Business, trade, and commerce cbse class 11th notes

Business, trade and commerce

Business

An occupation in which people regularly engaged in activities relating to purchase / production and sale of goods and services with a view to earning profits.

Characteristics of business are :-

• Economic activity.
• Production or procurement of goods and services.
• Dealing in goods and services on daily basis .
• Sale or exchange of goods and services.
• Profit earning.
• Uncertainty of return.
• Element of risk.

 Human activities are of two types:-

1. Economic activities - economic activities are those activities by which we can earn our livelihood. 
2. Non-economic activities - are performed out of love, sympathy  sentiment, patriotism etc. 

Economic activities may further divided into three categories :-

• Business 
• Profession 
• Employment 

Business activities are classified into two broad categories :-

1. Industries - industries are concerned with the production or processing of goods or materials. 
2. Commerce - commerce includes all those activities which are necessary for facilitating goods and services 

Commerce includes two types of activities :-

1. Trade - buying and selling goods and services is termed as trade.
2. Auxiliaries to trade - activities that are required to facilitate trade are known as auxiliaries to trade. 

Trade are classified into two broad categories :-

1. Internal - internal trade are within the geographical boundaries of a country. 
2. External - trade consists of the exchange of goods and services between persons or organizations operating in two or more countries. It is import, export and when goods are imported for export to other country, it is known as entrepot trade. 

Auxiliaries to trade are as follows :-

• Transport and communication 
• Banking and finance 
• Insurance 
• Warehousing 
• Advertising 

Multiple Objectives of business :

1. Market standing 
2. Innovation 
3. Productivity 
4. Physical and financial resources 
5. Earning profits
6. Manager performance and development 
7. Worker performance and attitude 
8. Social responsibility 

Business risks 

The term 'business risk' refers to the possibility of inadequate profits or even losses due to uncertainties and unexpected events.

 

Business risks are of two types :

1. Speculative risk : possibilities of either gains or loss. Ex. - changes in tastes. 
2. Pure risk : possibilities of loss or no loss.ex. - fire, theft, strike or flood etc.

Nature of business risks

1. Business risks arise due to uncertainties. 
2. Risk is an essential part of every business. 
3. Degree of risk depends mainly upon the nature and size of business. 
4. Profit is the reward for risk taking. 

Causes of business risks 

1. Natural causes 
2. Human causes
3. Economic causes 
4. Other causes 

Starting a business - basic factor are as follows :

1. Selection of line business. 
2. Size of the firm. 
3. Choice of form of ownership. 
4. Location of business enterprise.
5. Financing the preposition.
6. Physical facilities.
7. Plant layout. 
8. Competent and committed workforce.
9. Tax planning.
10. Launching the enterprise.

Hope it is useful