MGT211

Introduction to Business
Lecture 01
DEFINITION
◼ Any regular legal activity done for
the purpose of earning profit is
called business.
◼ The word “business” is derived
from the term “busyness.”
Components of business
◼ Industry
◼ Commerce
Industry
◼ Conversion of raw material into finished goods or semi-
finished goods.

◼ Goods: The things which are bought and sold by

business are called goods. Goods maybe raw material work
in progress of finished goods.
 Types of Industry
◼ Primary Industry:

◼ Extractive Industry _ Extraction of

underground resources.

◼ Genetics _ Genetic industries are those,

which are engaged in reproducing and
multiplying certain species of animals and
plants. For example, poultry farm, fishing
farm, diary farm, plant nurseries etc.
 Types of industries
◼ Secondary Industry

◼ Construction _ Construction of buildings,

roads, bridges etc.

◼ Manufacturing _ Conversion of raw material

into final goods.

◼ Services _ Banking, consultancy, accountant,

Lawyer, Interior decorator, designer, music
composer etc.
 Commerce

◼ All those activities which start from the

warehouse of the manufacturer to the buyer.

Types of commerce
◼ Trade
◼ Trade means buying and selling
◼ Home Trade (Wholesale Trade, Retail Trade)
◼ Foreign Trade (Imports and Exports)

◼ Aid to trade
◼ Institutions that are meant and build to assist
and support the trading process.
Factors of production
◼ Labor _ People working in an organization.

◼ Capital _ Amount invested by investor in the

business.

◼ Entrepreneurship _ Management ability of the

people who are running the business.

◼ Physical Resources _ Land, building,

vehicles, machinery etc.
Economic System
◼ A system for allocation of resources.
Types of Economic Systems
◼ Planned Economy: In planned economy the
government decides that how many
resources are to be generated and how these
resources will be allocated.
◼ Free market Economy: In free market
economy demand and supply in the market
determines the allocation for resources with
little or no government intervention.