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CONCEPT OF BUSINESS
THE DIFFERENCE BETWEEN BUSINESS AND NON BUSINESS
DIVISIONS OF BUSINESS
COMMERCE AND INDUSTRY
• OBJECTIVES OF A MODERN BUSINESS
• PROBLEMS BEFORE ESTABLISHING A NEW BUSINESS
• BUSINESS ORGANIZATION AND ITS SCOPE
• QUALITIES OF A SUCCESSFUL BUSINESSMEN
First Definition of Business
All the commercial and industrial
activities that provide goods and
services to the people and with the
aim to earn profit.
for example: a manufacturer who converts
raw material into finished goods ( cotton to
cloth, and wood into furniture.
1. Buying and selling
2. The exchange of commodities
3. And distribution of goods
Business is the sum of total activities which are connected with
the production or purchase and sale of goods and services with
the object to earn profit.
The persons who are engaged in business are named as
businessmen or entrepreneurs. An organization formed for
carrying on business activities is called business organization.
The difference between Business
Activities and Non Business
Business Activities: The business combines human, material,
technological and financial resources carried on for profit. For example
buying and selling
Non Business Activities: Those Activities which are not for the sake
of profit, but to provide social services to the society. For example setting
up free hospitals, free educational institutions etc.
1. Social Service Activities
2. Personal consumption activities
3. Religious and other activities
4. Illegal activities
Objectives of Business
Objective of a business means the purpose for which business is established.
It is generally believed that the main objective of business is to make profit
and avoid loss, but it is not the sole objective of any business.
1. Economic Objectives
2. Social Objectives
3. Human Objectives
4. National Objectives
1. Economic Objectives
Economic objectives are those
objectives, where a business earn
profit, create customers, improve
technologies and use resources in a
best possible way.
2. Social Objectives
Social objectives are those which are for the
betterment of the society
The main social objectives are
1. Supply of standard quality of goods
2. Avoidance(the act of keeping away something) of anti-social practices (smuggling, overcharging) etc.
3. More employment & Equal employment Opportunities
4. Cooperation with the government
5. Welfare of employees : somebody's state or condition with respect to whether he or she is healthy,
safe, happy, or prospering
3. Human Objectives
The business activity is carried on by the people (entrepreneurs)
through the people (employees) and for the people
Human is an important element in the business. If a business does not care
of human, ultimately suffer losses. The human objectives of business are
1. Employees should be rewarded fairly
2. Developing new skills and abilities
3. Employees should participate in decision making
4. Work hours should be planned
4. National Objectives
Every business whether operating on small scale or
large must have an obligation towards nation. It
should help in promoting social justice, quality goods
for exports, finding out better and cheaper
substitutes for imports, producing goods according to
Meaning of Industry
The term “industry” refers that part of business
activity which is concerned with extraction,
production, or fabrication of products.
Types of industry
1. Extractive industry: Which extract, produce raw materials from above or
below the surface of the earth. Mining, fisheries, agriculture.
2. Genetic industries: industries which reproduce animals and plants and
selling them in the market for profit.
3. Constructive industries: industry engage in the construction of building,
bridges, dams, roads etc.
4. Manufacturing industries: industry which convert raw material into
finished goods. Shoe company, textile mills etc
5. Service industries: These industries are engaged in the creation of
intangible goods which cannot be seen or touched. The services of
professionals such as doctors, lawyers, etc, are examples of service
All those activities which are related to the transfer of goods from the
place of production to the ultimate consumers is called commerce.
Commerce can be classified into two categories
a) Internal Trade
b) External Trade
2. Aids to Trade
Trade: Trade means buying and selling of
goods or it is the exchange of goods and
services among buyers and sellers in which
both parties ( sellers and buyers) are
Trade involves the transfer of
the ownership of goods or services from
one person or entity to another in
exchange for other goods or services or for
money. Possible synonyms of "trade"
include "commerce" and "financial
transaction". A network that allows trade
is called a market.
Aids to Trade
The different means of
transport e.g., railways, ships,
airlines etc. help in carrying
goods from the places of
production to centers of
Financial protection against loss or harm: An
arrangement by which a company gives
customers financial protection against loss or
harm such as theft or illness in return for payment
The risk of damage of goods due to fire, flood,
Warehousing is a kind of storage.
Goods are stored in safe places and
are released as and when demanded
in the market. Warehousing helps
overcoming the barrier of time.
Banks help traders by providing loans
whenever they need. They also assist
the buyers and sellers of goods in
receiving and making payments, both
at national and international level.
Selling of goods is the most important
and difficult problem for the
manufacturer. Advertising helps in
increasing the sale of goods.
A public announcement in a newspaper or on the radio,
television, or Internet advertising something such as a product
for sale or an event.
There is a long chain of middlemen
(wholesalers, retailers, agents) who
act as agents between the producers
and the consumers. These people
bring together producer and
Important points before starting a new
Before the industrial revolution,
the goods were generally
produced for local markets. It was
easy to establish a new business.
Now the goods are produced by
machines, the rate of production
has gone up.The main factors or
problems which are to be
examined before establishing a
new business are as follows.
1. Selection of business
The most important decision before
engaging one-self in any business is
the selection of business. Care should
be taken while selecting a business.
Because it is very difficult to change
that business again.
2. Demand for the product
A business should not be taken up on the basis of
current demand. Future trend (direction) in
demand should be carefully examined. If the
demand for the product is irregular, seasonal,
and the margin of profit earned by existing firms
is very low, it is no use in starting such a
3. Size of business unit
Determination of the size of business is an
important factor to be considered before
establishing a business.
4. Provision of Capital
Capital is the life blood of
business. Before starting a
business, the capital needs of a
business is to be considered and
The selection of a suitable place for the
establishment of a business is very important.
6. Selection of physical
The selection of physical facilities
depends upon the nature of a new
business. In case of manufacturing
business, land, building, machinery,
store, etc are purchased or on rent
basis will be carefully undertaken.
7. Plan Layout
Business depends upon plan layout.
Plan lay out is the setting up of
machines and equipments of the
factory in manufacturing business.
(Five M’s Money, Machines, Material,
Methods, Men) should be properly
8. Selection of staff
A new business needs enough staff both skilled and
unskilled for the operation of a business. Here care
should be taken that right persons are selected for
the right job.
9. Office equipments
Tables, chairs, computers, air conditioners,
machines etc are important for a business. These
equipments improve the working of the staff.
10. Fulfillment of Legal
An entrepreneur before starting a
business has to fulfill the conditions
and rules imposed by the state, if any.
The non fulfillment of legal
requirements may send him to jail.