Business Organizations

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Questions and Answers

What is the primary objective of a business?

To minimize costs

To satisfy human needs and wants

To reduce risks

To maximize profits (correct)

Which type of industry is concerned with extracting and producing natural resources?

Secondary industries

Tertiary industries

Quaternary industries

Primary industries (correct)

What is a characteristic of business risks?

They arise due to uncertainties (correct)

They only occur in small businesses

They can be eliminated completely

They are optional in every business

What is the main purpose of tertiary industries?

To provide support services to primary and secondary industries Signup and view all the answers

What is a key characteristic of business activities?

They involve uncertainty and risk Signup and view all the answers

What is the main reason for the existence of business?

To maximize profits Signup and view all the answers

What type of industry is concerned with using materials extracted at the primary stage?

Secondary industries Signup and view all the answers

What is an essential part of every business?

Risk Signup and view all the answers

What is the purpose of scanning the business environment?

To identify opportunities, threats, strengths, and weaknesses Signup and view all the answers

What are the two main groups that the business environment can be divided into?

Micro environment and Macro environment Signup and view all the answers

What is included in the internal environment of a business?

Marketing programs, financial resources, research and development, manufacturing, and purchasing policies Signup and view all the answers

Why is it important to identify a firm's weaknesses?

To improve competitiveness and develop strategies to overcome weaknesses Signup and view all the answers

What is the result of scanning the business environment?

Identification of opportunities, threats, strengths, and weaknesses Signup and view all the answers

What are the three causes of business risks?

Human causes, Economic causes, and Natural causes Signup and view all the answers

What is the primary motive of a business?

Earning profit Signup and view all the answers

What is commerce involved in?

Removing hindrances of person, place, time, risk, finance, and information in the process of exchange of goods and services Signup and view all the answers

What is an essential part of commerce?

Trade Signup and view all the answers

What is the primary objective of business?

Earning profit Signup and view all the answers

What is an auxiliary to trade?

Activities which are meant for assisting trade Signup and view all the answers

What indicates the efficient working of a business?

Profit Signup and view all the answers

What do business objectives define?

What the business is going to do in concrete terms Signup and view all the answers

What is the main function of trade?

Sale, transfer, or exchange of goods Signup and view all the answers

Study Notes

Definition of Business

Business is an economic activity that involves producing and selling goods and services to earn a profit by satisfying human needs.
It is primarily organized to manufacture or produce goods and services for a profit.

Aspects of Business

Business means different things to different people, including an occupation, trade, profession, operations of trade or industry, or a commercial enterprise or establishment.

Commerce and Trade

Commerce refers to the activities of removing hindrances of person, place, time, risk, finance, and information in the process of exchanging goods and services.
Trade is essential to commerce, referring to the sale, transfer, or exchange of goods, making them available to ultimate consumers or users.

Objectives of Business

Profit is a primary objective of business, which:
- Provides income for business owners
- Enables financing for business expansion
- Indicates efficient business operations
- Builds business reputation
Multiple objectives of business include market standing, innovation, productivity, physical and financial resources, profit, manager and worker performance, and social responsibility.

Characteristics of Business Activities

Economic activity
Production or procurement of goods and services
Sale or exchange of goods and services to satisfy human needs
Dealings in goods and services on a regular basis
Profit earning
Uncertainty of return
Element of risks

Industry Classification

Primary industries: extraction and production of natural resources, reproduction, and development of living organisms
Secondary industries: using materials extracted at the primary stage
Tertiary industries: providing support services to primary and secondary industries and relating to trade

Rationale for the Existence of Business

Profit maximization is the primary rationale for the existence of business
Business must make revenue exceeding costs through production and marketing of goods and services that satisfy human needs and wants

Business Risks

Risk refers to the responsibility of inadequate profits or even losses due to uncertainties or unexpected events
Characteristics of business risks:
- Arise due to uncertainties
- Essential part of every business
- Degree of risk depends on nature and size of business
Causes of business risks include natural, human, and economic causes

Business Environment

Components of business environment:
- Micro environment (internal and external)
- Macro environment
Micro environment includes internal environment (marketing programs, financial resources, R&D, manufacturing, purchasing policies) and external environment
Scanning the environment helps identify opportunities, threats, strengths, and weaknesses

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Description

Introduction to business organizations, definition of business, and aspects of business, including occupation, trade, and commercial enterprise.