Unit-1 Introduction to business and

business forms
Tapu
Faculty Member
Birganj Public College
Business 2

Business is an economic activities consisting of

production, distribution, exchange of goods to satisfy
the changing need and demand of customer to meet
economic goal of the organization.

According to Lewis H. “a human activity directed

towards producing and acquiring wealth through buying
and selling good.”
Characterisitcs of Business 3

 Economic Activity  Customer

 Continuous satisfactio
Process  Capital
 Profit Motive Element of courage
 Risk and
Uncertainities
 Creation of Utility
Components or Scope of Business 4

Business Covers Large or wide area. It involves all kind of

economic activities. Broadly business may be classified into two
categories viz. Industries and Commerce. Industry involves
producing goods and services whereas commerce is concerned
with distribution of goods and services from manufacturers to the
customers.
1. Industries
2. Commerce
Industries 5

“Industry” refers to production of goods by manufacturing or

processing. It converts raw materials into finished goods . Goods
produced by an industry may be “consumers’ goods” or
“producers’ goods”. Industry may be further divided into Two
Types.

1. Primary Industries:
2. Secondary Industries
Primary Industries 6

The primary sector of industry, is the sector of an economy

making direct use of natural resources. This includes agriculture,
forestry, fishing .
1. Genetic Industries: Genetic Industry is related to the reproducing,
breeding and multiplying certain species of plants and animals with the
object of earning profit from their sale.
2. Extraction Industries: The Extractive Industry concerned with the
extraction or drawing out products from natural sources. It supplies basic
raw materials to other industries.
Secondary Industries Cont….. 7

Any industry that processes raw materials, that are provided from primary
industry for manufacture of products is called secondary industries. This
sector involves:
1. Construction Industry : This industry is concerned with the construction,
fabrication or building products. Examples of such industries are road,
bridge, dams, buildings construction, etc.
2. Manufacturing Industry : Generally the term ‘industry’ refers to the
manufacturing industry. This industry is mainly concerned with the
production of different types of goods by using raw materials or
semi-finished goods.
Manufacturing Industries…… 8
• Analytical Industry: In this industry many types of products are
manufactured by analyzing and separating different elements from the same
material.
• Synthetic Industry : In this industry various raw materials are put together in
manufacturing process to make a final product.
• Processing Industry : In this industry raw material is processed through
different stages of production resulting in the final product.
• Assembling Industry : In this industry various instruments or component
parts already manufactured are assembled to make new useful product.
Commerce: 9

Exchange of goods or services for money ,usually on a

scale large. It requires transportation from place to
place or across city, state, or national boundaries.
• Trade
• Auxiliaries of Trade
Trad 1
e 0
Trade is related to buying and selling goods and services
for earning profit.
Those activities which are related to buying, selling and
distributing goods in market is known as trade
Types of Trade: 1
1
1.Home Trade: Home trade means national, domestic or
internal trade i.e. Buying and selling with in a nation.
• Wholesale Trade: When trader buy goods in bulk
amount and resell to retail in small volume is called
whole sale trade.
• Retail Trade: When trader buy goods in bulk amount
and resell to customer in small volume is called
retail trade.
Trade Cont…. 12
1
2.Foreign Trade: Foreign trade means international, global,
external trade i.e. Buying and selling is between two or more
nation.
• Import:A good or service brought into one country from another is
called import.
• Export: A good or service sold to another country from one is called
export.
• Inter import trade: The trade in which a country purchases the goods
from one country and sells it to another country is called inter import
trade.
Auxiliaries of trade: 1
3
It supports or assists the trade activities. It helps to run
business smoothly.
1. Transportation
2. Warehouse
3. Insurance
4. Banking
5. Advertisement
Function of Business: 1
4
A business is an organization of human, material and other intangible
resources. the function of a business is to create, retain and satisfy profitable
customers as a means of successfully achieving the desired ends of the
enterprise.
 Organizing  Managing function
function  Research and
 Financing development
function function:
 Production  Marketing function
function:
 Distributing
function
 Personnel
Objectives of Business 1
5
Generally it is believed that any business activity is carried on only
for profit because it measures the effectiveness and soundness of
business efforts and it is also the risk premium to cover the cost. It
should also be kept in mind that the business is carried on to meet
the needs of society by continuous supply of goods and services.
Therefore, the main objective of the business should be to serve the
society
Economic Objectives, Social Objectives & Human Objectives
Economic Objectives: 1
6
The economic objective of a business is to earn sufficient profit to
give reasonable reward to the investors of capital and to provide
for further capital.
1. Earning Profit
2. Production of goods and services
3. Creation of customers
4. Innovation

0
Social Objectives 1
7
A business is a part of society whose ethical and moral code of
conduct should not be avoided. The philosophy of running a
business should be in tune with what is considered right by the
society.social objectives refers , fulfilling the expectations of the
society.
1. Supply Quality goods and services
2. Utilizing Resources
3. Providing Employment
4. Avoidance of profiteering and anti-social practices
Human Objectives: 1
8
A business organization deals with two important parties of
society: employees & customers. The business enterprise should
treat them as human beings.Therefore, the various human
objectives of business are:
1. Satisfaction of Employees
2. Payment to Creditors
3. Satisfaction of Customers
4. Satisfaction of Shareholders
Differences between Business, Commerce & Trade

Basis of Difference Business Commerce Trade

Commerce refers to all Trade refers to

Business refers to all
activities which exchange of products
those activities which
Meaning facilitates the exchange or services among
are done with the aim
of goods from producer buyers and sellers in
of earning profits.
to end consumer. return for money.
Narrower as is
Wider. It includes both Wider than trade, as it
concerned with only
Scope trade and commerce comprises of activities
buying and selling of
within its activities. which supports trade.
goods.
Between owner and Between producer and Between buyer and
Connectivity
clients. consumer. seller.
 Huge amount of capital More amount of capital
Capital needed Requires less capital.
is needed. needed.

Supply side of the Both demand and supply

Side represented Only demand side.
product. side.

Riskier than trade and

Risk level More risky than trade. Low risk
commerce.

Transactions frequency Regular Regular Isolated

More employment
Large number of
opportunities as large
Employment opportunities due to
number of people are Very few.
Opportunities presence of many
required for performing
activities.
different tasks.
# Forms of Business Organization
1. Sole Proprietorship 3. Joint Stock Company
a. Single ownership a. Artificial person
b. No legal entity b. Separate legal entity
c. No profit sharing c. Limited liability
d. Autonomy d. Transferability of shares
e. Perpetual existence

2. Partnership Firm 4. Cooperative Society

e. Unlimited liabilities f. Open membership
f. Difficulty in transfer of shares g. Voluntary association
g. Higher capital h. Democratic management
h. Chances of disputes i. Mutual cooperation
j. Disposal of surplus