Business, Trade, Commerce - Class 11 Commerce Chapter 1

Introduction

• Welcome to Class 11 Commerce.
• Chapter covers Business, Trade, and Commerce, also referred to as Nature and Purpose of Business.
• Notes for all chapters available in the description.
• Business Studies is easy because it’s about understanding business.

Definition of Business

• Business refers to an occupation involving consistent work.
• Businessmen are always engaged in economic activities like production, procurement, selling, or exchanging goods.
• Main objective: Earning profit.
• Economic Activity: Activities aiming to earn money (e.g., selling, purchasing, teaching with compensation).
• Non-Economic Activity: Activities done out of love or sympathy (e.g., helping someone cross the road, celebrating national festivals).

Types of Economic Activities

1. Business: Continuous economic activity aimed at profit-making.
2. Profession: Requires specialized knowledge and skills (e.g., doctors, lawyers, CAs) governed by professional bodies (e.g., ICAI, Bar Council of India).
3. Employment: Working for someone else, involves employees and employers. Employees receive salaries/wages without risk.

Features of Business Activities

• Economic activities: Production, procurement, selling, and exchange aimed at profit.
• Regularity: Must be performed regularly, not occasionally.
• Profit motive: Central aim is to earn profit.
• Uncertainty: Involves risk due to unpredictable future.

Classification of Business Activities

1. Industry: Related to production or processing of goods and materials.
2. Commerce: Helps bridge the gap between producers and consumers.

Types of Industries

1. Primary Industry: Uses natural resources (e.g., agriculture, extraction).
2. Secondary Industry: Converts raw materials into finished products.
   • Types: Analytical (e.g., petroleum refining), Synthetical (e.g., cement production), Processing (e.g., sugar production), Assembling (e.g., phone assembly).
3. Tertiary Industry: Provides supporting services like transportation, banking, insurance.

Commerce

• Link between producer and consumer.
• Includes Trade (buying/selling) and Aids to Trade (services facilitating trade like banking, insurance, transportation).

Types of Trade

1. Internal Trade: Within a country (Wholesale & Retail).
2. External Trade: Between countries (Import & Export, Entrepot).

Aids to Trade (Auxiliary to Trade)

• Transportation: Solves place issues by moving goods.
• Warehousing: Solves time issues by storing goods.
• Insurance: Combats risk issues.
• Banking: Resolves capital issues.
• Advertising: Solves information issues.

Objectives of Business

1. Organizational Objectives: Survival, Profit, Growth.
2. Social Objectives: Employment, Quality goods, Less pollution, Social responsibility.
3. Personal Objectives: Good salary, Fair treatment, Healthy work environment, Job security.

• Main objective: Profit but includes social and personal goals.

Business Risks

• Risk: Possibility of loss due to uncertain future.
• Types: Speculative (profit/loss possible) and Pure Risks (only loss or no loss).
• Causes of Risk: Natural (e.g., floods), human (e.g., strikes), economic (e.g., price changes), others (e.g., political).

Conclusion

• Business involves understanding and managing economic activities for profit while addressing risks and fulfilling organizational, social, and personal objectives.
• For more detailed notes, check the links provided.