NCERT Solutions for Class 11

Business Studies - Part-1 Foundations of Business

Chapter 1 – Business, Trade and Commerce

Short Answers Questions

1. List any five major commercial cities of ancient India?

Ans: Port towns, manufacturing towns, mercantile towns, the religious centre, and
pilgrimage towns were all present. Their existence is a barometer of merchant
communities' and professional classes' success. In ancient India, the following were
the most important trade centres:
1. Pataliputra: Today, it is known as Patna. It was not just a commercial centre, but
also a major stone export hub.
2. Peshawar: It was a major centre for the export of wool and the import of horses.
In the first century A.D., it played a significant role in trade dealings between India,
China, and Rome.

3. Taxila: It was a crucial crossroads on the important land route connecting India
and Central Asia. It was also a financial and commercial banking centre. As a
Buddhist learning centre, the city held a significant position. Here, the illustrious
Taxila University blossomed.
4. Indraprastha: It was the royal road's commercial intersection, where most east-
west, south-south, and north-south routes intersected.
5. Mathura: It was a trading emporium, and the people here lived off it. Mathura
and Broach were visited by many routes from South India.

2. What is Hundi?
Ans: The hundi was a popular form of currency in the Indian subcontinent. It
involved a contract that —
(i) guaranteed the payment of money, the unconditional promise or order

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(ii) might be changed through proper negotiation.
As practiced by Indian merchant communities, the Hundi is as follows:

Name of Hundi Broader Functions of Hundi

Classification

Dhani-jog Darshani There is no obligation for who receives

payment if it is made to anyone.

Sah-jog Darshani Payable to a certain individual, someone

who is ‘respectable.' For who is
responsible for who received payment.

Firman-jog Darshani Order a hundi and make it payment to the

person who placed the order.

Dekhanhar Darshani Payable to the bearer or presenter

Dhani-jog Muddati Payable to anyone—no responsibility for

who received payment, but payment over
a set period.

Firman-jog Muddati Following a set term, a hundi is made

payable to order.

Jokhmi Muddati Drawn in opposition to items that have

been shipped. If things are lost in transit,
the drawer or holder is responsible for the
costs, and the Drawee is not responsible.

3. List the major exports and imports in ancient India.

Ans: Ancient India's major exports were spices, wheat, sugar, indigo, opium, sesame
oil, cotton, parrot, live animals, and animal products—hides, skin, furs, horns,
tortoise shells, pearls, sapphires, quartz, crystal, lapis, lazuli, granites, turquoise and
copper etc. Major Imports in ancient India were of horses, animal products, Chinese

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silk, flax and linen, wine, gold, silver, tin, copper, lead, rubies, coral, glass, amber,
etc.

4. What were the different types of Hundi in use by traders in ancient times?
Ans: The different types of Hundi are given below:

Name of Hundi Broader Functions of Hundi

Classification

Dhani-jog Darshani There is no obligation for who receives

payment if it is made to anyone.

Sah-jog Darshani Payable to a certain individual, someone

who is ‘respectable.' For who is
responsible for who received payment.

Firman-jog Darshani Order a hundi and make it payment to the

person who placed the order.

Dekhanhar Darshani Payable to the bearer or presenter

Dhani-jog Muddati Payable to anyone—no responsibility for

who received payment, but payment over
a set period.

Firman-jog Muddati Following a set term, a hundi is made

payable to order.

Jokhmi Muddati Drawn in opposition to items that have

been shipped. If things are lost in transit,
the drawer or holder is responsible for the
costs, and the Drawee is not responsible.

5. What do you understand by maritime trade?

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Ans: Ancient periods saw a lot of travel by land and water. Both land and water were
used to maintain trade. Maritime trade refers to trading that takes place over water.
Another key aspect of the global commerce network was maritime trade. Muziris is
located on the Malabar Coast, which has a long history of international marine trade
dating back to the Roman Empire.
Pepper was highly prized throughout the Roman Empire, and it was dubbed "Black
Gold." For centuries, the battle to control the route for this trade has been a source
of rivalry and conflict between numerous empires and trading powers. The desire
for an alternative route to India for spices led to Columbus' discovery of America in
the late 15th century, as well as Vasco da Gama's arrival on the Malabar coast in
1498.
Calicut was such a thriving marketplace that Chinese ships came to buy products
from the Middle East, such as essential oil and myrrh (fragrant resin used in
perfumes and medicines), as well as pepper, diamonds, pearls, and cotton from India.
Pulicat was a prominent port on the Coromandel Coast in the 17th century. Pulicat's
primary export to Southeast Asia was textiles.

6. State the different types of economic activities.

Ans: Economic activities are those that allow us to earn a living. A worker at a
factory, a doctor in his clinic, a manager in an office, and a teacher teaching in a
school, for example, are all involved in economic activities to support their families.
Economic activities are further split into three categories: business, profession, and
employment.

7. Why is business considered as economic activity?

Ans: The word 'business' comes from the word 'busy.' As a result, doing business
entails being busy. In a more precise meaning, business refers to an occupation in
which people routinely engage in activities linked to the purchase, manufacture,
and/or selling of goods and services with the goal of making money.

The activity could include the production or purchase of items for resale, as well as
the exchange of goods or the provision of services to meet the needs of others. People
in every culture engage in a variety of activities to meet their requirements. These
activities can be divided into two categories - economic and non-economic.

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Economic activities are those that allow us to earn a living, whereas noneconomic
activities are those that are done out of love, sympathy, feeling, patriotism, and other
emotions. A factory worker, a doctor working in a clinic, a manager working in an
office, and a teacher teaching in a school, for example, are all performing their jobs
to make a living and are thus involved in economic activity. A woman preparing
meals for her family or a boy assisting an elderly man across the street, on the other
hand, are engaging in non-economic tasks because they are doing it out of love or
sympathy. Business, professions, and employment are the three types of economic
activity.

Business is classified as an economic activity since it is carried out with the goal of
making money or sustaining one's living, rather than out of love, affection, pity, or
any other emotion. It should be noted that this activity can be carried out on a small,
individual basis (e.g., purchase and sale by a shopkeeper) or on a larger, more formal,
and organised size (e.g., purchase and sale by a cooperative society or enterprise).

8. State the meaning of business.

Ans: The word 'business' comes from the word 'busy.' As a result, doing business
entails being busy. In a more precise meaning, business refers to an occupation in
which people routinely engage in activities linked to the purchase, manufacture,
and/or selling of goods and services with the goal of making money. The activity
could include the production or purchase of items for resale, as well as the exchange
of goods or the provision of services to meet the needs of others.

9. How would you classify business activities?

Ans: Business activities can be divided into two categories: economic and non-
economic.

Economic activities are those that allow us to earn a living, whereas non-economic
activities are those that are done out of love, sympathy, feeling, patriotism, and other
emotions. A factory worker, a doctor working in a clinic, a manager working in an
office, and a teacher teaching in a school, for example, are all performing their jobs
to make a living and are thus involved in economic activity. Business, professions,
and employment are the three types of economic activity that can be classified. A
woman preparing meals for her family or a boy assisting an elderly man in crossing

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the street, on the other hand, are engaging in non-economic tasks since they are doing
it out of love or sympathy.

10. What are the various types of industries?

Ans: The various types of industries are given below:

● Primary

This category includes all activities involving the extraction and production
of natural resources, as well as the reproduction and growth of living beings,
plants, and other living things.

● Secondary

These are concerned with the use of materials that have previously been
extracted in their raw form. These businesses process such materials to create
goods for end users or for further processing by other businesses.

● Tertiary

These are responsible for providing support services to main and secondary
industries, as well as trade-related operations.

11. Explain any two business activities which auxiliaries to trade are.

Ans: The following are two business activities that are related to trade:

1. Transport and Communication: Most items are produced in specific locations.

For example, tea is primarily produced in Assam; cotton is primarily produced in
Gujarat and Maharashtra; jute is primarily produced in West Bengal and Odisha;
sugar is primarily produced in Uttar Pradesh, Bihar, and Maharashtra, and so on.
These items, on the other hand, are required for consumption in various sections of
the country. Transport, whether by road, rail, or coastal ships, removes the
geographical barrier. Transport supports the movement of raw materials to

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manufacturing facilities and completed goods from manufacturers to consumer
locations. Along with transportation, communication facilities are required so that
producers, traders, and consumers may share information with one another. As a
result, mail services and telephone services can be considered auxiliaries to
commercial activity.

2. Banking and Finance: Business activities cannot be carried out without finances
are available for the acquisition of assets, the purchase of raw materials, and other
costs. Businessmen can receive necessary funds from a bank. As a result, banking
assists businesses in overcoming their financial challenges. Overdraft and cash credit
facilities, loans, and advances are common ways for commercial banks to lend
money. Banks also handle cheque collection, transmission of payments to other
locations, and bill discounting on behalf of traders. Commercial banks assist
exporters in collecting money from importers in international trade. Commercial
Banks also assist company promoters in raising funds from the public.

12. What is the role of profit in business?

Ans: A business's starting point is an objective. Every firm has a set of goals that it
strives to attain. The things that businesspeople seek in return for what they do are
referred to as objectives. The widespread perception is that business is conducted
solely for profit. Every business is stated to be an attempt by businesspeople to make
more money than they have spent or invested, or, in other words, to make profit,
which is the difference between revenue and cost. Although profit cannot be the sole
goal of a firm, its significance cannot be overlooked.

Every firm is an endeavour to earn more money than it has invested, and profit is the
difference between revenue and cost. Profit may be a critical corporate goal for a
variety of reasons:

• It is a source of revenue for entrepreneurs.

• It can provide a source of funding for a company's expansion needs.

• It denotes the smooth operation of a business

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• It might be interpreted as society's endorsement of business's utility.

• It helps to establish a company's reputation.

13. What is business risk? What is its nature?

Ans: The term "business risks" refers to the probability of low profits or even losses
because of unknowns or unforeseeable events. Demand for a particular product, for
example, may fall due to changes in consumer tastes and preferences or more
competition from other providers. Longer sales and profits derive from lower
demand. In another scenario, a scarcity of raw materials on the market could drive
up the price. The company that uses these raw materials will have to pay extra for
them. As a result, production costs may rise, thereby lowering earnings. Speculative
and pure risk are two forms of risk that businesses confront on a regular basis.
Speculative hazards include both the potential for profit and the potential for loss.
Speculative risks develop because of changes in market conditions, such as
fluctuations in demand and supply, price adjustments, or changes in client fashion
and tastes. Market conditions that are favourable are more likely to result in gains,
while those that are unfavourable are more likely to result in losses. Pure risks only
have two outcomes: loss or no loss. Pure dangers include the possibility of fire, theft,
or strike. Its occurrence may cause loss, whereas their absence may explain the
absence of loss rather than gain. The following are the types of business risks:

1. Uncertainty creates business risks.

2. Risk is a necessary component of any business.

3. The degree of risk is mostly determined by the nature and size of the firm.

4. Profit is the payoff for taking risks.

Long Answers Questions

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1. Discuss the development of indigenous banking system in Indian
subcontinent.

Ans: In ancient times, trade and commerce played a critical part in establishing India
as a prominent economic player. In the third millennium B.C., commercial centres
such as Harappa and Mohenjodaro were created. The civilisation established trade
relations with Mesopotamia, trading gold, silver, copper, colourful gemstones,
beads, pearls, seashells, terracotta pots, and other items. Metals thus began to
supplement other commodities as money as economic life advanced due to their
durability and divisibility. The advent of metallic money and its use stimulated
economic activities because money acted as a means of exchange. Hundi and Chitti
documents were used to carry out transactions in which money was transmitted from
one person to another. The hundi was a popular form of currency in the Indian
subcontinent. There was a contract involved which

(i) guarantee the unconditional payment of money, commitment, or order

(ii) People began to deposit precious metals with lending individuals acting as
bankers or Seths as banking developed, and money became a vehicle for providing
producers with a way of manufacturing more things. Credit transactions and the
availability of loans and advances made business operations easier. The Indian
subcontinent reaped the benefits of a favourable trade balance, with exports
outnumbering imports by huge margins, and the indigenous banking system
providing additional capital funding for expansion and development to
manufacturers, traders, and merchants. Agricultural banks provide both short- and
long-term loans to finance agriculturists. Commercial and industrial banks later
arose to finance trade and commerce.

2. Define business. Describe its important characteristics.

Ans: The word 'business' comes from the word 'busy.' As a result, doing business
entails being busy. In a more precise meaning, business refers to an occupation in
which people routinely engage in activities linked to the purchase, manufacture,
and/or selling of goods and services with the goal of making money. The activity

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could include the production or purchase of items for resale, as well as the exchange
of goods or the provision of services to meet the needs of others.

• Production or procurement of goods and services: Business enterprises must

either manufacture or buy commodities before they can be provided to the public for
consumption. As a result, every commercial company either manufactures or
purchases the goods it sells from producers to resell to consumers or users.
Consumable commodities, such as sugar, ghee, pen, notebook, and so on, or capital
goods, such as machinery, furniture, and so on, are examples of goods.
Transportation, banking, energy, and other services are examples of services
provided to consumers, businesses, and organizations.

• Sale or exchange of goods and services: Business involves the transfer or

exchange of commodities and services for a monetary value, whether directly or
indirectly. It cannot be deemed a business activity if things are created for personal
consumption rather than for sale. Cooking food for the family at home is not a
business but cooking meals at a restaurant and selling it to others is. As a result, one
of the most important characteristics of a business is the sale or exchange of goods
or services between the seller and the customer.

• Dealings in goods and services on a regular basis: Dealings in commodities or

services on a regular basis are a part of business. As a result, a single sale or buy
does not constitute a commercial transaction. It will not be deemed a business
activity if a person sells his or her household radio set for a profit. However, if
someone sells radio sets on a regular basis, whether through a shop or from his home,
it will be considered a business activity.

• Profit earning: One of the primary goals of a business is to generate profit.

Without profit, no company can last long. As a result, businesspeople make every
attempt to maximize earnings, whether by boosting sales volume or cutting costs.

• Uncertainty of return: The lack of knowledge about the amount of money that
the business will generate in a certain period is referred to as uncertainty of return.
Every firm invests money to conduct its operations to make a profit. It's not possible
to predict how much money will be made. Furthermore, despite the best efforts put
into the firm, there is always the chance of losses.

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• Element of risk: The uncertainty associated with a loss exposure is known as risk.
It is brought on by a negative or unfavourable occurrence. Changes in consumer taste
as well as fashion, changes in production methods, workplace strikes or lockouts,
increasing market competition, fire, theft, accidents, natural calamities, and so on
are all risk factors. Risks are generally considered as an unavoidable part of doing
business.

3. Compare business with profession and employment.

Ans: The difference between business, profession and employment is given below:

Basic Business Profession Employment

Mode of If necessary, the Membership in a Letter of

Establishment decision of the professional appointment and
entrepreneur and organisation and a service agreement
other legal practice certificate
formalities

Nature of Work supplying goods Personalized, Performing work

and services to the competent services in accordance with
public are provided. a service contract
or service rules

Qualification No minimum Qualifications, Employer-

qualification is expertise, and mandated
Necessary training in a qualifications and
particular field, as training are
stipulated by the required.
professional body,
are required.

Reward or Earned profit Fees for Wages or salary

Return professionals

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 Capital Capital investment Capital investment There is no
Investment is necessary based is necessary based capitalization
on the size and on the size and required
nature of the nature of the
company. company.

Risk Profits are Fees are normally Fixed and

unpredictable and consistent and consistent pay; no
sporadic, and there predictable; or minimal risk
is a risk involved. nonetheless, there
is some risk.

Transfer of With some It is not possible. It is not possible.

Interest formalities, a
transfer is doable.

Code of Conduct There is no It is necessary to Employer-

established code of adhere to a established
conduct. professional code standards of
of behaviour. conduct must be
followed.

Example Shop, factory, etc Legal, medical

profession,
Chartered
accountancy, etc

4. Define Industry. Explain various types of industries giving examples.

Ans: The term "industry" refers to economic operations that involve the conversion
of raw materials into usable items.

In general, the term "industry" refers to tasks using mechanical devices and technical
expertise. These include activities such as manufacturing and processing items, as
well as animal breeding and raising. The term "industry" can also refer to groups of

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businesses that produce comparable or related commodities. Cotton textile industry,
for example, refers to all production units that produce cotton textile goods.

Primary

This category includes all activities involving the extraction and production of
natural resources, as well as the reproduction and growth of living beings, plants,
and other living things. They are split into the following categories:

● Extractive Industries: These businesses take items from natural sources and
extract them. Extractive industries provide some essential raw materials,
which are primarily geographical or natural environment goods.
Manufacturing industries frequently transform these industries' products into
a variety of other valuable commodities. Farming, mining, lumbering,
hunting, and fishing are all important extractive industries.

● Genetic Industries: These businesses are in the business of raising plants and
animals for use in reproduction. Genetic industries include seed and nursery
enterprises, for example. Furthermore, the activities of cattle breeding farms,
poultry farms, and fish hatcheries are all subject to genetic regulation.

Secondary

These are concerned with the use of materials that have previously been extracted in
their raw form. These businesses process such materials to create goods for end users
or for further processing by other businesses. Secondary industries can be further
classified into the following categories:

● Manufacturing Industries: These businesses produce things by processing

raw materials and converting them into finished goods. Through the
conversion of raw materials or partially finished materials in their
manufacturing activities, they produce a variety of finished products that we
consume or use.

● Construction Industries: These businesses are involved in the construction

of structures such as buildings, dams, bridges, roads, tunnels, and canals. In
construction, engineering and architectural skills are crucial.

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Tertiary

● These are responsible for providing support services to main and secondary
industries, as well as trade-related operations.

● Service facilities are provided by these industries.

● As business operations, these could be regarded part of commerce because

they support trade as auxiliaries. Transportation, banking, insurance,
warehousing, communication, packaging, and advertising are all included in
this area.

5. Describe the activities relating to commerce.

Ans: There are two sorts of commerce activities: (i) trade and (ii) trade auxiliaries.
Trade is defined as the buying and selling of products. However, several activities
are required to make the buying and sale of commodities easier.

• Trade

Trade is an important aspect of business. It is the act of selling, transferring, or

exchanging goods. It aids in the distribution of items generated to consumers or
users.

Trade can be divided into two categories: internal and external.

Internal, domestic, or home trade refers to the purchasing and selling of goods and
services within a country's geographical borders.

The exchange of products as well as services between individuals or organisations

operating in two or more countries is known as external or foreign trade.

• Auxiliaries to Trade

Auxiliaries to trade are activities that are designed to help with trade. Auxiliaries are
an important aspect of business in general and trade.

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These actions aid in the removal of numerous roadblocks that develop in the
manufacture and distribution of goods. Auxiliaries to trade are explored briefly
below:

1. Transport and Communication:

Most items are produced in specific locations. Transport supports the movement of
raw materials to manufacturing facilities and completed goods from manufacturers
to consumer locations. Producers, traders, and consumers can communicate with one
another through communication facilities.

2. Banking and Finance: Business activities cannot be carried out without finances
available for the acquisition of assets, the purchase of raw materials, and other costs.
Businessmen can receive necessary funds from a bank. As a result, banking assists
businesses in overcoming their financial challenges. Overdraft and cash credit
facilities, loans, and advances are common ways for commercial banks to lend
money. Banks also handle cheque collection, transmission of payments to other
locations, and bill discounting on behalf of traders.

3. Insurance: Business entails a variety of hazards. The factory structure,

machinery, and furnishings, among other things, must be safeguarded from fire,
theft, and other threats. Material and goods in storage or in transportation are at
danger of being lost or damaged.

Employees must also be protected from the dangers of accidents and occupational
hazards. All these situations are covered by insurance.

4. Warehousing: Typically, things are not sold or consumed just after they are
manufactured. They are kept in stock so that they can be used as needed. To avoid
loss or damage, certain arrangements must be established for the storage of items.
Warehousing aids businesses in overcoming storage issues and ensuring that items
are available when needed.

5. Advertising: Advertising is one of the most effective ways to promote the sale of
things, especially consumer goods such as electronics and automobiles, as well as
soaps and detergents. Producers and traders are essentially unable to contact each

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customer. As a result, information about the goods and services available, their
features, price, and so on must reach potential purchasers to promote sales.

6. Explain any five objectives of business.

Ans: The following are the business objectives:

1. Position on the market: The position of a company in the market in respect to

its competitors is referred to as market standing. A company's goal should be to
establish a better position in terms of providing competitive products to customers
and satisfying their needs.

2. Innovation: The introduction of new ideas or procedures into the way something
is done or created is known as innovation. In any firm, there are two types of
innovation.

(i) product or service innovation

(ii) product and service supply chain innovation in a variety of skills and activities.
In a competitive environment, no firm can survive without innovation.

As a result, innovation becomes a critical goal.

3. Productivity: The value of output is compared to the value of inputs to determine

productivity. It's a metric for determining efficiency. To ensure long-term survival
and success, every business must strive for increased productivity by making the
best use of existing resources.

4. Physical and financial resources: Physical resources, such as plants, machinery,

and offices, as well as financial resources, such as capital, are required for any firm
to manufacture and sell goods and services to its consumers. The goal for the
commercial enterprise should be to acquire these resources in accordance with their
needs and to put them to good use.

5. Earning profits: Businesses run with a motive to earn profits on the capital which
has been employed. If we talk about profitability, it refers to profit in relation to

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capital which is invested. A reasonable amount of profit for every business is must
to earn so that its survival and growth can be ensured.

7. Explain the concept of business risk and its causes.

Ans: The term "business risks" refers to the probability of low profits or even losses
because of unknowns or unforeseeable events. Demand for a particular product, for
example, may fall due to changes in consumer tastes and preferences or more
competition from other providers. Longer sales and profits derive from lower
demand. In another scenario, a scarcity of raw materials on the market could drive
up the price. The company that uses these raw materials will have to pay extra for
them. As a result, production costs may rise, thereby lowering earnings.

Speculative and pure risk are two forms of risk that businesses confront on a regular
basis. Speculative risks develop because of changes in market conditions, such as
fluctuations in demand and supply, price adjustments, or changes in client fashion
and tastes. Market conditions that are favourable are more likely to result in gains,
while those that are unfavourable are more likely to result in losses. Pure risks only
have two outcomes: loss or no loss. Pure dangers include the possibility of fire, theft,
or strike. Its occurrence may cause loss, whereas their absence may explain the
absence of loss rather than gain. A multitude of factors contribute to business
hazards, which are characterised as follows:

1. Natural causes: Natural disasters such as floods, earthquakes, lightning, torrential

rainfall, starvation, and other natural calamities are beyond human control.

2. Human causes: Unexpected events such as employee dishonesty, carelessness or

neglect, work halt due to power outages, strikes, riots, management ineptitude, and
so on are examples of human causes.

3. Economic causes: These include concerns about demand for goods, competition,
price, customer debt collection, changes in technology or production methods, and
so on.

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Financial issues, such as an increase in borrowing interest rates or the imposition of
higher taxes, are also examples of these types of causes since they result in greater
unanticipated operating or company costs.

4. Other causes: Unforeseen occurrences, such as political upheavals, technical

problems, such as a boiler exploding, variations in exchange rates, and so on, can all
result in business hazards.

8. What factors are to be considered while starting a business? Explain.

Ans: The following are some things to think about while beginning a business:

1. Line-of-business selection: The nature and sort of business to be undertaken are

the first decisions that an entrepreneur must make. He or she will undoubtedly want
to pursue that field of industry and commerce that offers the greatest potential for
profit. The decision will be impacted by market customer requirements as well as
the entrepreneur's technical competence and enthusiasm in developing a specific
product.

2. Size of the firm: Another crucial decision to make at the outset of a business is
the size of the company or the scope of its operations.

Some elements favour a broad scale of activity, while others tend to limit it. If the
entrepreneur is certain that demand for the planned product will be strong over time
and that he or she can secure the necessary financing, the firm will be launched on a
large scale. A small firm would be a better alternative if market circumstances are
unpredictable, and risks are high.

3. Choice of ownership structure: The business organisation can be a sole

proprietorship, a partnership, or a joint stock corporation in terms of ownership.
Each kind has its own set of advantages and disadvantages. The appropriate form of
ownership will be determined by considerations such as the line of business, capital
requirements, owner liability, profit split, legal formalities, company continuity, and
interest transferability, among others.

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4. Business enterprise location: The location of the company's headquarters is an
important issue to consider while starting a firm. Any blunder in this area might
result in expensive production costs, inconvenient access to the proper kind of
production inputs, or a failure to provide the best possible service to clients. The
availability of raw materials and labour, as well as power and services such as
banking, transportation, communication, and warehousing, are all key
considerations when choosing a location.

5. Obtaining funding for the proposal: Financing is concerned with supplying the
necessary funds for the prospective business's start-up and continuation. Capital is
needed to invest in fixed assets such as land, buildings, machinery, and equipment,
as well as current assets such as raw materials, books, debts, finished goods stock,
and so on. Day-to-day expenses necessitate the use of capital.

(a) the capital requirement,

(b) the source from which the money will be raised, and

(c) the best strategies to use the capital in the company.

6. Physical facilities: The availability of physical facilities, such as machines and

equipment, as well as a building and associated services, is a critical issue to consider
when starting a firm. The nature and scale of the business, the availability of cash,
and the manufacturing process will all influence this selection.

7. Plant layout: The entrepreneur should design a layout plan outlining the
organisation of physical facilities once the need for them has been determined. The
physical arrangement of machines and equipment required to make a product is
referred to as layout.

8. A capable and dedicated workforce: Every business requires a skilled and

dedicated personnel to carry out numerous tasks to convert physical and financial
resources into desired outcomes.

Because no single entrepreneur can accomplish everything, he or she must determine

the need for qualified and unskilled workers, as well as administrative personnel.

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Plans should also be created for how staff will be trained and motivated to perform
at their highest levels.

9. Tax preparation: Tax planning has been vital in recent years due to the country's
numerous tax rules, which affect practically every facet of modern business
operation. The tax liabilities under various tax regulations, as well as its impact on
business actions, must be considered in advance by the business's creator.

10. Starting the business: Following the above-mentioned decisions, the

entrepreneur can proceed with the actual launching of the business, which includes
mobilizing various resources, completing essential legal formalities, commencing
the production process, and launching a sales promotion campaign.

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