Riaz Academy
1. Question: Define Business. Discuss the Scope of the business?
2. Question: Define Business. What are the main Components of the business?
1. Question: Define Business. Discuss the Scope of the business?
2. Question: Define Business. What are the main Components of the business?
Answer :
BUSINESS
The word “Business” includes all human activities concerned with
earning money. In other words, business
is an activity in which various persons regularly produce or exchange goods and
services for mutual gain or profit.
earning money. In other words, business
is an activity in which various persons regularly produce or exchange goods and
services for mutual gain or profit.
COMPONENTS OF BUSINESS
Business bears the following components:
1.
Industry
Industry
2.
Commerce
Commerce
3.
Professional Services
Professional Services
INDUSTRY:
Industry is connected with the production and preparation of goods
and services. It is a place where raw material is converted into finished or
semi-finished goods, which have the ability to satisfy human needs or can be
used in another industry as a base material.
In other words, industry means that part of business activity, which is
concerned with the extraction, production and fabrication of products.
and services. It is a place where raw material is converted into finished or
semi-finished goods, which have the ability to satisfy human needs or can be
used in another industry as a base material.
In other words, industry means that part of business activity, which is
concerned with the extraction, production and fabrication of products.
KINDS OF
1. PRIMARY INDUSTRY
Primary
industry is engaged in the production or extraction of raw materials, which are
used in the secondary industry. Primary industry can be divided into two parts:
industry is engaged in the production or extraction of raw materials, which are
used in the secondary industry. Primary industry can be divided into two parts:
a) Extractive Industry b) Genetic Industry
(a) Extractive Industry:
Extractive
industries are those industries, which extract, raise or produce raw material
from below or above or above the surface of the earth. For example, fishery, extraction of oil, gas
and coal etc.
industries are those industries, which extract, raise or produce raw material
from below or above or above the surface of the earth. For example, fishery, extraction of oil, gas
and coal etc.
(b) Genetic Industry
Genetic industries
are those, which
are engaged in
reproducing and multiplying
certain species of animals and plants.
For example, poultry farm, fishing farm, dairy farm, plant nurseries
etc.
are those, which
are engaged in
reproducing and multiplying
certain species of animals and plants.
For example, poultry farm, fishing farm, dairy farm, plant nurseries
etc.
2. SECONDARY INDUSTRY
These
industries use raw materials and make useful goods. Raw material of these industries is obtained
from primary industry. Secondary industry can be divided into three parts:
industries use raw materials and make useful goods. Raw material of these industries is obtained
from primary industry. Secondary industry can be divided into three parts:
a) Constructive Industry
b) Manufacturing Industry c) Services Industry
(a) Constructive Industry
All
kinds of constructions are included in this industry. For example, buildings, canals, roads,
bridges etc.
kinds of constructions are included in this industry. For example, buildings, canals, roads,
bridges etc.
(b) Manufacturing Industry
In
this industry, material is converted into some finished goods or semi-finished
goods. For example, textile mills, sugar
mills etc.
this industry, material is converted into some finished goods or semi-finished
goods. For example, textile mills, sugar
mills etc.
COMMERCE
Commerce
is the second component of business. The term “commerce” includes all
activities, functions and institutions, which are involved in transferring
goods, produced in various industries, from their place of production to
ultimate consumers.
is the second component of business. The term “commerce” includes all
activities, functions and institutions, which are involved in transferring
goods, produced in various industries, from their place of production to
ultimate consumers.
In
the words of Evelyn Thomas:
the words of Evelyn Thomas:
“Commercial
occupations deal with the buying and selling of goods, the exchange of
commodities and distribution of the finished goods.”
occupations deal with the buying and selling of goods, the exchange of
commodities and distribution of the finished goods.”
In
simple words, “trade and aids to trade” is called commerce.
simple words, “trade and aids to trade” is called commerce.
SCOPE OF COMMERCE
The
scope of commerce can be explained as:
scope of commerce can be explained as:
1. Trade
2. Aids to Trade
1. TRADE
Trade
is the whole procedure of transferring or distributing the goods produced by
different persons or industries to their ultimate consumers. In other words, the system or channel, which
helps the exchange of goods, is called trade.
is the whole procedure of transferring or distributing the goods produced by
different persons or industries to their ultimate consumers. In other words, the system or channel, which
helps the exchange of goods, is called trade.
TYPES OF TRADE
There
are two types of trade:
are two types of trade:
(a)
Home trade (a) Foreign
trade
Home trade (a) Foreign
trade
(a) Home Trade
The
purchase and sale of goods inside the country is called home trade. It is also known as ‘domestic’, ‘local’ or
‘internal trade’. Home trade has two types: (i) Wholesale Trade (ii) Retail Trade
purchase and sale of goods inside the country is called home trade. It is also known as ‘domestic’, ‘local’ or
‘internal trade’. Home trade has two types: (i) Wholesale Trade (ii) Retail Trade
(i)
Wholesale Trade
Wholesale Trade
It
involves selling of goods in large quantities to shopkeepers, in order to
resale them to the consumers. A wholesaler is like a bridge between the
producers and retailers.
involves selling of goods in large quantities to shopkeepers, in order to
resale them to the consumers. A wholesaler is like a bridge between the
producers and retailers.
(ii)
Retail Trade
Retail Trade
Retailing
means selling the goods in small quantities to the ultimate consumers. Retailer is a middleman, who purchase goods
from manufacturers or wholesalers and provide these goods to the consumers near
their houses.
means selling the goods in small quantities to the ultimate consumers. Retailer is a middleman, who purchase goods
from manufacturers or wholesalers and provide these goods to the consumers near
their houses.
(b) Foreign Trade
Trade
or exchange of goods and services between two or more independent countries for
their mutual advantages is called foreign trade. It is also called international trade. Foreign trade has two types:
or exchange of goods and services between two or more independent countries for
their mutual advantages is called foreign trade. It is also called international trade. Foreign trade has two types:
(i) Import Trade
(ii) Export Trade
(i)
Import Trade:
Import Trade:
When
goods or services are purchased from other country it is called import trade.
goods or services are purchased from other country it is called import trade.
(ii)
Export Trade:
Export Trade:
When
goods or services are sold to any other country it is called export trade.
goods or services are sold to any other country it is called export trade.
(ii) Enter-port Trade:
When
goods are purchased from foreign country and reached at port and sold to an
other country it is called enter-port trade.
goods are purchased from foreign country and reached at port and sold to an
other country it is called enter-port trade.
2. AIDS TO TRADE
Trade
means buying and selling of goods, whereas, aids to trade means all those
things which are helpful in trade.
means buying and selling of goods, whereas, aids to trade means all those
things which are helpful in trade.
a)
Banking
Banking
b)
Transportation
Transportation
c)
Insurance
Insurance
d)
Warehousing
Warehousing
e)
Agents
Agents
f)
Finance
Finance
g)
Advertising
Advertising
h)
Communication
Communication
(a) Banking
In
daily business routine, commercial banks and other financial institutions help
the seller and the buyer in receiving and the buyer in receiving and making
payments.
daily business routine, commercial banks and other financial institutions help
the seller and the buyer in receiving and the buyer in receiving and making
payments.
(b) Transportation
The
goods which are manufactured in mills and factories, reach the consumers by
different means of transportation like air, roads, rails, seas etc.
goods which are manufactured in mills and factories, reach the consumers by
different means of transportation like air, roads, rails, seas etc.
(c) Insurance
The
transfer of goods from one place to another is not free from risk of loss. There is a risk of loss due to accident,
fire, theft etc. The insurance companies
help out the traders with this problem through insurance policy.
transfer of goods from one place to another is not free from risk of loss. There is a risk of loss due to accident,
fire, theft etc. The insurance companies
help out the traders with this problem through insurance policy.
(d) Warehousing
The
manufacturers today, produce goods in large quantity. Therefore, a need for warehouses arises in
order to store the manufactured goods.
manufacturers today, produce goods in large quantity. Therefore, a need for warehouses arises in
order to store the manufactured goods.
(e) Agents
They
are the persons who act as the agents of either buyer or seller. They perform these activities for commission.
are the persons who act as the agents of either buyer or seller. They perform these activities for commission.
(f) Finance
A
large amount is needed to set up an industry.
Financial institutions provide long-term finance to the producers. The producers alone are unable to
manufacture goods without financial help.
large amount is needed to set up an industry.
Financial institutions provide long-term finance to the producers. The producers alone are unable to
manufacture goods without financial help.
(g) Advertising
The
consumer may sometimes, not know about the availability of goods in the
market. The producer must sell his goods
in order to remain in business.
Advertisement is an easy way to inform the large number of customers
about the goods. This can be done
through TV, newspapers, radio etc.
consumer may sometimes, not know about the availability of goods in the
market. The producer must sell his goods
in order to remain in business.
Advertisement is an easy way to inform the large number of customers
about the goods. This can be done
through TV, newspapers, radio etc.
(h) Communication
The
producers, wholesalers, retailers, transporters, banks, warehouse-keepers,
advertisers and consumers live at different place. This post office, telephone and other similar
media is very useful for promotion of trade and industry.
producers, wholesalers, retailers, transporters, banks, warehouse-keepers,
advertisers and consumers live at different place. This post office, telephone and other similar
media is very useful for promotion of trade and industry.