
❑Types of business
❑Forms of business organization
What things come to your
mind by the word
BUSINESS?
BUSINESS

• Literally the word “business” means the state of being


busy. But in economic sense, “business” means work,
efforts and acts of people, which are connected, with
the production of wealth.

• Business is an economic activity, which is related with


continuous and regular production and distribution of
goods and services for satisfying human wants.
BUSINESS…
• Business is economic system where goods and services are
exchanged for one another or for money.

• Every business requires some form of investment and


enough customers to whom its output can be sold on a
consistent basis in order to make a profit.
Barter
• It is the direct exchange of one goods for another
without using anything as money or as a medium of
exchange.

• Barter is a type of trade where goods or services are


exchanged for a certain amount of other goods or
services; no money is involved in the transaction.
Barter…
LET’S HAVE A FUN
SUMMARY
THANK YOU
Economic activities of
human being
• Economic activities are related to production, distribution,
exchange and consumption of goods and services.

• The primary aim of the economic activity is the production of


goods and services with a view to making them available to
consumer.

• "Human activities which are performed in exchange for money or


money's worth are called economic activities.“
Types / Classification of Economic
Activities
1. Profession

Profession is an occupation carried on by professional people like Doctors,


Lawyers, Engineers, etc. They provide specialized services in return for fees. To
become a professional, a man requires specialized knowledge and professional
qualification. For e.g. Doctor needs specialized knowledge in medicine, a lawyer
needs a degree in law, etc.

2. Employment

Employment is a type of occupation under which one person provides his services,
physical or mental to someone else in return for which he gets salary or wage. The
person who employs is called employer and the person who is employed is called
employee or worker.
• 3. Business

Business is an economic activity concerned with production and
distribution of goods and services with the aim to earn profit. It
includes all those activities which are directly or indirectly concerned
with production, purchase and sale of goods and services. So the
production, marketing, advertising, warehousing, insurance, banking,
etc. are all business activities
Difference between economic and non-economic activities.
SURPRISED TEST-1
• Q1. What are the names of your University, Department, and Program?
• Q2. What are the names of this course and course code?
• Q3. What are the names of the reference book and author of this course?
• Q4. Write shortly what you have learnt so far from this course.
Features of Business
1. Production or acquisition of goods: It is the business of
“business” to provide goods to people for a price. It is necessary
to that there are goods to be supplied. They must therefore
either manufactured or produced.

2. Sales or transfer of title: Goods which have been produced or


procured for sale in return for price enter the realm of business.
Goods produced or acquired for personal consumption, do not fall
within the scope of business.

3. Deals in goods and services


In business there has to be dealings in goods and service.
Goods may be divided into following two categories:-
• Consumer goods: Goods which are used by final consumer for
consumption are called consumer goods e.g. T.V., Soaps, etc.

• Producer goods: Goods used by producer for further production


are called producers goods e.g. Machinery, equipments, etc.
Services are intangible but can be exchanged for value like
providing transport, warehousing and insurance services, etc.

• 4. Regularity of dealings: Regularity and recurring nature of buying


and selling which ensures continuity of transactions is a
characteristic of business. A single transaction involving buying and
selling does not become business.
• 5. Profit as reward for service rendered
• The profit motive is an important element of business. Any
activity undertaken without profit motive is not business. A
businessman tries to earn more and more profits out of his
business activities. This does not mean that there will not be
losses in business. The objectives of starting a business are to
earn profit though there may be losses. Profit is essential for
survival and development.
• 6. Risks and Uncertainties
• Business is subject to risks and uncertainties. Some risks, such as
risks of loss due to fire and theft can be insured. There are also
uncertainties, such as loss due to change in demand or fall in
price cannot be insured and must be borne by the businessman.
• 7. To Satisfy human wants
• The businessman also desires to satisfy human wants through
conduct of business. By producing and supplying various
commodities, businessmen try to promote consumer's
satisfaction.
• 8. Social obligations
• Modern business is service oriented. Modern businessmen are
conscious of their social responsibility. Today's business is
service-oriented rather than profit-oriented.
Topics
TOPICS DISCUSSED
❑Business
❑Barter
❑Economic Activities of Human Being
❑Types / Classification of Economic Activities
❑Difference Between Economic And Non-economic Activities.
❑Features of Business
TODAY’S TOPICS
❑Importance of Business
❑Objectives of Business
❑Scope of Business
❑Industry
❑Types of Industry
HOW A SMALL BUSINESS WORK
Importance and necessity of
business. or, the role of business in
the socio-economic development.

1. Economic importance:

(i) Proper utilization of resources.


(ii) Formation of capital.
(iii) Increase Standard of living.
(iv) Development of international relation.
(v) Social Advancement.
(vi) Urbanization.
• 2. Social Importance:

• (i) Supply of goods and services.


• (ii) Employment opportunity.
• (iii) Development of transportation.
• (iv) Division of labor.
• (v) Increase research and Development.
Objectives of business

Every business
Every business must enterprise must aim
earn a reasonable at greater
profit to survive and productivity to
grow. ensure continuous
survival and growth.

It refers to the Economic


position of an It means
enterprise in relation objectives introduction of
to its competitors. new ideas or
methods for
producing goods
and services.

Physical & financial


resources
Business requires physical resources and financial resources to
produce goods and services.
Business should
A businessman should
produce and sell
avoid hoarding, black
products of proper marketing, over
quality to satisfy charging, misleading
custmer expectations advertisements etc.

Business should
generate
Large business units Social employment
should undertake opportunities to the
community services objectives disadvantaged
like setting up sections of the
charitable fund, society(e.g.
schools etc. physically
handicapped
people).

Welfare of
employees
Business should provide good working conditions and
pay satisfactory wages/salaries to its employees.
SCOPE OF BUSINESS.
Business
Industry Commerce

Primary Secondary Trade Aids

Extractive Manufacturing
Genetic Construction Home Foreign

Wholesale Retail

Import Export

Enterport
INDUSTRY
• Industry refers to manufacturing activity concerned with the
conversion of raw materials or semi finished goods into
finished goods.

• Prof. M. C. Shukla "The process of extraction, production,
conversion, processing or fabrication of products are
described as industry."

• P. H. Collin- "Industry means all factories or companies or
processes involved in the manufacturing of products."
TYPES OF INDUSTRY
• An Industry is either primary or secondary. Primary industry may be either
extractive or genetic, and secondary industry is either manufacturing or
construction.

• a. Primary industry: Industries which are concerned with the production of
goods.

• i. Extractive industries: Activities which are concerned with the extraction or
production of wealth from soil, water, air or beneath the surface of the earth.
Fishing, Mining etc.

• ii. Genetic industries: Activities which are undertaken for reproducing or
multiplying plants or animals with the object of earning profit from their sale.
Cattle breeding farms, Poultry farms,
b. Secondary industries: Industries where human labor plays a more important role than nature.

• i. Manufacturing industries: Activities concerned creation of infrastructure for
economic development.

• 1. Continuous Industry
• It is an industry in which all raw materials is received at one point, from which
successive operations turned into a finished products. As for example, yarn
spinning, paper and pottery manufacture.

• 2. Analytical Industry
• The basic materials is analyzed and separated into several parts –so that the final
product emerge separately and distinct from the mass of original materials. As
for example, the crude mineral oil is analyzed and separated in to kerosene, diesel
oil, lubricating oil, and the final product petrol.


3. Synthetical Industry
In this type of continuous industry various ingredients are brought
together and combined in the manufacturing process to produce
a new product. As for example, soap making.

4. Assembly Industry
In an assembly industry the finished product can be produced only
after various components have been made and then brought
together for final operations. As for example, shoes or
automobiles.

ii. Construction Industry


These are the concerned with the making or constructing of
buildings, bridge, dams, roads etc
• Service Industry:
• An industry made up of companies that primarily earn revenue
through providing intangible goods and services.
• For example: Bank, Hospital, Transportation etc.
Commerce
Commerce is the sum of all those processes which are
engaged in the removal of hindrances of person, place
and time in the exchange of commodities.

J. A. Hanson " Commerce is concerned with the


distribution and exchange of commodities.“

M. C. Shukla "The process of buying and selling and all


those activates which facilitate trade such as storing,
grading, packaging, financing, insuring and transporting
are called commerce."
TYPES
• 1. OF
Trade COMMERCE
• Trade refers to the purchase and sale of goods between the parties. It is the
process by which goods are transferred from the producers to the customers
and consumers along with their ownership.

• a. Home trade
• The trade, which is dealt within the boundary of one country, is known as
home trade. It is also of two types wholesale trade and retail trade.

• Wholesale trade is the one, which deals with a large quantity of goods by
purchasing from the producers or authorized suppliers and selling them to the
retailers.

• Retail trade is that in which goods are bought from wholesales and sold to the
ultimate consumers.
Figure: A SUPPLY CHAIN
• b. Foreign Trade
• The trade, which is dealt between two or more countries, is
known as foreign trade. The buying and selling the goods in the
foreign trade are termed as import and export. Hence, foreign
trade is further divided into import and export trade.
• Import trade implies to the purchase of goods from a foreign
country. The purchasing act is known as import and the party
importing goods is known as importer.
• Export trade implies to the sale or supply of goods to a foreign
country. The selling act is known as export and the party
exporting the goods is known as exporter.
2. Auxiliaries of Trade
Auxiliaries of trade refer to the integration of all the agency
services, which facilitate the distribution of goods and services.
The following are the important auxiliaries of trade and industry.

• Advertising and Publicity


• Advertisement and publicity let the customers know about the goods or
services. It can draw their attention towards the products and thus promotes
the trade dealing in the wider coverage.

• Warehousing
• It is a way of storage of goods, which protects them from losses, fire, theft etc.
on one side and creates time utility on the other. Some goods are produced
seasonally but demanded throughout the year. They should be stored so that
they can be supplied when demanded. Thus, warehousing promotes trade
activities by providing storage facilities for the goods.
Insurance
Insurance is a way of transferring business risks to an agency in consideration of
the payment of a certain premium. There may occur any sort of financial loss in
production, storage, carriage etc. It is insurance, which assures the recovery of
financial loss and promotes and develops trade activities.

Banking and finance


Banks and financial institutions frequently provide capital in terms of loan under
different terms and conditions. Banks also provide agency services like credit
guarantee, remittance of money etc. to the business parties. In this way, banking
service is an important auxiliary service to commerce.
• Transportation
• Trade is an act of distribution of goods from producers to ultimate
consumers. It is transportation, which delivers the goods up to the
various consumers from the manufacturers. Many carrier companies
is private as well as public sectors are in operation for the
transportation of the goods. It plays a significant assistance in
promoting trade.
• Communication
• It is a process of transmission of information among persons and
places. With the development of communication network, the world
has become a small village. Most of the business communication is
made through various means like correspondence, radio, television,
telephone, fax, e-mail, internet etc. and most of the trade dealings
are performed by way of such communication. Thus, communication
is an important aid for trade and commerce.
Types of businesses.

• 1. Service Business
• A service type of business provides intangible products (products with no physical
form). Service type firms offer professional skills, expertise, advice, and other similar
products.
• Examples of service businesses are: schools, repair shops, hair salons, banks,
accounting firms, and law firms.

• 2. Merchandising Business
• This type of business buys products at wholesale price and sells the same at retail
price. They are known as "buy and sell" businesses. They make profit by selling the
products at prices higher than their purchase costs.
• A merchandising business sells a product without changing its form. Examples are:
grocery stores, convenience stores, distributors, and other resellers.
• 3. Manufacturing Business
• Unlike a merchandising business, a manufacturing business buys products with
the intention of using them as materials in making a new product. Thus, there
is a transformation of the products purchased.
• A manufacturing business combines raw materials, labor, and factory overhead
in its production process. The manufactured goods will then be sold to
customers.

• Hybrid Business
• Hybrid businesses are companies that may be classified in more than one type
of business. A restaurant, for example, combines ingredients in making a fine
meal (manufacturing), sells a cold drinks (merchandising), and fills customer
orders (service).
• In that case, restaurants are more of the service type – they provide dining
services.

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