Business And Types Of

Business Organizations

By Sasan Maru
TY-BMS
Roll No.41
 What Is Business ?
 The term business literally means a state of being busy in
performing certain activities. The activities can be classified as
economic activities and non-economic activities. Economic
activities are those which are taken up with the objective of
earning money like Business,Profession etc. Non-economic
activities are those which are carried without objective of earning
money like Eating, Sleeping etc.
 Business is an economic activity. It creates time, place and form
utility for satisfaction of wants. It includes the various activities of
buying and selling of goods, manufacturing of goods and providing
services in order to earn money.
 Definition Of Business :-
 According to L.H.Haney, “Business is a human activity directed
towards providing or acquiring wealth through buying and selling
activities”.

 According to Keith Davis, “Business may be defined as an organized

effort by individuals to produce goods and services, to sell those
goods and services in a market and to get some reward for this
effort”.

 According to Wheeler B.O., “Business is an organized effort by

individuals to produce goods and services, to sell these goods and
services in a market place and to reap some reward for these
efforts”.
 Features Of Business :-
1. Economic Activity : Business is a form of economic activity. It is an
occupation for number of people like traders, bankers, manufacturers
and producers.

2. Basic is Buying and Selling : The basic activity of any business is

buying and selling. Buying involves purchase of raw materials, plant
and machinery, movable and immovable property and many more
items required in business. Selling is of finished products include
goods and services selling to customers, wholesalers and retailers

3. Dealing in Goods and Services : Business deals with production and

distribution of goods and services. Goods include consumer goods and
industrial goods. Services are utilities like supply of electricity, water
gas and transportation, banking, insurance other financial services,
communication, entertainment etc.
Nature And Scope Of Business :-
The scope of business can be explained from the viewpoint of areas covered by it.
Human activities can brodaly divided into two groups as shown in the following chart

Human Activity

Economic Non-Economic

Emplyomen
Profession Business
t

Industry Commerce
1. INDUSTRY :-
The production side of business is referred as industry. It is
concerned with the production of goods and services. The goods
produced or processed by industry are either consumer goods or
industrial goods. The following are the different types of industry :

 Primary Industry
 Genetic Industry
 Construction Industry
 Manufacturing Industry
 Extractive Industry
 Service Industry
2. COMMERCE :-
Commerce includes trade and aids-to-trade :
 Trade
 Aids-to-trade

1. Trade :-
Trade refers to buying and selling of goods and services. The
trade can be further divided into two groups :
 Internal Trade :
 External Trade:
2. Aids To Trade :-
Aids-to-trade are those activities, which remove the difficulties
or hindrances in the smooth flow of goods from the producers to the
consumers. There are several hindrances in trade such as that of
place, time, information, risks, direct contact, finance, etc. Such
hindrances are removed with the help of aids-to-trade. The following
are the important aids-to-trade :

 Banking
 Insurance
 Warehousing
 Transport and Communication
 Advertising and Publicity
 Mercantile Agents and Traders
 Importance Of Business :-
Business plays an important role for consumers, business firms, society and economy,
which is explained as following :

1. Importance to Consumers :-
2. Satisfaction Of Wants
 Improves Standards Of Living
 Better Quality Products
 Better Services
 Reasonable Prices

2. Importance to Business Firm :-

3. Increases In Profits
4. Increases in Market Share
5. Build Goodwill
6. Helps To Achieve Objectives
 Improvements In Skills
3. Importance to Society and Economy :-
Provides Employment
 Brings Revenue To The Government
 Balanced Regional Development
 Brings Economic Growth
 Undertake Social Services
 Types Of Business
Organizations :-
 Sole Trading Concern :-
It is the oldest form of business organization. A sole trading
business is owned by one person. It is managed by the owner himself,
or he may take the help of his employees to manage the firm.

 Partnership Firm :-
A partnership firm is a business organization in which two or more
persons come together for business purpose, which is carried on by
all or any one of them acting for all.
 Joint Stock Company :-
The Companies Act, 2013 regulates incorporation of a company,
responsibilities of a company, directors dissolution of a company.
The Companies Act, 2013 has replaced The Companies Act, 1956.
The new Act came into force on 12th September, 2013 with changes.
The ownership of a joint stock company is in hands of several
members. There can be private limited company, or public limited
company.

 Joint Hindu Family Firm :-

The joint Hindu family firm is a distinct form of business
organization existing only in India. It comes into existence by the
operation of Hindu law.
 Cooperative Societies :-
It is a democratic form of organization formed to promote and protect
interest of its members.

 Departmental Form :-
 The departmental form of public sector operates under the control
and guidance of the concerned ministry. The departmental form of
public sector includes the railways, broadcasting, post and telegraphs,
telephone services, etc

 Public Corporation :-
A public corporation is established under a special act of the
Parliament or State Legislature. The central government or state
government owns the corporation. Examples of such corporations are Life
Insurance Corporation, Industrial Development Bank of India, Unit Trust of
India, Export Credit Guarantee Corporation of India Ltd., and so on.
 Government Company :-
A “Government Company” is defined under Section 2(45) of the
Companies Act,2013 as ‘any company in which not less than 51% of
the paid up share capital is held by the Central Government, or by
any State Government or Governments or partly by the Central
Government and partly by one or more State Governments. Examples
of such organizations include Indian Oil Corporation. BHEL, SAIL,
GAIL, Hindustan Petroleum Ltd., and Bharat Petroleum Limited.
Thank you