Chapter 1: Business, Trade, and Commerce
1. Learning Objectives
After studying this chapter, the learner will:
1. Appreciate the contribution of business activities in the growth and development of an economy.
2. Discuss the concept and objectives of business.
3. Categorize business activities into occupation, profession, and employment.
4. Classify industries into different types.
5. Explain risk and profit as a reward for risk.
6. Enumerate factors for starting a business.
2. Introduction
• All human beings require different types of goods and services to satisfy their needs.
• Goods and services are available in markets, either physical or online.
• These goods and services are supplied by people involved in economic activities like production, manufacturing, distribution, and
exchange.
• Business is a major economic activity and involves production and sale to satisfy human needs.
Example:
Imran, Manpreet, Joseph, and Priyanka, while discussing career options, learn from businessman Mr. Raghuraj that business offers more than
money. It contributes to a country’s growth and development.
3. Role of Business in the Development of Economy
1. Contribution Since Ancient Times:
• Trading activities contributed significantly to India’s prosperity.
• India was referred to as “Swaran Bharat” and “Swaran Dweep” by travelers like Megasthenes and Xuanzang.
2. Indigenous Banking System:
• Instruments like Hundi and Chitties were used for safe money transfer.
• Types of Hundi:
Type Details
Dhani-jog Darshani Payable to any person.
Sah-jog Darshani Payable to a specific respectable person.
Firman-jog Darshani Payable to order.
Dhani-jog Muddati Payable to any person after a fixed time.
Firman-jog Muddati Payable to order after a fixed time.
3. Major Trade Centers:
• Pataliputra: Known for stone exports.
• Surat: Famous for textiles with gold borders (zari).
• Varanasi: Known for gold silk and sandalwood products.
• Taxila: Center for trade, learning, and financial institutions.
4. Concept of Business
1. Definition: Business is an occupation involving production, purchase, and sale of goods and services for profit.
2. Types of Activities:
• Economic Activities: Done for earning livelihood.
• Non-Economic Activities: Performed out of love, sympathy, or patriotism.
5. Characteristics of Business Activities
1. Economic activity aimed at earning money.
2. Goods and services must be produced or procured for sale.
3. Sale or exchange must happen regularly.
4. Profit is the main motive.
5. Risk and uncertainty are integral to business.
6. Comparison of Business, Profession, and Employment
AspectBusiness Profession Employment
EstablishmentEntrepreneur’s decision. Membership in a profession. Appointment by employer.
Purpose Earning profit.Providing expert services. Following employer rules.
Risk High. Low. Almost no risk.
7. Classification of Business Activities
1. Industry:
• Primary: Extraction of natural resources (e.g., farming, mining).
• Secondary: Processing raw materials (e.g., steel manufacturing).
• Tertiary: Providing services (e.g., banking, transportation).
2. Commerce:
• Trade: Buying and selling goods.
• Auxiliaries to Trade: Services like advertising, insurance, transport, etc.
8. Objectives of Business
1. Profit: Essential for survival and growth.
2. Innovation: Introducing new products or improving existing ones.
3. Social Responsibility: Contributing to society.
4. Productivity: Using resources efficiently.
9. Business Risks
1. Definition: Business risks mean the possibility of losses due to uncertainties.
2. Types:
• Speculative Risks: May result in gain or loss.
• Pure Risks: Only result in loss.
3. Nature of Risks:
• Risk is inevitable and cannot be eliminated, only minimized.
• Higher risks often lead to higher profits.
10. Starting a Business: Basic Factors
1. Type of Business: Choosing a suitable business activity.
2. Size: Deciding between small-scale or large-scale operations.
3. Location: Accessibility of raw materials, labor, and transport.
4. Finance: Arranging capital for setup and operation.
5. Workforce: Employing skilled labor and management staff.
11. Case Study: Dipak Bharali
• Dipak, a silk weaver from Assam, invented “Chaneki,” a device that increased productivity by 40 times.
• His innovation improved the business and lives of other weavers.
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