TRIVANDRUM INTERNATIONAL SCHOOL Welcomes you to XI commerce class

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Chapter 1

What is business ? How we identify it is a business? Do we need a permanent place to start the business ?

What is the ultimate aim behind business?

Find some business organization around your Locality?

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Business?
Business is an Economic activity which involves regular production and or exchange of goods and services with the main purpose of earning profits through the satisfaction of human wants.

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Familiar the meaning OF Business?

1.business involves production and exchange of goods. 2.Its main aim is to earn profit. 3.It must satisfy human wants. These activities are organised and performed under the framework of an institution known as business organisation /firm/enterprise.
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According to B.O Wheeler, Business is an institution organised and operated to provide goods and services to society under the incentive of private gain.

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Business ?
Business pervades all human activities directed towards earning profits or economic gains.
Industry,trade,Banking,Transport ,Insurance,warehousing,advertisin g etc are integral part of modern business.
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TYPES OF ECONOMIC ACTIVITY

ECONOMIC ACTIVITIES

BUSINESS

PROFESSION

EMPLOYMENT

TRADE INDUSTRY BANKING TRANSPORTATION INSURANCE WAREHOUSING ADVERTISING ETC.

MEDICAL LEGAL CHARTERED ACCOUNTANT.

MANAGER FOREMAN CLERK SALESPERSON WORKER,ETC...

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Definition of Business
Business refers to all those activities which are concerned with the production and /or purchase and sale of goods or services with the purpose of selling them at a profit.

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Characteristics of business
Economic Activity Production or procurement (acquisition of goods for the purpose of sale) Dealing in goods and services;( goods are consumer goods and capital goods) Satisfaction of consumer wants Regular dealings (continuous supply of goods and services) Profit motive Uncertainty. Risk element Creation of utility

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Objectives Of Business
Business objectives as the purpose or the reason for the existence of the business in the society.

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Business activities
Business activities broadly divided in to three; They are, a) Economic objectives, b) social objectives c)Human objectives

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TYPES OF BUSINESS ACTIVITY

ECONOMIC OBJECTIVES

SOCIAL OBJECTIVES

HUMAN OBJECTIVES

1)EARNING OF PROFIT )CREATION OF CUSTOMERS 3)INNOVATION )EFFECTIVE UTILISATION OF RESOURCE

1)BETTER QUALITY PRODUCTS 2)FAIR TRADE PRACTICES 3)GENERATION OF EMPLOYMENT EMPLOYEES WELFARE 4)COMMUNITY SERVICE 5)PROTECTION OF EMPLOYMENT

1)GOOD SERVICE AND FAIR DEALINGS 2)TREATING EMPLOYEES AS PARTNERS 3) DEVELOPMENT OF EMPLOYEES SKILLS 4) JOB SATISFACTION OF EMPLOYEES

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NECESSITY OF PROFITABILITY OBJECTIVE

ACCORDING TO PETER. F. DRUCKER

BUSINESS MUST ACHIEVE SUFFICIENT PROFITS TO COVER THE RISKS OF ECONOMIC ACTIVITY AND THUS TO AVOID LOSS

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A BUSINESS MUST EARN ADEQUATE PROFITS BECAUSE OF THE FOLLOWING REASONS;

MEANS OF LIVELY HOOD RETURN TO INVESTORS REWARD FOR RISKS SOURCE OF FINANCE FOR GROWTH AND EXPANSION INDICATOR OF EFFICIENT WORKING GOODWILL OR REPUTATION

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Can profit be the sole objective of a Business

A lay man may say that business is carried on for profit only. But a good business man cannot afford to keep profits as his sole objective. earning of profits cannot be the objective of a business any more than eating is the objective of living

The argument against the profit maximisation are;

Profit maximization ignores the interests of labour,customers,and the society. Unfair means such as hoarding, black marketing or adulteration may be followed to maximize profits. Long term interest of the business may be ignored to maximize profits in the short run. In the present day environment, a business can't be effective with the sole objective of profit maximisation.It must also set objectives in areas like customer satisfaction, employee welfare, community development, environment protection etc..

Multiplicity objectives of a Business

According to peter f Drucker remarked To manage a business is to balance a variety of needs and goals. And this requires multiple objectives He suggests 8 areas where objectives must be set.

Multiplicity objectives of a Business

1 market standing (eg; Bata) 2 Innovation (eg; Hero Honda) 3 productivity( It is the ratio b/w output and inputs in
4 Human organization-workers
performance production process. it is considered as the efficiency of the enterprises.) attitude and

5 Physical and financial resources

6 managarial performance 7 social rresponsibility 8 profitability-reasonable rate.

Classification of business activities

Business activities are classified on the basis of 3 criteria,ie, 1 size 2 ownership 3 functions

Classification of business activities

On the basis of size business activities are classified as 1 small scale 2 large scale Small scale the investment does not exceed Rs 100 lakhs. Large scale means the investment exceed 1 Crore

Classification of business activities

On the basis of OWNERSHIP business activities are classified as Public sector under the govt. control pvt sector-under private control Joint sector both govt. and private

Classification of business activities

Public enterprises may be organized as Departmental undertaking Government company Statutory corporation etc
But pvt.enterprises are like; Sole trader, Joint Hindu family Partnership Joint stock company And co-operative society.

Classification of business activities

On the basis of functions business activities are classified in to two; Industry and commerce Commercial activities are again classified as ; trade and aids to trade

BUSINESS ACTIVITIES

INDUSTRY

COMMERCE

Trade
1 EXTRACTIVE 2 GENETIC 3 MANUFACTURING 4 CONSTRUCTION

Aids to Trade
Transport Warehousing Insurance Banking advertising

Home trade; 1)Retail trade 2) wholesale trade

Foreign trade 1 import 2 export 3 Entrepot

A brief review of the various types of Business activities

1 Industrial activities or Enterprise;
.

2 Commercial activities;

It includes mining ,breeding,costruction of roads building,etc....(manufacturing,mining,constructions ) commercial activities involve exchange of goods and services like...transport, ware housing,banking,insurance and advertisement.

.3

it refers to purchase and sale of goods to earn profits by the business men known as traders. They engaged in a) Home trade - includes wholesale and retail
b) foreign trade- import-export and entreport

Trading activities or firms;

A brief review of the various types of Business activities

Service activities or enterprises; These include those services which facilitate smooth trade and also serve as the back born of modern industry. banking,insurance,transportation,warehousing, insurance, packaging.

Types of industries
Primary industry; it includes extraction ,producing and processing of natural resource (extractive+ Genetic) Secondary industry are concerned with processing materials which have already been produced at the primary stage. Manufacturing and construction industry is under secondary industry.

Manufacturing industry may assume the following forms

Analytical industry;petrolium refining is an example of analytical industry. Synthetic industry; two or more materials are mixed together in the manufacturing operations to obtain some new products.like soap,cement etc

Manufacturing industry may assume the following forms

Processing industry; raw materials are processed through a series of manufacturing operations making use of analytical and synthetic method)textile sugar and steel. Assembly line industry; in assembly industry, the finished products can be produced only after various components have been made and then brought together for final assembly. automobile watches,telivision are examples

Construction industry may assume the following forms

They are concerned with making of roads,bridges,dams and canals.

Definition of trade
Trade is that branch of commerce which deals with exchange of goods and services in terms of money between different persons known as traders

Types of trade
Trade may be classified on the basis of 1) Geographical area covered 2) volume of trade transaction On geographical basis trade may be classified in to two like internal trade and external trade. On volume of trade basis trade is divided in to two Wholesale & retail trade

Internal or home trade

It refers to purchase and sale of goods within the boundaries of a country. Wholesale trade; purchase and sale of goods in bulk quantity and sell to retailers at small quantity. Retail trade; selling of goods by the retailer to the customer

External or foreign trade

Import trade Export trade & Entrepot trade

AUXILIARIES TO TRADE
Transportation and communication Banking Insurance ware housing Advertising And packaging

Differentiate between industry, trade and commerce

industry commerce Trade