Business can be defined as an economic activity involving the purchase, production and sale of goods and services with the motive of earning profits. The three main types of business activities are industry, commerce and auxiliaries to trade. Industry involves the extraction of raw materials and their conversion into finished goods. Commerce includes trading activities related to the buying and selling of goods and services. Auxiliaries to trade provide support services to facilitate trade, such as transportation, banking, advertising and warehousing.

1. nature
and
purpose of
business

2. Contents:
1.1 Concept and characteristics of business
1.2 Economic and non economic activities
1.3 Comparison between business, profession and employment
1.4 Objectives of business
1.5 Role of profit in business
1.6 Classification of business activities

3. An
economic
activity Production
or
Element
procurement
of risk Business may be of goods and
defined as an services
economic activity
involving the
purchase, production Sale or
and sale of goods and exchange of
goods and
Uncertainty services with a motive services for
of return of earning profits by the
satisfying human needs satisfaction of
human needs
in society.
Dealings in
Profit goods and
earning services on a
regular basis

4. I said you to start a
business not to sell my old
sarees …….

5. Busines
s
Professi
on
Employme Economic
activities
nt
Religiou
s
Socia
Human
l
activities
Parent
al
Activities
Non Economic
Patriotic

6. Differentiation between economic and non-economic
activities.
Basis Economic Activities Non-economic Activities
Meaning Economic activities are those by which we Non-economic activities are
can earn our livelihood. those performed out of love,
sympathy, sentiments,
patriotism etc.
Purpose/Moti These activities are under taken to earn These activities are
ve/Expectatio money and to create wealth. undertaken to satisfy social,
n. psychological and emotional
needs.
Examples • A worker working in a factory. • A housewife cooking food
• A doctor operating in his clinic. for her family.
• A teacher teaching in a school. • A boy helping an old man
cross the road.
• A person goes to temple to
offer his prayer.
Outcome Production, distribution and consumption Mental/psychological
of goods and services. satisfaction.
Types Business, profession and employment . Religious, social, parental and
patriotic activities.

8. When a teacher is
teaching in a
school and gets
salary, it is an
economic activity
but when a teacher
is teaching her
son/daughter at
home, then it is a
non-economic
activity.

9. Comparison of business, profession and
employment.
Profession
• Accounting(C.A)
• doctor
Business Employment
• Farming • Workers
• banking • employees
Economic
activities

10. Basis Business Profession Employment
Entrepreneur’s decision Membership of a Appointment letter and
Mode Of Establishment and other legal formalities, professional body and service agreement.
if any. certificate of practice.
Provision of goods and Rendering of personalised, Performing work as per
Nature Of Work services to the public. expert services. service contract or rules of
services.
No minimum qualification Expertise and training in a Qualification and training
Qualification is necessary. specific field is must. as prescribed by the
employer.
Profit earned. Professional fee. Salary or wages
Reward/Return
Required as per size and Limited capital needed for No capital required.
Capital Investment nature of business. establishment.
Profits are uncertain and Fee is generally regular Fixed and regular pay; no
Risk irregular;risk is present. and certain; some risk. risk.
Transfer possible with some Not possible. Not possible.
Transfer Of Interest formalities.
No code of conduct is Professional code of Norms of behaviour laid
Code Of Conduct prescribed. conduct is to be followed. down by the employer are
to be followed.
Profit making To provide services. To earn income by
Main Objective/Motive satisfying the employer.

11. Objectives of business
Every business
Every business must enterprise must aim
earn a reasonable at greater
profit to survive and productivity to
grow. ensure continuous
survival and growth.
It refers to the Economic
position of an It means
enterprise in relation objectives introduction of
to its competitors. new ideas or
methods for
producing goods
and services.
Physical & financial
resources
Business requires physical resources and financial resources to
produce goods and services.

12. Business should
A businessman should
produce and sell
avoid hoarding, black
products of proper marketing, over
quality to satisfy charging, misleading
custmer expectations advertisements etc.
Business should
generate
Large business units Social employment
opportunities to the
should undertake
community services objectives disadvantaged
sections of the
like setting up society(e.g.
charitable physically
dispensaries, handicapped
schools etc. people).
Welfare of
employees
Business should provide good working conditions and
pay satisfactory wages/salaries to its employees.

13. Source of income for Source of funds for business
businessmen growth
• As a source of income for the • Profits can be a source of finance for
businessmen, profit provide the meeting growth and expansion
means of livelihood for them. requirements of business.
Role of
profit in
business
Index of performance Reward of risk taking
• Profits indicate whether a business is • It is in the hope of earning sufficient
being managed efficiently or not. It is profits that a businessman invests
a measure of performance and money in business and undertakes
success of a business. risks. profit is essential for covering
costs and risks of the business.

14. Industry
• Industry refers to
economic activities
which are connected
with conversion of
resources into useful
goods.
Business
activities
Commerce
• Commerce includes
all those activities
which are necessary
for facilitating the
exchange of goods
and services.

15. industry
Secondary Tertiary
primary
industry industry
These industries These industries These industries
are connected are concerned provide service
with: with : facilities.
using the materials
The extraction Reproduction extracted at the
primary stage to
and production and development produce goods for final
of natural of living consumption of for
resources organisms . further processing by
other industrial units.

16. Primary
industry
Extractive Genetic
These industries extract Genetic means heredity or
or draw out various parentage. these industries
products from natural involve breeding or reproduction
resources. of plants and animals.
Cattle
Poultry
Farming Mining Fishing breeding
farms
pisciculture
farms

17. Secondary
industry
Manufacturing Construction
industry industries
These industries are engaged in construction
These industries convert raw of buildings, bridges, roads, dams, canals etc
materials or semi-finished products using the products of extractive and
into finished products. manufacturing industries like bricks, sand,
cement, Iron and steel wires etc.
Analytical industry: Synthetical industry: Processing industry: Assembling industry:
basic raw material is two or more materials involves successive various components or
analysed or separated are combined or mixed stages for parts are brought
into a number of together to manufacture manufacturing finished together to produce a
products. a new product. products. finished product
An oil refinery
separates crude Cement, soaps, TV, car,
oil into Sugar, pap
plastics, paints, computer,
kerosene, diesel,
fertilizers etc. er watches etc.
petrol.

18. commerce
Auxiliaries to
trade trade
Trade refers to buying and Activities which are meant
selling of goods and for assisting trade are
services with the objective known as auxiliaries to
of earning profit. trade.

19. Types of
trade
External trade: which takes
Internal trade: which takes
place between two or more
place within a country
countries.
Wholesale Retail Import Export Entrepot
trade trade trade trade trade
Wholesale trade refers to Retail trade refers to If goods are If goods and Where goods are
buying and selling of goods buying of goods and purchased from services are sold to imported for export
and services in large services in relatively
quantities for the purpose small quantities; and
another country, it other countries, it to other countries,
of resale or intermediate selling them to ultimate is called import is called export it is called entrepot
use. consumers. trade. trade. trade.

20. Auxiliaries to trade
Transport and Banking and Warehousing Advertising
communication finance • It refers to the • Advertising brings
• Transport(road,rail or • Business needs funds holding and goods and services to
coastal) facilitates for acquiring preservation of goods the knowledge of
movement of –raw until they are finally prospective buyers.
assets, purchasing
materials to the place raw materials and consumed. • With the help of such
of production,and –the • It helps business knowledge, consumers
meeting day-to-day
finished goods from can obtain better value
expenses. firms to overcome
factories to the place of for their money
consumption • Necessary funds can the problem of
be obtained by storage of goods and • Thus, advertising helps
• Communication to promote the sale of
businessmen from facilitates the
facilities like postal products like electronic
services and telephone commercial banks. availability of goods goods, automobiles,
facilities enable • Thus banking helps when needed. soaps etc by providing
businessmen to business activities • Warehousing creates information about
exchange information overcome the time utility. them.
with one another. problem of finance.