Business, Trade and Commerce

• Introduction

  • Meaning of Business
  • Role of Business in satisfying human needs
  • Concept of Economic Activities vs Non-Economic Activities

• Concept of Economic Activities

  • Business (Production and sale for profit)
  • Profession (Specialized knowledge and training)
  • Employment (Working for others under a contract)

• Characteristics of Business

  • Economic Activity (Driven by profit motive)
  • Production or Procurement of goods/services
  • Sale or Exchange of goods/services
  • Regularity of Dealings (Not single transactions)
  • Profit Earning (Essential for survival/growth)
  • Uncertainty of Return (Element of risk)
  • Element of Risk (Financial loss possibility)

• Objectives of Business

  • Economic Objectives
    • Survival
    • Profit
    • Growth
  • Social Objectives
    • Supply of quality goods at fair prices
    • Avoidance of unfair trade practices
    • Employment generation
    • Environmental protection

• Role of Profit in Business

  • Source of income for businesspersons
  • Providing funds for growth and expansion
  • Indicator of success and efficiency
  • Building reputation and goodwill

• Business Risk

  • Nature of Business Risks
    • Arise due to uncertainties
    • Essential part of every business
    • Degree of risk depends on nature and size
  • Causes of Business Risks
    • Natural Causes (Floods, earthquakes, epidemics)
    • Human Causes (Employee theft, strikes, negligence)
    • Economic Causes (Price fluctuations, competition, changes in technology)
    • Other Causes (Political disturbances, exchange rate fluctuations)

• Classification of Business Activities

  • Industry (Production and processing)
    • Primary Industry
      • Extractive (Mining, agriculture)
      • Genetic (Breeding plants/animals)
    • Secondary Industry
      • Manufacturing (Analytical, synthetic, processing, assembling)
      • Construction (Buildings, dams, roads)
    • Tertiary/Service Industry (Banking, transport, insurance, warehousing)
  • Commerce (Facilitating exchange)
    • Trade (Buying and selling)
      • Internal Trade (Wholesale, Retail)
      • External Trade (Import, Export, Entrepot)
    • Auxiliaries to Trade (AIDS to trade)
      • Transport and Communication (Removes hindrance of place)
      • Banking and Finance (Removes hindrance of finance)
      • Insurance (Removes hindrance of risk)
      • Warehousing (Removes hindrance of time)
      • Advertising (Removes hindrance of information)