Ch-1 Business, Trade and Commerce (Prashant Kirad) (2).pdf

Class XI BUSINESS STUDIES BUSINESS, TRADE AND COMMERCE PRASHANT KIRAD  PRASHANT KIRAD Ch:1 BUSINESS, TRADE AND COMMERCE What is Business? A business involves regular activities of buying, producing, sell...

Class XI BUSINESS STUDIES BUSINESS, TRADE AND COMMERCE PRASHANT KIRAD  PRASHANT KIRAD Ch:1 BUSINESS, TRADE AND COMMERCE What is Business? A business involves regular activities of buying, producing, selling, or obtaining goods and services, primarily to earn profits while meeting societal needs. It encompasses various transactions aimed at providing products or services to satisfy human demands. Exam mai aayega! Economic and non economic activities (EMA) 1. Economic activities are actions taken to earn a living. 2. Non-economic activities are actions undertaken to satisfy social, psychological, and emotional needs. Characteristics: 2 t h & 1 1. Economic activity: All business activities are undertaken primarily to earn money. 1 h t Business activities 1services or procuring them. 2. Production and procurement of goods and services: d involve either producing goods and i rawhile shopkeepers handle procurement. 3. Sale and exchange ofn t goods Kand services: The sale and exchange of goods Manufacturers focus on production, s h and services aim to a satisfy human needs. P ra Business activities must be conducted regularly; a one- 4. Regular dealings: time transaction does not constitute a business. 5. Profit earning: The primary motive of any business is to earn a profit, with other objectives depending on the success of this goal. Business, Profession and Employment Business: 1. Definition: Activity includes production, purchase, and sale of goods or supply of services with the main objective of earning profit. 2. Mode of Establishment: Starts after completing some legal formalities if needed. 3. Qualification: No minimum qualification is necessary.  PRASHANT KIRAD 4. Capital Investment: Capital is needed according to the nature and size of the business. 5. Risk: High risk. 6. Code of Conduct: No code of conduct. Profession JOSH METER? 1. Definition: A profession involves activities that require specialized knowledge and skills, applied by individuals in their occupation to earn money. 2. Mode of Establishment: Membership in a professional body. A certificate of practice is required. 3. Qualification: 2th Professional qualification and training are necessary. 4. Capital Investment: & 1 1th Limited capital is required for the establishment. 5. Risk: d 1 Low risk involved. ira 6. Code of Conduct: t K h a n Adherence to ethical standards and integrity. ra s Commitment to continuous learning and professional development. P Employment: 1. Definition: Economic activities related to the production, purchase, and sale of goods or supply of services. 2. Mode of Establishment: Commences after receiving an appointment letter. 3. Qualification: Specific qualifications and training as prescribed by the employer are required. 4. Capital Investment: No capital investment is required from the employee. 5. Risk: The employee bears no financial risk.  PRASHANT KIRAD 6. Code of Conduct: Adherence to the terms and conditions outlined in the service contract is mandatory. Objectives of business: (EMA) Economic Social 1. Creating Consumers 1. Quality Product 2. Innovation 2. Environment Protection 3. Effective Utilization of Resources 3. Fair and Reasonable Price 4. Earning Profit 4. Generating Employment 5. Creating Goodwill th 5. Social Security 2 Role of Profit in Business: & 1 1 t h 1. Means of Livelihood: d 1 ir a Profits are essential for entrepreneurs to sustain and continue their business operations. 2. Rewards for Takingn t Risks: K They provides h a returns and incentives for the risks undertaken by P ra entrepreneurs. 3. Funds for Growth: Profits generate the necessary capital for business expansion and development. 4. Symbol of Efficiency and Efficacy: They indicate that the management is effective and the business is operating successfully. 5. Enhancement in Goodwill: Higher profits enhance a business’s reputation and goodwill in the market.  PRASHANT KIRAD Classification of business activities Industry: Primary Industry The primary industry includes activities that utilize natural resources th to provide raw materials to other industries. Primary industries are of 2 two types: 1. Extractive & 1 2. Genetic 1 t h d 1 Secondary Industry: ir a K This industry involvest manufacturing new products using materials h produced by primarya n industries. For example, producing cotton is a s a while manufacturing cloth from cotton is a secondary primaryrindustry, P industry. It is of two types: 1 Manufacturing: 2. Construction Tertiary or Service Industry: This sector includes services that facilitate the smooth operation of businesses, such as transport, banking, insurance, storage, and advertising. Ab Confuse matt hona! - "Prashant Bhaiya"  PRASHANT KIRAD Commerce: Trade: Internal trade involves the exchange of goods and services within a country's borders. It can be categorized into wholesale trade, which deals with bulk th transactions, and retail trade, catering to individual consumpion needs. 2 1 External trade refers to the transfer of goods and services between & entities from different nations. 1 t h Import trade involves purchasing goods from foreign countries. d 1 Export trade entails selling goods to foreign countries. ira K Entrepot trade occurs when goods are imported for the purpose of re- t han exporting them to other countries. a Auxiliaies r s Trade: to (EMA) P and Communication: Goods are produced in specific locations Transport but needed nationwide. Transport via road, rail, or coastal shipping moves raw materials and finished products. Communication services like postal and telephone facilities are vital for business operations. Banking: Businesses need funds for operations, which they can obtain from banks. Commercial banks provide lending, cheque collection, remittance, bill discounting, and support for foreign trade and capital raising. Insurance: Businesses face risks such as fire, theft, and accidents. Insurance protects against these risks by allowing businesses to pay a small fee to recover losses and receive compensation for damages and injuries.  PRASHANT KIRAD Warehousing: Produced goods are stored for future sale or use. Warehousing prevents loss or damage, ensures availability, and helps maintain stable prices through continuous supply. Advertising: To increase sales, businesses must inform potential buyers about their products and services, including features and prices, and persuade them of their quality and value. Advertising achieves this by providing information and encouraging purchases. Business Risk: Definition: Business risk refers to the possibility of inadequate profits or losses due to uncertainties such as changes in consumer preferences, strikes, or government policy changes. These risks can be speculative or pure. Nature of Business Risk: 2th 1 Arise due to uncertainties: Examples include natural calamities, changes & 1th in demand and prices, and technological advancements. Essential part of every business: Risks can be minimized but not eliminated. d 1 ira Depends on nature and size of business: Smaller businesses face less t K h an risk, while larger businesses face more. Profit as reward for risk-taking: Higher risks can lead to higher profits. r a s Risk: P Causes of Business Natural Causes: Beyond human control, e.g., floods, earthquakes, heavy rains, famines. Human Causes: Carelessness or negligence, e.g., theft, strikes, riots, misappropriation. Economic Causes: Market-related, e.g., demand and price fluctuations, competition, technological changes. Physical Causes: Mechanical failures, e.g., boiler bursts, machinery malfunctions causing destruction. Other Causes: Unforeseen events, e.g., political disturbances, exchange rate fluctuations.  PRASHANT KIRAD Top 5 Questions Q1. Differentiate between economic and non-economic activities? Ans: Economic activities are actions undertaken to earn a living, focusing on generating income or profit. In contrast, non-economic activities areperformed to fulfill social, psychological, and emotional needs, rather than for financial gain. Q2. Why business is considered as economic activity? Ans: An activity is considered an economic activity when it is carried out with the intention of earning money. The primary motive of a business is to make a profit. While there are other objectives, such as increasing market share, improving productivity, enhancing employee and consumer satisfaction, and achieving social goals, the fundamental objective of a 2 th business is profit-making. Thus, it is classified as an economic activity. & 1 Q3. What are the functions of commerce? t h Ans: Function of Commerce are as followed: 11 a d ir of lack of information by K Advertising eliminates the obstacle t Transportation h a n connecting producers with consumers and vice versa. s eliminates aconsumers. producersrto the obstacle of place by moving goods from P Storage and warehousing activities eliminate the obstacle of time by preserving goods until they are needed. Q4. What is business risk? Ans: The term 'business risk' refers to the possibility of earning insufficient profits or incurring losses due to uncertainties, such as changes in consumer tastes and preferences, strikes, or shifts in government policy. Q5. Role of Profit in Business. Ans: Role of Profit in Business are: Sustainability and Growth: Profit ensures a business can sustain itself and grow by funding expansion and innovation. Attracting Investment: Profitability attracts investors by indicating financial health and potential for returns.