10th Social Science EM 2nd Revision Exam 2023 Thiruvallur District PDF

www.tntextbooks.in GOVERNMENT OF TAMILNADU HIGHER SECONDARY FIRST YEAR COMMERCE A publication under Free Textbook Programme of Governmen...

www.tntextbooks.in GOVERNMENT OF TAMILNADU HIGHER SECONDARY FIRST YEAR COMMERCE A publication under Free Textbook Programme of Government of Tamil Nadu Department of School Education Untouchability is Inhuman and a Crime Introduction.indd 1 13/12/2022 13:02:09  www.tntextbooks.in Government of Tamil Nadu First Edition - 2018 Revised Edition - 2019, 2020, 2021 2022, 2023 (Published under New Syllabus) NOT FOR SALE Content Creation The wise possess all State Council of Educational Research and Training © SCERT 2018 Printing & Publishing Tamil NaduTextbook and Educational Services Corporation www.textbooksonline.tn.nic.in II Introduction.indd 2 13/12/2022 13:02:09  www.tntextbooks.in CONTENTS COMMERCE Page Unit Chapter Contents Month no. Historical Background of Commerce in the Sub-Continent 1 1.01 Introduction 01 June 1.02 Barter System 1.03 Hindrances of Commerce 1.04 Elimination of Hindrances of Commerce UNIT I Objectives of Business FUNDAMENTALS 2.01 Introduction OF BUSINESS 2 2.02 Types of Economic Activities 10 June 2.03 Characteristics of Business 2.04 Objectives of Business Classification of Business Activities 3 3.01 Industry 17 June 3.02 Commerce 3.03 Trade Sole Proprietorship 4.01 Introduction 4 4.02 Definition of Sole Trader 23 June 4.03 Characteristics 4.04 Advantages and Disadvantages Hindu Undivided Family and Partnership 5.01 Introduction to HUF 5.02 Meaning and Definition of Partnership UNIT II 5.03 Partnership Deed and its Contents FORMS OF 5 5.04 Rights and Duties of Partners 30 June BUSINESS 5.05 Types of Partners ORGANISATION 5.06 Procedure for Registration 5.07 Drawbacks of Non-Registration of Partnership 5.08 Dissolution of Partnership Joint Stock Company 6.01 Meaning and Definition of a Company 6 6.02 Types of Companies 47 July 6.03 Memorandum of Association 6.04 Articles of Association 6.05 Prospectus III Introduction.indd 3 13/12/2022 13:02:09  www.tntextbooks.in Cooperative Organisation 7.01 Meaning and Definition 7 7.02 Principles of Cooperation 60 July 7.03 Features of Cooperatives 7.04 Advantages and Disadvantages 7.05 Types of Cooperatives Multi National Corporations (MNCs) 8 8.01 Meaning and Definition 70 July 8.02 Advantages and Disadvantages 8.03 Examples of MNCs Government Organisation 9.01  Meaning and Features of Departmental Undertaking 9.02 Advantages and Disadvantages 9 9.03 Meaning and Features of Public Corporation 76 July 9.04 Advantages and Disadvantages 9.05  Meaning and Features of Government Company 9.06 Advantages and Disadvantages Reserve Bank of India 10.01 Need for the Study on Service Business 10.02 Banking Service 10.03 The Historical Development of Banks in 10 India 86 July 10.04 Bank Definition 10.05 Definition of Central Bank 10.06 Origin of RBI 10.07 Organisational Structure of RBI 10.08 Functions of RBI Types of Banks 11 11.01 Introduction 97 August 11.02 Types of banks UNIT III Functions of Commercial banks III SERVICE 12.01 Primary Functions BUSINESS - I 12.02 Secondary Functions 12 12.03 Diversified Banking Functions 106 August 12.04 Electronic Banking Functions 12.05 Functions of All Commercial Banks in Totality Warehousing 13.01 Meaning of Warehouse and Warehousing 13.02 D ifferences between Warehouse and Warehousing 13 13.03 Types of Warehouses 118 August 13.04 Functions of Warehouses 13.05 Advantages and Drawbacks of Warehousing 13.06 Warehousing Documents 13.07 Warehousing in India IV Introduction.indd 4 13/12/2022 13:02:09  www.tntextbooks.in Transportation 14.01 Meaning and Definition of Transport 14 14.02 Types of Transport 127 August 14.03 Recent Trends in Transportation 14.04 Documents Used in Transportation 14.05 Common Carrier Insurance 15.01 Meaning and Definition of Insurance 15 15.02 Principles of Insurance 139 August 15.03 Types of Insurance 15.04  Insurance Regulatory Development Authority of India (IRDAI) Emerging Service Business in India UNIT IV 16.01 Franchising 16 16.02 Factoring 152 September SERVICE 16.03 Logistics BUSINESS - II 16.04 Outsourcing 16.05 E-Commerce Social responsibility of business 17.01 Concept of Social Responsibility 17 17.02 Need for Social Responsibility 169 September 17.03 Arguments For and Against Social UNIT V Responsibility 17.04 Kinds of Social Responsibility SERVICE BUSINESS - III Business Ethics and Corporate Governance  18.01 Concept of Business Ethics 18 18.02 Key Elements of Business Ethics 179 September 18.03 Code of Business Ethics 18.04 Corporate Governance Sources of Business Finance 19.01 Meaning and Nature of Business Finance 19.02 Sources of Business Finance 19 19.03 F  actors Influencing Choice of Business 186 September Finance 19.04 Savings - Importance of Savings 19.05 Personal Investment Avenues UNIT VI BUSINESS International Finance FINANCE 20.01 Introduction 20.02 Foreign Direct Investment and Institutional Investors 20 20.03 International Capital Market 200 September 20.04 Global Depositary Receipt (GDR) 20.05 American Depository Receipts (ADR) 20.06  Foreign Currency Convertible Bonds (FCCB) V Introduction.indd 5 13/12/2022 13:02:09  www.tntextbooks.in Micro, Small and Medium Enterprises (MSMEs) and Self Help Groups (SHGs) 21.01 Micro, Small and Medium Enterprises 21 21.02 Role and Significance of MSMEs 207 October 21.03 Contribution of MSMEs to Indian Economy 21.04 MSME Sector in Tamilnadu 21.05 Self Help Groups Types of Trade 22 22.01 Trade-Meaning 215 October 22.02 Features of Internal Trade 22.03 Foreign Trade - Meaning Channels of Distribution 23.01 Channels of Distribution - Meaning 23.02 Types of Channel of Distribution 23.03 Factors influencing Channel of Distribution 23.04 Middlemen UNIT VII 23.05 K  inds of Mercantile Agents or Agent 23 Middlemen 220 October TRADE 23.06 Wholesaler 23.07 The Characteristics of Wholesalers 23.08 Retail Trade - Meaning 23.09 Characteristics of Retailers 23.10 D  istinction between Wholesaler and Retailer Retailing 24 24.01 Introduction 234 October 24.02 Types of Retailers International Business 25.01 Nature of International Business 25.02 C  oncept, Meaning and Definition of International Business 25.03  Method of Conducting International Business 25 25.04 Features of International Business 244 October UNIT VIII 25.05 Rationale Behind International Business INTERNATIONAL 25.06 D  ifferences between Domestic Business BUSINESS and International Business 25.07 Types of International Business 25.08  Advantages and Disadvantages of International Business Export and Import Procedures 26 26.01 Export Trade 255 November 26.02 Import Trade VI Introduction.indd 6 13/12/2022 13:02:09  www.tntextbooks.in Facilitators of International Business 27.01 World Trade Organisation (WTO) 27 27.02 World Bank 276 November 27.03 International Monetary Fund (IMF) 27.04 S outh Asian Association for Regional Cooperation (SAARC) Balance of Trade and Balance of Payments 28 28.01 Balance of Payments (BOP) 286 November 28.02 Balance of Trade (BOT) Elements of Contract 29 29.01 Meaning and Definition 291 November 29.02 Essentials of a Valid Contract 29.03 Classification of Contract UNIT IX Performance of Contract THE INDIAN 30 30.01 Introduction 298 November CONTRACT ACT 30.02 Who will Perform the Contract? 30.03 Reciprocal Promises Discharge and Breach of a Contract  31 31.01 Discharge of Contract 304 December 31.02 Remedies for Breach of Contract Direct Taxes 32 32.01 Meaning of Tax 309 December UNIT X 32.02 Income Tax DIRECT AND Indirect Taxation INDIRECT TAXES 33.01 Meaning of Indirect Tax 33 315 December 33.02 Goods and Services Tax (GST) 33.03 GST Council E-Book Assessment VII Introduction.indd 7 13/12/2022 13:02:09  www.tntextbooks.in Dear Students! There is a wonderful treasure on your hands now in the form a text book, which is going to make you a really resourceful and an able person in future. You have to believe it first so that you can develop a multi-dimensional personality in your own self with a thorough knowl- edge in Commerce. This is for you to know, how you could make use of the book for the best understanding of various useful and valuable knowledge sources hidden within the text. These tips would certainly make a difference in you while learning the units, lessons and relevant concepts thereof. Actually the book is divided into 10 Units, 33 Chapters where in there are several sections are written in a student friendly way. An attempt is made here to explain how to use them for a better learning experience. The units are broad heading of the book which contains several Chapters in each of them so that you can understand the section specific knowledge in various parts of Commerce Education. This is the usual way of learning. There are three Chapters, for example, in Unit I, which gives you UNITS the basic and introductory aspects of Commerce HOW TO USE Education. Similarly the remaining Units give THE BOOK you the specialized knowledge on the different Unit headings so required at the level of Eleventh Standard. Omission any unit may lead to loss of knowledge continuity. All the 33 Chapters in the book are a real treasure for one who wants to learn the theory and practice of Commerce today. So you have to look into these chapters as useful, informative and capacity CHAPTERS building capsules in any individual student who wants to learn the elements and fundamentals of Commerce. Omission of any Chapter would lead to loss of knowledge in real terms and other related benefits. These headings are given for you to remember the major divisions of a chapter with conceptual clarity and information sequence in an orderly SUB-HEADINGS manner so as to arrange your learning method made easy. So you have to learn the subject content of a chapter, mainly based on the ‘sub-headings’ of a chapter. This is the simple way of learning. VIII Introduction.indd 8 13/12/2022 13:02:09  www.tntextbooks.in This section of the Chapters in general would give you various tips on the present or past events or bits of useful information in the field of Commerce so relevant to the subject matter discussed in a specific Chapter, of course in almost all Chapters. This section is an attempt to explain you how some people or organisations have been able to grow from nothing to top today and those who set an SUCCESS STORY example by their way of becoming the role models. You can understand the way of growing and also you can follow such role models for achieving your own future ambition. This section is given to test your ‘applied knowledge’ on the subject matter of a Chapter or Chapters wherein you have to think and analyze about the case and give your best ability to understand the situation and explanation thereof / relevant answers Case study so as to depict yourself as a student with practical knowledge or applied knowledge on the chosen case study. This is an exercise given to you to do either class work or home work on the chosen theme or subject matter in each chapter or chapters. Commerce Education is required to have practical exposure to PROJECT WORK various forms of business organizations around the world. Project work will ensure your ability to bring about a solution to present crisis in an organization or give plans for future development of the same. There is an useful section in all chapters for ‘ your own thinking ‘ either with some meaning of concepts or practical situation for your understanding. Repeated thinking of these aspects would ensure your ability FOR OWN THINKING to understand developments in Commerce and capacity to do your own business in future. This section is attempted to make the students to learn about necessary concepts or section of Commercial knowledge by doing home work or by FOR FUTURE LEARNING doing further study through browsing or learning from reference books. IX Introduction.indd 9 13/12/2022 13:02:09  www.tntextbooks.in Students are expected to be thorough about certain concepts which are chapter specific and related to KEY TERMS the knowledge dealt in that chapter. This would enable the students to be clear about various concepts which is essential for clarity of thought and able learning about the subject matter. As you are aware of, this section is essential to evaluate your ability to answer specific questions, may be long answer or short answer or fill in the blanks or choosing the correct one from among the multiple-choice of answers. Scoring high marks is an indicator of your knowledge level for higher studies QUESTIONS and hence you need to prepare for these questions well in advance to the schedule of examination time-table. You can try to find answers before your teachers direct you to answer them. Prevention is better than cure. This is an interesting section of many a chapter in the book wherein you can have the learning experience through the online support, using an Android phone with applied QR Code app. You can listen to short lectures or demonstrations by experts or experienced teachers. Of course this is mostly home work or leisure time exercises, unless or otherwise the class teachers wanted to display them in class- rooms during working hours. This is a section ear-marked for your food for thought wherein you can try to understand the major concepts used in the book. This will help GLOSSARY you understand the overall subject matter from the collection of terms placed in an order for cross examination of your memory and recalling the meaning of various concepts studied in the book. We wish you a meaningful and successful learning and at the same time we want to remind you that HARD WORK ALONE LEADS TO COMPLETE SUCCESS.  Team of Authors. X Introduction.indd 10 13/12/2022 13:02:10  www.tntextbooks.in SCOPE OF “COMMERCE” EDUCATION “Commerce” as a field of knowledge is all pervasive in nature. It offers enormous opportunities for higher education and employment both in India and abroad. The scope after higher secondary programme in Commerce is given below: EDUCATIONAL OPPORTUNITIES Any of the following Degree Any of the following Any of the following Any of the following Any of the Research Programmes can be pursued professional courses/ programmes in India or professional courses/ Programme after a by the students both on programmes. abroad after a Formal Degree programmes after Formal Post Graduation Regular mode and Distance Programme. Anywhere a Formal Degree in Commerce/ Education mode. in colleges. Universities Programme or Indian Institute of Management (IIM) B.Com., Bachelor of C.A., Chartered M.Com., Chartered M.Phil., (Commerce) Commerce (General) Accountant as Master of Commerce. Accountancy Master of Philosophy B.Com., (Hons.) an Integrated M.Com., C  ost and Ph.D., (Commerce) Programme. (Accounting and Finance) Management Doctor of Philosophy B.Com., (Accounting & Finance) CMA(ICWA) M.Com., (International Accounting (ICWA) D.Litt., (Commerce) B.Com., (Corporate ACS Business and Banking) A  ssociate Company Doctor of Letters Secretaryship) B.L., Bachelor of Law M.Com., (Computer Secretary UGC – National B.Com., (Computer – Five year Integrated Applications) B  achelor of Loss Eligibility Test (NET) Application) Programme. M.Com., (Co operative (LLB) SET – State Eligibility B.Com., (International B.Com., (LLB) Management) U  nion Public Sercice Test Business) Bachelor of Law – M.B.A., Master of Business Commission (UPSC) B.Ed., (Bachelor of Five year Integrated Administration I ndian Administrative Education) and followed B.Com., (Bank Management) Programme in India M.B.A., (Finance) Service (IAS) b  y B.B.A., (Bachelor of Business or Abroad Administration) M.B.A., (Marketing) I ndian Police Service M .Ed., (Master of CIMA (Chartered (IPS) Education) Programmes B.B.M., (Bachelor of Bank Institute of M.B.A., (Human Resource Management) Management Management) I ndian Foreign Any PG Diploma Accountants (UK)) Service (IFS) programme offered by a B.A., (Co-operation) M.B.A., (Advertisement and standard Institute ACCA (Association Salesmanship) I ndian Revenue M.Com., (Master of Service (IRS) Commerce – Five year of Chartered Certified M.B.A., (Hospital Integrated programmed) Accountants (UK)) Management) I ndian Audit and CPA (Certified Public Account Service Any Diploma Programme MHRM (Master of Human (IA&AS) etc. offered by a Standard Institute Accountant (USA)) Resource Management) MLM (Master Labour Management) EMPLOYMENT OPPORTUNITIES a) For self employment there are a number of Enterpreneurial Development and Training Programmes sponsored by District Industries Centres (DIC) throughout Tamil Nadu. Any Higher Secondary student can approach DIC in their own District Headquarters to train up themselves to start their own Agri-business, small trade, Self Help Group, Departmental stores or any General Mercantile Shop. b) After gaining a Formal Degree Programme, the commerce graduate can gain access to Bank Finance or Institutional lending for business start-up c) After Higher Secondary Course, the students can appear for Group IV and after formal degree programme, they can appear for Group I and Group II for Govt Postings through TNPSC/UPSC, including services in police to postal departments, besides bank employees in public sector. d) Commerce graduates can become Income Tax practitioners and GST consultants with due qualifications. XI Introduction.indd 11 13/12/2022 13:02:10  www.tntextbooks.in SCOPE ABROAD The commerce students have a wide range of scope abroad as listed below. 1. The Bachelor Degree holders in commerce can join MBA in any university in developed countries like England. The USA, Australia and so on. 2. The commerce graduates with ‘Tally’ Accounting package can get employed in any part of world as Accountants in business enterprises. 3. The Master Degree holders in commerce can join Ph.D. Programmes in any foreign University with fellowships abroad. 4. B.Ed/M.Ed/M.Phil/Ph.D holders in commerce can gain teaching jobs abroad both in schools and colleges (This is not only for younger but also those who are retired from service in India) 5. Commerce graduates are permitted by foreign governments to start-up export business ventures in their respective Nations, If their projects are valid. 6. Commerce graduates can become foreign exchange dealers through proper and authorised certification by the respective National Governments in various countries. 7. Commerce graduates can become bank employees abroad after a formal selection by them. Based on required qualification. 8. Commerce graduates have great scope for Management consultancy/Export and Import consultancy/ Clearing and Forwarding agencies/Economic Advisories/ Project consultancies/planning divisions/ share market speculators/security brokers/portfolio advisors/ Insurance advisors/ Advertisement agencies/ Secretariats of Business Tycoons/ Board personnel /Financial Advisors/Associates of Tax consultancies/Treasury Management/Scrap Dealers/ Bullion Trader/ Advisors to various purchase committees. SCOPE OF AREA OF RESEARCH Marketing Management Finance Human Resource Management Entrepreneurship Retailing Supply Chain Mangement Logistic Mangement Financial Services Financial Markets Services Industries International Business Organisational Behaviour Digital Marketing Taxation Institute of Chartered Accountants Of India XII Introduction.indd 12 13/12/2022 13:02:12  www.tntextbooks.in UNIT I FUNDAMENTALS OF BUSINESS CHAPTER HISTORICAL BACKGROUND OF 1 COMMERCE IN THE SUB-CONTINENT “வாணிகம் செய்வார்க்கு வாணிகம் பேணிப் பிறவும் தமப ோற் செயின்”. - குறள் 120 Couplet: The true merchandise of merchants is to guard and do by the things of others as they do by their own. Learning Objectives in need or countries in demand and over To enable the students to a period of time barter economy took the i. gain knowledge about the historical dimension of monetary economy where background of commerce in the sub money was used as a medium of exchange continent of goods and services. ii. learn the hindrances of commerce and trade The growth of civilization witnessed the iii. know about the features of barter rise and fall of many dynasties, but still the system course of commerce activities continued further and further, not only within a country, but also between nations of the world. However Tamil Nadu remained to 1.01 Introduction be the founder of trade and commerce both within and outside as evidenced in various Commerce has been in practice since time ancient literatures like Sangam. immemorial. It is part and parcel of human life, whether it is a king or a common man. The whole of commerce activity emerged It emerged as an economic activity, mainly from barter system into a multi dimensional as barter system which means exchange of and multifaceted scientific system goods for goods. It was so comfortable for consisting of courses like Monetary system, neighbouring villages, states, even countries Mail-order business, Hire purchase system, to practice barter in the absence of a medium Instalment purchase system and so on. In a of exchange in the form of money today. technology driven society today again the However, the concept of money occupied course of commerce activities is heading its predominance when scarce resources for a cashless system through e-commerce, were to be either exchanged between parties which means business activities enabled 1 commerce 1-15.indd 1 10/12/2022 16:31:00  www.tntextbooks.in through electronic modes like Online trading, Mobile banking and e-marketing. In this context, it is all the more important for any student to learn the historical background of the growth and development of commerce in the country in general and in Tamil Nadu in particular. An attempt is made in this chapter to explain such a history so as to ascertain the magnitude of commerce today. The important trade routes of the silk and spices, blocked by the Ottoman The earliest trading population of India Empire in 1453 with the fall of was Indus valley people, who used the word Constantinople and the Byzantine ‘trade’. The word vaniyam or vanipam Empire, led to the search for a sea route would have had a Dravidian origin. The across the Atlantic skirting Africa. early Tamils produced their products and goods in their lands and bartered their surplus and that is how trade came into existence. The word ‘Vanigam’ has been for a certain period. There was dependence widely used in sangam literature like and interdependence among the people Purananuru and Thirukkural. The Tamil in matters of trade and commerce. Barter – Brahmi inscriptions from Alagarmalai, system cemented their relationship Pugalur, Mangulam and Sri Lanka illustrate internally while coins were used later for the the fact that trade in gold, oil, plough, cloth purpose of exchange of goods in external etc.was conducted during the early age. trade. Trade in Sangam period was both internal Trade and Traders in the Pandiya and external but it was conducted by means Dynasty of barter (pandamattru) Trade was one of the Trade and commerce was so common to major means of linking various regions in Pandiya Dynasty. Information collected the medieval period. Sangam work refers to from the diaries of foreign travellers, great traders, their caravans, security force, voyagers, mariners and adventurers of the markets, marts and guilds of such great ancient world highlighted the prosperity of traders. The important articles which the trade in the Pandiya country. The Hebrew then hilly tribes offered to their neighbours and Latin literature, archaeological remains in exchange were honey and roots and fruits in Aden, Alexandria, Java, Sumatra and while pastoral people offered cattle, milk even China add support to the fact of and milk products. Cattle served as money existence of trade network in the Pandiya for sometimes during the same period. country. Trade in copper, cloth, salt, flower, Most of the inland trade was done in salt as sandal wood, fish, paddy, cereals, pearls, a medium of exchange under barter mode. etc flourished during their period. The Paddy too served as a medium of exchange place where the goods were sold was called 2 commerce 1-15.indd 2 10/12/2022 16:31:00  www.tntextbooks.in ‘Angadi’ in their period. Day market was pearls, and conches and produced salts and called as Nalangadi while the night market built ships. Boats like ‘Padagu’, ‘Thimil’, was called as Allangadi according to Saint ‘Thoni’, ‘Ambu’ ‘Odampunai’ etc… were Poet Ilango in Silapathigaram, Madurai– used to cross rivers for domestic trade while Kanchi. He described Madurai as iruperu Kalam, Marakalam, Vangam, Navai etc.. neyamath meaning sleepless city due to were used for crossing oceans for foreign round the clock business activities. trade. Coastal Trade in Ancient Role of the Government during Tamil Nadu Ancient Tamil Nadu Big cities like Poompuhar had the Foreigners who transacted business were ‘Maruvurappakam’ (inland town) and known as Yavanars. Arabs who traded with ‘Pattinapakkam’ (coastal Town), had market Tamil were called ‘Jonagar’. Pattinappalai and bazaars where many merchants met one praised Kaveripumpattinam as a city where another for the purpose of selling or buying various foreigners of high civilization different kinds of commodities and food speaking different languages assembled to stuff. Port towns like Tondi, Korkai, Puhar transact business with the support of the and Muziri were always seen as busy with then Kingdom. marts and markets with activities related to imports and exports. In such a brisk The role of the State in trade related to two trade, people of the coastal region, engaged aspects namely adequate infrastructure themselves in coastal trade and developed to sustain the trade and administrative their intercontinental trade contacts. They machinery for taxation. During the Sangam were engaged in different kinds of fishing period, the main trade routes were passing through thick forests over western ghats. Important Ancient Trade Centres in The State protected the merchant caravans Tamilnadu on these trade routes from robbers and wild i. Alagankulam (Ramanathapuram) ALAMBARAI ii. Mylarphan (Mylapore, near Chennai), iii. Keberis (Kaveripumpattinam), iv. Poduke or Poduce (Arikamedu, Puducherry), v. Soptana (Marakanam), vi. Nikam (Nagapattinam), vii. Periyapattinam, Location: Situated 20 kms south east of Maduranthakam in Kanchipuram District. viii. Kayalpattinam, ix. Colchi (Korkai) Significance: It was once a flourishing place of commerce. A mint also existed. x. Comari (Kanyakumari) 3 commerce 1-15.indd 3 10/12/2022 16:31:01  www.tntextbooks.in life. Main roads known as Peruvali were the chief controllers of State Trading. The built for surface transportation. Besides profit margin allowed for traders ranged state expanded infrastructure for shipping between 5 per cent for indigenous goods such as ports, lighthouse, warehouse etc.. to and 10 per cent for imported goods. promote overseas trade. Many such ports Import of foreign goods was encouraged were developed during the Sangam period. to enhance the standard of living of people. Kaveripumpattinam was the chief port of Kautilya gave importance for the State in the Kingdom of Cholas while Nagapattinam, relation to treasury, taxation, industry, Marakannam, Arikamedu etc. were other commerce, agriculture and conservation small ports on east coast. Similarly Pandiyas of natural resources. Arthasathra focused developed Korkai, Saliyur, Kayal, Marungaur on creation of wealth as the means to pattinam and Kumari for foreign trade. The State Govertments installed check posts to collect customs along the highways and the ports. Contribution of ‘Kautilya’ to Trade ‘’Kautilya’s Arthasastra” describes economy in Mauriyan time. This brought out history of marketing practised some 2000 years ago. According to Kautilya, trade in Medieval India was centralized. Since the commodities produced could not be sold in the location of production, the state designated certain places for ALAGANKULAM selling the commodities. It levied duties Location: A village situated on the east on goods brought into the city and could coast of Bay of Bengal – Ramanathapuram be sold after payment of duty. Only district. Attankarai – confluence of river certain merchants were authorized to Vaigai situated near Sri Lanka engage in trade to sell at prices fixed by Significance: Findings - large number of potsherds of mediterranean origin Important Ancient Trade Centres In The Coastal Regions Of Tamil Nadu Roman coins of Valentine II, Arcadius & 1. Alambarai Theodosius II Pot sherds with Roman ship 2. Alagankulam graffiti. Sherds with two lady figurines identified with Egyptian origin. Tamil 3. Pumpuhar brahmi sherds with Ceylon brahmi scripts 4. Marakkanam are found in an ancient Roman port. The 5. Vasavasamudram department carried out excavations in eight seasons and the collected artefacts 6. Mylapore revealed Indo-Roman trade contact. 4 commerce 1-15.indd 4 10/12/2022 16:31:01  www.tntextbooks.in promote the well being of the state. He dense forest and helped traders and their advocated maintenance of perfect balance commercial caravans to move from one between State management and people’s market place to others. Alauddin Khilji welfare through trading activities. brought the price to a very low ebb. He encouraged import of foreign goods from Commerce and Trade in North Persia and subsidised the goods. Arabs India were dominant players in India’s foreign India was prosperous even during the trade. They never discouraged Indian medieval period from 12th to 16th centuries traders like Tamils, Gujaratis, etc.. The despite political upheavals. Balban was Trade between the coastal ports were in the first sultan who paved the way in the the hands and Marwaris and Gujiratis. The overland trade with central and west Asia was in the hands of Multanis who were Hindus and Khurasanis who were Afghans, Iranians and so on. During Sultanate period, trade flourished due to the establishment of currency system based on silver and copper. Moorish traveller described the teeming market of big cities in the Gangetic plains, Malwar, Gujarat and South India. The important trade centres were Delhi, Mumbai, Ahmedabad, POOMPUHAR Sonar, Sonargoon, Jaunpur, Lahore and so on. The burgeoning foreign trade led The southern Coromandel Coast mostly to the development of market place in within the territory of Tamilnadu state is the towns and villages. India’s handicraft thick with history.This history is not only commanded a good foreign market. India of the European colonization but goes imported horses, dry fruits, precious back to the ancient times when many stones, glassware, high grade textiles, raw places along the coast were centres of silk, corals, scented oil, velvets, etc.. from international trade. One such place which Kabul, Arabia, Europe, West Asia and is said to have flourished from 200 BC China. Indian products were exported to onwards is Poompuhar. The seaside town East Africa, Malaya, China and Far East. which was once the second capital of the Trade was conducted through overland Chola Dynasty and a major centre of roots with Afghanistan, Central Asia and international trade with both eastern and Persia India conducted foreign trade via western people. Silk appears to be a major land route with Quetta, Khyber pass, Iraq item of exports from here. The ancient and Bukhara. The traders of Malabar, port as destroyed and is now found by the Gujarat and foreign settlers in the ports archaeologists submerged off the coast for of Calicut, Khumbat and Mangalore up to 5 km. Erosion of land or a Tsunami controlled a major business sector in port was cited as possible causes. cities. 5 commerce 1-15.indd 5 10/12/2022 16:31:01  www.tntextbooks.in Trade with Rome, China and handicrafts, to Great Britain. Between early Europe 1600 and mid – 19th century, the British Roman and Greek traders frequented the East India company led establishment and ancient Tamil country and forged trade expansion of foreign trade all over Asia. relationship with ancient Kings of Pandiya, Although initial interest of the East India Chola and Chera dynasties. Cholas had a Company was aimed at reaping profits, their strong trading relationship with Chinese single minded focus was on establishing a Song Dynasty. The cholas conquered the Sri trade, monopoly throughout Asia Pacific Vijaya Empire of Indonesia and Malaysia to made them heralding agent of British secure a sea trading route to China. Colonial Imperialism. 1.02 Barter System During the 16th and 18th centuries, India’s overseas trade expanded due to trading Goods were exchanged for goods prior to with European companies. The discovery invention of money. Barter system worked of new all - sea routes from Europe to India on certain conditions mentioned below. via Cape of Good Hope by Vascoda Gama 1. Each party to barter must have surplus had far – reaching impact on the civilized stocks for the trade to take place. world. The arrival of Portuguese in 2. Both the buyers and sellers should India was followed by the advent of other require the goods each other desperately European communities. India’s maritime i.e., double coincidence of wants trade was a monopolized one over 3. Buyer and seller should meet personally Europeans and at one stage the global trade to effect the exchange. share of India was 55 per cent which is just 2 per cent in 21st century. The European Constraints in Barter System merchants who came to India were not only individual merchants but also represented The barter system envisages mutual their respective governments. They gained exchange of one’s goods to other without a strong foothold in India’s maritime trade the intervention of money as a medium of by virtue of their strong naval power. In exchange. It imposes certain constraints in course of time their commercial motives the smooth flow of trade as explained below. turned into territorial ambition like the 1. Lack of double coincidence of Wants East India Company which became the British Empire here. Unless two persons who have surplus have the demand for the goods possessed by Textiles and ship building earned name each other, barter could not materialize. For and fame in the 17th and 18th centuries. instance ‘A’ is having a surplus of groundnut Britishers gradually abolished Princely and ‘B’ is possessing rice in surplus. In this order in the Indian territories. Thus the case A should be in need of rice possessed demand for Indian goods declined during by B as the latter should desperately the British rule. Britishers put in place need groundnut possessed by A. If this policies prohibiting the export of some of “coincidence of wants” does not exist, Barter the popular goods like Indian textile goods, cannot take place. 6 commerce 1-15.indd 6 10/12/2022 16:31:01  www.tntextbooks.in 2. Non – existence of common measure the producer and the consumer. It renders a of value variety of services to ensure that the passage Barter system could not determine the value of goods and services between the two, is of commodities to be exchanged as they completed without any let or hindrance. lacked commonly acceptable measures to Accordingly, commerce may be defined as evaluate each and every commodity. It was “the organized system for the exchange of difficult to compare the values of all articles in the absence of an acceptable medium of goods and services between members of exchange. industrial world.” It comprises all forms of trade, wholesale, retail, import, export 3. Lack of direct contact between producer and consumers and entrepreneurial services which aid and assist the trading activities such as banking, It was not possible for buyers and sellers transport, warehousing, insurance, and to meet face to face in many contexts for exchanging the commodities for advertising. commodities. This hindered the process of barter in all practical sense. 1.04 E  limination of Hindrances of 4. Lack of surplus stock Commerce Absence of surplus stock was one of the Business consists of all industries and impediments in barter system. If the buyers commerce. It serves to remove several and sellers do not have surplus then no hindrances and solve many problems while barter was possible. facilitating the production and distribution of goods. The various hindrances removed Invention of Money by business are as follows All the aforesaid constraints were addressed by the invention of money as medium 1. Hindrance of person of exchange. Besides there are other Manufacturers do not know the place and hindrances in the smooth exchange of goods from the place of production to the face of the consumers. It is the retailer who place of consumption like place, time, risk, knows the taste, preference and location of knowledge, finance and so on. These are the consumers. The chain of middlemen addressed by various mechanisms in detail consisting of wholesalers, agents and retailers in the subsequent sections of this chapter. establish the link between the producers and 1.03 Hindrances of Commerce consumers. Production of goods and services for the 2. Hindrance of place satisfaction of human wants is the main Production takes place in one centre and objective of an industry. Reaching those consumers are spread throughout the country goods and services to the people for where and world. Rail, air, sea and land transports these are produced is the object of commerce. bring the products to the place of consumer. Commerce serves as a valuable link between 7 commerce 1-15.indd 7 10/12/2022 16:31:01  www.tntextbooks.in 3. Hindrance of time t Exercise Consumers want products whenever they have money, time and willingness to buy. Goods are produced in anticipation of such demands. They are stored in warehouses in I. Choose the Correct Answer different regional centres so that they can be 1. In Pandiyas Dynasty the place where distributed at the right time to the consumers. the goods are sold is _____ 4. Hindrance of risk of loss a) Angadi Fire, theft, floods and accidents may b) Market bring huge loss to the business. Insurance c) Nalangadi companies serve to cover the risk of such d) Allangadi losses. 5. Hindrance of knowledge 2. Hindrance of place is removed by ______ Advertising and communication help in a) Transport b) Warehouse announcing the arrival of new products and their uses to the people. c) Salesman d) Insurance 6. Hindrance of finance 3. Who wrote “Arthasasthra” ? a) Kautilya Producers and traders may not have the required funds at the time of their need. b) Kambar Banks and other financial institutions c) Thiruvalluvar provide funds and help in transfer of funds d) Elangovadigal to enable the functioning of business smoothly. 4. Trade and Commerce was common to _______ Dynasty. a) Pallava Key Terms b) Chola Vanigam Nalangadi c) Panidya Allangadi Hindrances d) Chera 5. _______ was first sultan who paved Barter system way in the dense forest and helped traders to move from one market place to others place for their commercial caravans. 8 commerce 1-15.indd 8 10/12/2022 16:31:01  www.tntextbooks.in a) Balban III. Short Answer Questions b) Vascoda Gama 1. Explain the meaning of the term “Vanigam”. c) Akbar 2. State the meaning of Maruvurapakkam d) Alauddin Khilij and Pattinapakkam. Answers 3. What are the ports developed by Pandiya 1. a 2. a 3. a 4. c 5. a kingdom? II. Very Short Answer Questions IV. Long Answer Questions 1. What is meant by Barter System? 1. What are the hindrances of Commerce? 2. What is meant by Nallangadi? (any 5) 3. What is meant by Allangadi? 2. State the demerits of barter system. 3. Briefly explain the coastal trade in ancient Tamilnadu. 9 commerce 1-15.indd 9 10/12/2022 16:31:01  www.tntextbooks.in UNIT I FUNDAMENTALS OF BUSINESS CHAPTER OBJECTIVES OF BUSINESS 2 Learning Objectives To enable the students to i. know the meaning of human activities and its kinds ii. learn the Economic Vs Non-Economic Activities iii. know the types of Economic Activities Employment, Profession and Business iv. understand the concept of business v. explain the characteristics of business activities vi. analyse the objectives of business vii. elucidate the comparison of business, profession and employment 2.01 Introduction Examples: i. Production of goods by manufacturers Human Activities ii. Distribution of goods by wholesalers Human activity is an activity performed by iii. Selling by retailers a human being to meet his/her needs and iv. Medical advice rendered by physicians v. Accounting practice by chartered wants or may be for personal satisfaction. accountants Human activities can be categorised into economic and non-economic activities. II.Non-Economic Activities The chart below gives a snapshot of human Activities undertaken to satisfy social activities. and psychological needs are called non- I. Economic Activities economic activities. Activities undertaken with the object Examples: of earning money are called economic i. Cooking food for family activities. ii. Celebrating festivals 10 commerce 1-15.indd 10 10/12/2022 16:31:02  www.tntextbooks.in Economic Activity Vs. Non-Economic Activity Economic Activities Non-Economic Activities 1. Definition: Economic activities are those Non-economic activities are those activities which activities which are undertaken to earn are undertaken for the sake of pleasure, performed money or financial gain for livelihood. out of love, sympathy, sentiments etc. e.g., Fruit seller selling fruits e.g., Mother cooks for her family 2. Motive: Sole motive is to earn money or Undertaken for satisfaction of social, financial gain. psychological or emotional needs. e.g., Working as a lawyer. e.g., Visit to a temple 3. Money Measurement: All economic Non-economic activities cannot be valued in activities can be valued in monetary terms. monetary terms. These are an expression of a e.g., Doctor charges ₹500 as consultation fee. thought, feeling or a gesture. e.g., An NGO distributes free clothes to poor children 4. Relationship: Economic activities are Non-economic activities do not create wealth. related to creation of wealth. e.g., Money received as donation is spent on e.g., Ram saved part of his salary to purchase charity work. a house of his own. 5. Outcome: All economic activities result in The end result of a non-economic activity production, procurement, distribution and is the mental, emotional or psychological consumption of goods and services. satisfaction of the person doing the activity. e.g.,  Nokia produces cell phones and sells e.g.,  Sona enjoys teaching orphans in an across India through its distributors. orphanage. 6. Duration: Economic activities are Non-economic activities may not be repetitive. They are done on a regular basis undertaken regularly. Usually they are done to earn a living. during free time. e.g., Kulfi ice cream seller sells ice creams e.g., Sankar visits orphanage in his free time. every evening. 7. S ource of Initiation: Economic activities are Non-economic activities are initiated to initiated to satisfy human needs and wants. satisfy emotional or sentimental pleasures. iii. Watching movies in a theatre said to be engaged in their occupation. iv. Doing meditation Occupations may be classified into three categories based on the following: 2.02 Types of Economic Activities Economic activities are undertaken to earn A. Employment money. Generally, people engage themselves B. Profession in such activities on a regular basis and are C. Business 11 commerce 1-15.indd 11 10/12/2022 16:31:02  www.tntextbooks.in A. Employment C. Business It refers to the occupation in which people Business refers to any human activity work for others and get remuneration in the undertaken on a regular basis with the object to form of wages or salaries. The one who is earn profit through production, distribution, employed by others are called employees purchase and sale of goods and services. and the one who employs others is called employer. Business may be defined as “an activity Managers, Clerks, Bank officials, Factory involving regular production or purchase workers etc., are examples of employees. of goods and services for sale, transfer and exchange with an object of earning profit”. Characteristics There is a contract existing between the According to James Stephenson business employer and the employee. Employee refers to “Economic activities performed performs according to assigned task. for earning profits.” Remuneration is given to employees for According to H.Haney, “Business may delivering value of services. An employee be defined as a human activity directed must abide by the rules and regulations of towards producing or acquiring wealth the organization. through buying and selling of goods”. B. Profession Professions are those occupations which Business activities are connected with involve rendering of personal services of a raising, producing or processing of goods. special and expert nature. A profession is Industry creates form utility to goods by something which is more than a job. It is a bringing materials into the form which is career for someone who is competent in their useful for intermediate consumption (i.e., respective areas. It includes professional further use of material in order industry) or activities which are subject to guidelines or final consumption by consumers. codes of conduct laid down by professional Classification bodies. Those engaged in a profession are Business activities are classified on the basis called professionals and they earn income of size, ownership and function. by charging professional fee. 1. Activities on the Basis of Size Characteristics On the basis of size, business activities may There should be a systematic body of be broadly grouped into two categories. knowledge. There should be formal acquisition of knowledge by the members. a. Small Scale There should be a code of conduct governing Small scale units require less capital. They the conduct and behaviour of professionals. employ small number of workers and Service motive should be uppermost in the produce the goods on small scale. Example: minds of people rendering professional Manufacturing textiles in handlooms or service. power looms. 12 commerce 1-15.indd 12 10/12/2022 16:31:02  www.tntextbooks.in (i) Extraction of edible oil from seeds like (iii) Government Company - State groundnut, sesame, through treditional Trading Corporation (STC) wooden churner. c. Joint Enterprises b. Large Scale An enterprise is said to be a joint enterprise Large scale units require huge capital. where it is owned, managed and controlled They employ large number of workers and by Government and private entrepreneurs. produce the goods on large scale. 3. Activities on the Basis of Function Examples On the basis of functions, business activities (i)  Manufacturing Textiles in a large may be broadly grouped into two categories. Textile mill. Example. Raymonds, a. Industry Ramraj Cotton Industry includes all those business activities (ii)  Extraction of edible oil from oil which are connected with raising, producing seeds in oil mills. Example. Suffola, or processing of consumer goods. Example - Sunflower bread, butter, cheese, shoes, or capital goods 2. Activities on the Basis of Ownership like machinery. On the basis of ownership business activities b. Commerce may be broadly grouped into three categories. It establishes a link between the producers a. Private Enterprises and consumers of goods and maintains a smooth and uninterrupted flow of goods An enterprise is said to be a private enterprise from producers to consumers. where it is owned, managed and controlled by persons other than Government. 2.03 Characteristics of Business (i) Sole proprietorship. Example - Sundar The essential characteristics of business are Stationeries as follows: i. Production or Procurement of Goods (ii) Partnership firms. Example - Ramesh Bros. Goods must be produced or procured in order to satisfy human wants. b. Public Enterprises ii. Sale, Transfer or Exchange An enterprise is said to be a public enterprise There must be sale or exchange of goods or where it is owned, managed and controlled services. When a person weaves cloth for by Government or any of its agencies or his personal consumption, it is not business both. Public enterprises may be organized because there is no transfer or sale. in several forms such as, iii. Dealing in Goods and Services (i) Departmental undertaking - Public Works Department (PWD) Goods produced or procured may be consumer goods like cloth, pen, brush, (ii)Public Corporation - Oil and Natural bag etc., or producer-goods like plant Gas Corporation (ONGC) and machinery. Services refer to activities 13 commerce 1-15.indd 13 10/12/2022 16:31:02  www.tntextbooks.in Comparision of Business, Profession and Employment Business Profession Employment 1. Nature of Work: Goods and services provided Personalized service of Performing work assigned to the public expert nature by the employer 2. Qualifications: No minimum qualification is Education and training in Minimum qualification is essential specialized field essential 3. Capital: Capital investment required as Limited capital necessary No capital required per size of the firm for establishment 4. Reward: Profits Professional fee Salary or wages 5. Risk: Profits are uncertain and Fee is regular and certain, Fixed and regular pay, no irregular never negative risk 6. Transfer of Interest: Transfer possible with some Not possible Not transferable formalities like supply of electricity, gas or water, vi. Element of Risk transportation, banking, insurance etc. The profit that is expected in a business is iv. Regularity of Dealings always uncertain because it depends upon An isolated dealing in buying and a number of factors beyond the control selling does not constitute business. The of the businessman. For example, change transactions must be regular. For example, in consumer preference, shortage of raw if a person buys a scooter for his use and materials, transport bottlenecks, power- later on disposes it of at a profit, he cannot crisis etc., may upset business calculations be said to have been engaged in business. and result in loss. That is why profit is said to The buying and selling must be recurrent to be reward for risk-taking. Thus any business constitute business. activity includes an element of risk too. v. Profit Motive An important feature of business is profit 2.04 Objectives of Business motive. Business is an economic activity by Every business enterprise has certain which human beings make their living. It is, objectives which regulate and generate in fact, the attraction of profit which spurs its activities. Objectives are needed in people to do business. every area where performance and results 14 commerce 1-15.indd 14 10/12/2022 16:31:02  www.tntextbooks.in directly affect survival and prosperity of a E. National Objectives business. Various objectives of business may The goal of the country may be to provide be classified into five broad categories as employment opportunity to its citizen, follows; earn revenue for its exchequer, become A. Economic Objectives self-sufficient in production of goods and Economic objectives of business refer to services, promote social justice, etc. Business the objective of earning profit and also activities should be conducted keeping these other objectives that are necessary to be goals of the country in mind, which may be pursued to achieve the profit objective, called national objectives of business. which includes creation of customers, regular innovations and best possible use Key Terms of available resources. Human Activities B. Social Objectives Economic Activities Social objectives are those objectives of Non-Economic business, which are desired to be achieved Activities for the benefit of the society. Since business Business operates in a society by utilizing its scarce Profession resources, the society expects something Employment in return for its welfare. No activity of the business should be aimed at giving any kind For Own Thinking of trouble to the society. Do you know that there are white C. Organizational Objectives collar, blue collar, pink collar jobs? The organizational objectives denote Collect the information and discuss. those objectives an organization intends to accomplish during the course of its existence in the economy like expansion Exercise and modernization, supply of quality goods to consumers, customers’ satisfaction, etc. I. Choose the Correct Answer D. Human Objectives 1. The Primary objective of a business is Human objectives refer to the objectives a. Making Profit aimed at the well-being as well as fulfillment b. Not Making Profit of expectations of employees as also of c. Special skill people who are disabled, handicapped d. None of the above and deprived of proper education and training. The human objectives of business 2. Occupation of a Doctor is may thus include economic well-being of a) Employment the employees, social and psychological b) Business satisfaction of employees and development c) Profession of human resources. d) Sole Proprietor 15 commerce 1-15.indd 15 10/12/2022 16:31:02  www.tntextbooks.in 3. The following does not characterise III. Short Answer Questions business activity? 1. What do you mean by human activities? a) Production of goods and services Explain. b) Presence of Risk 2. Write a short notes on: c) Sale or exchange of goods and services a) Business b) Profession d) Salary or wages 3. Explain the classification of ‘Business’. IV. Long Answer Questions 4.