CHAPTER ONE

Business studies
Class XI
Anmol Ratna Tuladhar
 Meaning of business
business is an economic activity which is
related with continuous and regular
production and distribution of goods and
services for satisfying human wants.

short, all those economic activities which are

concerned with earning profit and creating
wealth thought the production and exchange
of goods and services is called business.
 Concept of Business

1. Traditional Concept: the traditional concept

explains that the purpose of business is to
earn profit though production and marketing
of products.

2. Modern Concept: Consumer satisfaction is

the central point of the modern concept of
business. Profit can be earned by maintaining
social responsibility.
 Human Activities
1. Economic Activities: the activities by which the
human beings earn income and generate wealth
are known as economic activities.
There are three essential features of economic
activities:
• Economic gain
• Creation of utilities through provision of goods
and services.
• Satisfaction of other people’s needs.
 Human Activities
1. Economic Activities
a. Business
Economic activities in which human beings generally
produce or purchase goods for sale to satisfy the
needs of other people to earn profit.
b. Employment:
Economic activities of human beings in which people
work for others and get remuneration in exchange.
c. Profession:
Occupation or a professional job that offers specialized
services in return for professional charges.
 Human Activities
2. Non Economic Activities: the human
activities which are carried out to satisfy
social, psychological and emotional needs are
called non economic activities. Some
common examples of non-economic
activities are.
• Free -Time Activities
• Family-Commitment Activities
• Cultural and Religious Activities
Difference between Business
profession and Employment
 Characteristics of Business
1. Human activities
2. Production of goods and services
3. Creation of utility
4. Socio economic activity
5. Continuous process
6. Risk and uncertainty
7. Satisfaction of customers
8. Satisfaction of customers
Structure or scope or component of
business
 Structure or scope or component of
business
1. Industry
Industry refers to that part of business activity
which is concerned with production of goods
through the utilization of various resources.
industrial products: The products used for further
production such as raw materials, machines, tools.
intermediate products: The goods used for further
processing are called intermediate
consumer product: The products used for final
consumption
 Structure or scope or component of
business
1. Industry
On the basis of nature of product industry may be
classified into following two broad category.
A. Primary Industry
i. Extractive Industries
ii. Genetic Industries
B. Secondary Industry
i. Manufacturing Industries
ii. Construction Industries
 Structure or scope or component of
business
A. Primary Industry
Natural resources are extracted and living
organisms and plants are reproduced.
Primary industry can be classified into two types.
i. Extractive industries
These industries are involved to extract natural
and mineral resources from land, water and air.
Mining, hunting, fishing etc are the example of
extraction industries.
 Structure or scope or component of
business
A. Primary Industry
ii. Genetic Industries
The industry which involved in increasing the
number of certain species of plant and animals with
an objective to earn profit. Eg nurseries, poultry
farming, cattle farming etc.
B. Secondary Industry
transforming raw materials or semi finished
goods/semi processed materials into finished
products.
 Structure or scope or component of
business
B. Secondary Industry
The secondary industry are of two types.
i. Manufacturing industry
ii. Construction Industry

i. Manufacturing industry
industry which convert or transform raw materials
and semi processed material into finished
products generally, they collect raw materials from
genetic and extraction industries to produce
finished products
 Structure or scope or component of
business
B. Secondary Industry
i. Manufacturing industry
a. Analytical Industry
Analytical industry means breaking raw materials into
two or more than tow products from a single raw
material.
b. Synthetical Industries
These industries produce a single product with the
combination of two or more than two materials
c. Processing Industries
The industry that produces the final goods after
processing the raw materials through series of stages is
a processing industry.
 Structure or scope or component of
business
B. Secondary Industry
i. Manufacturing industry
d. Assembling Industries
Assembling industry are those industry which
assemble various types of components or parts to
produce a usable product.
e. Continuous Industries
All the required raw materials are fed into the
machine at one point from which successive
operations are performed to turn them into finished
product
 Structure or scope or component of
business
ii. Construction Industry
constructive works are done by using the things
produced by other industries.

2. Commerce
Commerce is the form of business, concerned with
buying, selling and distribution of goods and services.
It is directly related to the transfer of ownership.
Broadly commerce may be classified into two types.
i. Trade
ii. Aid to trade / Auxiliaries of trade
 Structure or scope or component of
business
2. Commerce
i. Trade
Trade means buying, selling and exchanging of
goods and services for money to satisfy goods and
services. it is the act of transferring goods from the
place of producers to the place of consumers.
Trade may be classified into the following two
types.
A. Home Trade/Domestic Trade/Internal Trade:
B. Foreign Trade/ International Trade.
 Structure or scope or component of
business
2. Commerce
i. Trade
A. Home Trade/Domestic Trade/Internal Trade:
The act of purchase and sale of goods between
buyers and seller within the boundaries of a
country is known as Home Trade.
a. Wholesale Trade
Purchase of goods from the producer or agent in
large quantity and selling goods to the retailer in
small quantity is known as wholesale trade.
 Structure or scope or component of
business
2. Commerce
i. Trade
A. Home Trade/Domestic Trade/Internal Trade:
b. Retail Trade
The purchase of goods from the wholesaler in large quantity and
selling goods to the final consumers in small quantities is known as
retail trade

B. Foreign Trade/ International Trade.

Foreign trade refers to the buying and selling activities that take
place between two or more than two countries.
foreign trade may be further classified into three groups.
• Import Trade
• Export Trade
• Entre Port Trade
 Structure or scope or component of
business
2. Commerce
i. Trade
B. Foreign Trade/ International Trade.
a. Import Trade
It is concerned with purchasing goods from foreign
countries.
b. Export Trade
The trade which is concerned with selling goods to
foreign country is export trade.
c. Enter Port trade
The trade which is concerned with selling goods to
foreign country is export trade.
 Structure or scope or component of
business
2. Commerce
ii. Aid to trade/Auxiliaries of Trade
Activities which provide support to trade are known as
auxiliaries of trade.
• Transportation
• Banking
• Communication
• Insurance
• Advertisement
• Warehousing
• Packaging
 Structure or scope or component of
business
3. Service Enterprise
The business which is established for providing services
instead of producing physical goods is known as
service.

From a business point, service business are those that

provide an activity or the performance of a task with a
commercial purpose.
There are two kinds of services:
i. Commercial Services
ii. Direct Services
 Structure or scope or component of
business
There are two kinds of services:
i. Commercial Services
Commercial services are designed to assist the
functioning of industrial and commercial
undertakings.
ii. Direct Services
direct services are rendered direct to the consumer in
the satisfaction of a need
 Functions of business
• Organizing functions
• Production Function
• Human resource function
• Financing function
• Promotional function
• Research and development function
• Distribution function
• Marketing function
 Objectives of Business
1. Economic Objectives
2. Social Objectives
3. Human Objectives
4. National Objectives
5. Organic Objectives

1. Economic Objectives
Economic Objectives of business consist of
economic profit and wealth through customers
satisfaction. The main economic objectives of
business are :
 Objectives of Business
1. Economic Objectives
a. Economic Gain/ Earning profit.
Profit is reward of the business.
b. Productivity
Productivity is concerned with best utilization of organizational resources
c. Enhance Market Share
market share is concerned with increasing the market coverage
d. Market standing
It is concerned with long term activities of a business
organization in market
e. Innovation
Innovation is concerned with development of new concept, idea,
model, design, structure, knowledge and technology
 Objectives of Business
2. Social Objectives
It is concerned with the fulfillment of some social obligations.
a. Supply of quality goods
provide customer quality product at reasonable prices that can
satisfy customer need.
b. Proper Price
business should supply quality goods at reasonable price.
c. Supply of goods in time
Provide goods in proper time in a regular basis to fulfill their needs
d. Providing Employment
Business should create new job opportunities in the society
e. Maintaining social Environment
business organization should preserve and maintain the
environment ecology
 Objectives of Business
3. Human Objectives
activities are performed through the medium of human beings as individual or
groups.
i. Welfare of employees
Business should have the objective to provide financial
as well as welfare facilities to the employees.
ii. Return to Investors
They invest fixed capital for establishment of business and working capital
iii. Satisfaction to customers
business organizations need to supply right quantity and quality of goods at the
right time and in proper price.
iv. Payment to creditors
Creditors are the individual who supply raw material or finished goods on credit.
v. Welfare to communities.
organization should involve in some community welfare activities of the society like
in education, health, culture, games and sports and other social activities.
 Objectives of Business
4. National Objectives
obligations of business directed towards the fulfillment of national
needs and expectations.
i. Utilization of resources
Business organizations need to utilize resources
ii. Payment of Tax
Tax can be paid to government on the basis of their business
turnover and profitability position.
iii. Generation of employment
Business organizations need skilled, semi skilled and unskilled
employees.
iv. Self sufficiency and export development
Business activities minimizes dependence on others for the supply
of goods and services
 Objectives of Business
5. Organic Objectives
Business passes different stage. The first concern of a business enterprises is to
ensure its own survival once enterprises is assured of its survival it will aim at
growth and win recognition and maintain stability. The organic objective includes
i. Survival
survival is related with future prospect, earning capacity, market
position and competition
ii. Growth and expansion
The business tries to increase the sales volume, market expansion and introduce
new products.
iii. Prestige and recognition
it give respect to the products of business organization. It helps in establishing
brand name
iv. Stability
business gets consistency in its activities without any hindrances or disturbances.
 Importance of Business
i. Economic Development
ii. Creation of Utilities.
iii. utilization of resources
iv. Generation of employment
v. Enhancing self-reliance/ self sufficiency.
vi. Earn foreign currency
vii. Sources of government revenue.
viii. Provision of goods and services at reasonable price.
ix. Development of international relationship
x. Provide investment opportunities.
 Social Responsibility of Business
Social responsibility refers to the obligations of
business organization towards society.
There is a need of co – relation between business
and society for the fulfillment of common
objectives
 Social Responsibility of Business
towards Stakeholders
1. Responsibility towards Investors/Shareholders
2. Responsibility Towards Customers
3. Responsibility Towards Employees
4. Responsibility Towards Government
5. Responsibility Towards Community
 Social Responsibility of Business
towards Stakeholders
1. Responsibility towards Investors/Shareholders
Investors or shareholders are the owner of business who
invest their hardly earned income as capital in business in the
hope of getting return.
i. Safety of investment
They invest capital for establishment of business organization
and also for day to day business activities.
ii. Fair and regular return.
regular return on investment to investors in terms of share of
profit or dividend i.e. cash dividend or share dividend, for
this purpose, management needs to accomplish economic
objectives effectively.
 Social Responsibility of Business
towards Stakeholders
iii. Regular and accurate information
Such information is related with financial transactions,
profitability position, future plans and other activities.
iv. Participation of shareholders.
It is the responsibility of business to provide opportunity to
participate in planning and decision making process for
capable shareholders.
v. Maximize wealth
It facilitates to minimize wastage of resources and maximize
productivity.
vi. Utilization of Resources
Business must try to utilize the different resources for the
welfare of the business.
 Social Responsibility of Business
towards Stakeholders
2. Responsibility Towards Customers
A business must satisfy its customers with the quality,
quantity and price of the goods and services produced.
i. Supply quality goods
ii. Supply goods in time
iii. Supply goods in proper price
iv. Provide pre sales and after sales services.
v. Handle customers’ grievance.
vi. Avoid unfair trade practices.
vii. Provide information about new and substitute
products.
 Social Responsibility of Business
towards Stakeholders
3. Responsibility Towards employees
i. Job security
ii. Fair wages and salary
iii. Good working environment
iv. Welfare facilities.
v. Participative management
vi. Handling Grievances
 Social Responsibility of Business
towards Stakeholders
4. Responsibility towards government
i. Payment of Tax
ii. Follow rules and regulations
iii. Solve national problems
iv. Provide business information