BUSINESS STUDIES chapter 1 notes(1st part)

Business:an economic activity involving the production and sales of goods and services undertaken with a motive of earning profit by satisfying human needs in society is called business .

Classification of human activities :

•Economic activities

• Non - Economic activities

Economics activities:The activities which are undertaken with the main aim of earning money and creation of wealth are known as economic activities.

Types of economic activities:

1. Business:business refers to those economic activities which are concerned with the production or purchase and sale of goods or supply of services with the main objective of earning profit.

2. Profession:profession refers to those economic activities which requires special knowledge and skills to be applied by individual in their occupations.

3. Employment : employment refers to the occupation in which people work for others and get remunerated in return.

Non - economic activities: the activities which are undertaken by an individual with the motive of getting psychological satisfaction or performed with the purpose of rendering services to others without any consideration to financial gain are called non economic activities.

For example: religious work , social services , parental activity , charity etc.

Difference between economic and non economic activities:( being provided a difference table):-

Concept and characteristics of business:-

Nature of business:

1. An Economic activity : all businessactivities are economic activities and are done for the sole purpose of earning money.

2. Production and procurement of goods:a business activity involves production or procurement of goods and services. A manufacturer is involved in production, while a shopkeeper is involved in procurement .

3. Sales and exchange of goods and services for the satisfaction of human needs:sales and exchange of goods and services is done to satisfy human needs. goods are physical commodity and service is our working on others demand hence , business involves sale and exchange of goods and services. 

4. Dealing in goods or services on a regular basis: one time dealing in goods and services cannot be termed as a business. Hence , the sale or exchange of goods and services should be on a regular basis.

5. Profit earning: profit earning is a fundamental motive of doing a business. Other objectives cannot be attained without it.

6. Uncertainty of returns:returns can never be certain in business activity. This happens because of external factors which are outside the control of the business organisation. 

7. Element of risk: an element of risk is always present in a business activity to produce more and more profit.

Differentiation between business , profession and employment :Here , you are being provided two difference tables for better understanding . 

Multiple objectives of business:

•Economic objectives

•Social objectives

•Human or individual objectives

~Economic objectives:as business is an economic activity so the most important objectives of business are are economic objectives. Under economic objectives, the following objectives are included:-

1.Survival : the basic purpose of every organisation is to survive and exist in the competition market for a longer period of time and it is possible only when it is able to cover its cost and earn profit.

2. Profit: The the mean important objective of every business is earning profit in adequate amount. Profit is necessary for survival, growth and the expansion of business. Profit is the reward given to the businessman for bearing risk .

3. Growth:every business organisation must grow and expand their activities. The success of every business is measured by the growth rate and growth is measured in terms of sales, number of branches , number of products , number of employees, etc. 

~. Social objectives:-

1. Supply of desired quality of products: customers prefer to buy the products only when they are satisfied with the quality and the price available.A businessman should ensure the quality of its product and should keep a reasonable price for all the customers.to maintain good will and to survive in the market a businessman must supply products with the right quality 👍 at right price.

2. Avoidance of unfair trade practices: unfair trade practices or antisocial activities such as black marketing , holdings , adulteration etc . should not be there and the goods must be provided with the right way and good quality to the customers. There is no such society which accept these practices. By these practices the businessman will only lose his reputation and under certain circumstances can also be punished.

3. Employment generation: unemployment is a very major problem in our society .The businessman must create employment opportunities to overcome this problem. By employing people a businessman will improve his public image in the society. The employees should be given proper training ,  there should be updation in their knowledge. Especially , a businessman should take a great consideration over the handicapped , disabled and poor people.

4. Social service or community service:business man should do donations for the upliftment of society. Doing so, will increase their reputation of the company and would establish a good image in public which will ultimately lead to more and more profit.

5. Environment friendly : Industrialisation has lead to a major problem of pollution. Hence it is a moral duty of a businessman to either reduce pollution or avoid pollution. The businessman should adopt eco-friendly techniques of production.

~. Individual / personal / human objectives:

It is related to the following points:

•sanitary conditions.

•competitive wages and salaries (as per contribution).

•basic facilities and special benefits.

•peer recognition.

•personal growth

These all points collectively means-

providing good working condition and special benefits such as housing facility , medical facility ,free education of children etc . Respecting and encouraging employees to take initiative and participating in decision making. Payment of competitive and satisfactory wages and salary. Proper training to employees and keep updating their knowledge.

Role of profit in business : 

1. Survival: A business and businessman cannot survive for a longer time without earning profit .Profit helps a businessman to stay in market .Profit is a source of income for a businessman which becomes his means of livelihood.

2. Expansion and growth: expansion of business is only because ofearning profits. It also helps in growth of business which ultimately will give out profit . Retention of profit is an internal source of funds. So , on retained profit there is no interest and company can easily use its expansion and growth projects.

3. Symbol of efficiency or an index of performance: profit highlights the conditions of business i.e the business is working efficiently or not.Higher profits indicate the efficiency of management and lower profit indicates the inefficiency of management.

4. Reward for bearing the risk:profit is considered as a price paid to a businessman after bearing risk. The higher is the risk , the more is profit and the lower is the risk, less is the profit.

5. Helps to gain reputation or goodwill: a profit earning company has a good reputation and image in the society. the rate of earning profit helps in creating a Goodwill of the company in the Market. the market price of shares increases with the increase in the profit.

Hope it helps!! 🤗🙂🙂🤗

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