Business Studies, Class XI, Chapter summary.

1. NATURE AND
PURPOSE OF
BUSINESS
Pankaj Saikia
PGT-Commerce
Modern English School

2. Pankaj Saikia-2021
HUMAN ACTIVITIES
ECONOMIC ACTIVITIES
BUSINESS PROFESSION EMPLOYMENT
NON-ECONOMIC ACTIVITIES
PERSONAL SOCIAL RELIGIOUS
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3. ECONOMIC ACTIVITIES
• The human activities that are performed
with an intent to earn some return the
value of which can be measured in terms
of money is called Economic Activities.
Example:-
* Doctor treating a patient for fee.
* Worker working to get salary or wage.
* Vendor selling fruits to earn profit.
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4. NON-ECONOMIC ACTIVITIES
• The human activities that are performed with
an intent to get something in return the value
of which can not be measured in terms of
money is called Non-Economic Activities.
Such activities are performed to get some
psychological or physiological satisfaction.
Example:-
* Taking part in religious activity.
* Doing charity for flood victims.
* Exercise and playing for healthy life.
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5. BUSINESS
• Business refers to those
economic activities that involve
in production and distribution
of goods and services on
regular basis to satisfy the need
of people with a motive of
earning profit.
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6. FEATURES OF BUSINESS
1. Business is an economic activity.
2. It involve production or procurement of good or
service.
3. It involve sale or exchange of goods or services.
4. Aims at satisfaction of customer needs and wants.
5. Activities are undertaken on a regular basis.
6. Presence of risk and uncertainty of return.
7. Undertaken for the purpose of earning profit.
8. Business creates utility.

7. PROFESSION
• Profession is an economic activity which
involve rendering specialized services with
the use of special skill and knowledge to
satisfy human needs on regular basis and
to get remunerated by means of fees.
• Example:-
Doctors, Lowers, Chartered Accountants, etc.
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8. FEATURES OF PROFESSION
1. Profession requires a special skill or knowledge on a
particular field. (Medicine, Legal, Accounts)
2. Special skills are developed through formal
education and training. ( MBBS, LLB, CA)
3. Professionals are registered member of a
professional body or association. (IMA, BCI, ICAI)
4. Professionals are abide by the code of conduct fixed
by professional body.
5. They get remunerated by way of professional fee.
6. Gives priority on service motive rather profit.

9. EMPLOYMENT
• Employment is an economic activity in
which people work for others under a
contract of employment and get
remunerated periodic basis by means of
wage or salary.
Example:-
Police officer.
Bank Manager.
Administrative Officer
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10. FEATURES OF EMPLOYMENT
1. Based on contract of employment between employer
and employee.
2. Involves performing duties as assigned by employer.
3. No capital investment is required.
4. Get reward or return for the service by means of
wage or salary.
5. Responsibility can not be transferred to others.
6. Abide by the rules of the employer or organisation.
7. Eligibility or qualification for employment is fixed
by the employer or industry.

11. OBJECTIVES OF BUSINESS
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Economic objectives
Profit earning
Expansion and growth
Innovation
Effective use of resource
Social objectives
Supply quality products
Fair trade practices
Employment Generation
Welfare of employees
Community service
Environment protection
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12. PROFIT IS THE MAIN OBJECTIVE
Profit earning is the main objective of
business because-
* Profit is the reward for bearing risk.
* Source of livelihood for entrepreneur.
* Necessary for expansion and growth.
* Profit is a success criteria for business.
* Profit earning is linked to goodwill and
reputation of a business
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13. CAN PROFIT BE THE SOLE OBJECTIVE
Profit earning is the main objective but it should
not be the only objective of a business because-
* For more profit the interest of the
employees may be overlooked.
* Only profit motive may lead a business in
involving unfair trade practices.
* Profit maximization may be very pleasant for
short run but may harmful in long run.
* Excess focus on profit maximisation may
result undue pressure on available resources.
* High profit invites more competitors in the
business.
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14. SUCCESS CRITERIA FOR BUSINESS
Peter F Drucker suggested eight key areas on
which a business should work upon in order to
achieve success.
• Market Standing.
• Innovation.
• Productivity.
• Physical and financial resources.
• Profitability.
• Managerial performance.
• Workers attitude and performance.
• Social Responsibility.
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15. CLASSIFICATION OF BUSINESS
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Business
Commerce
Trade
Auxiliary
to Trade
Industry
Primary Secondary Tertiary

16. INDUSTRY
Industry includes those economic activities
that involve in extraction, production,
conversion, or assembling of goods or/and
services.
Industry changes the form of goods from one
to another in order to enhance utility.
Industries are broadly classified in to-
* Primary sector.
* Secondary Sector. and,
* Tertiary Sector.
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17. PRIMARY SECTOR INDUSTRIES
Primary sector industry includes those
economic activities that involve in
production of natural goods by extraction
or by using some biological or natural
process.
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Primary Industries
Extractive Genetic

18. EXTRACTIVE INDUSTRY
Industry includes those economic
activities that involve in production of
natural goods through direct extraction or
collection from various available sources
of nature.
Example of Extractive Industries:-
* Mining.
* Lumbering,
* Fishing and Hunting. Etc.
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19. GENETIC INDUSTRY
Industry includes those economic
activities that involve in production or
generation of natural goods by using
some natural process.
Example of Genetic Industries:-
* Agriculture.
* Dairy Farming.
* Fish Hatchery. Etc.
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20. SECONDARY SECTOR INDUSTRIES
Secondary sector industry includes those
economic activities that involve in
processing of natural goods produced by
primary sector. It adds form utility to
goods.
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Secondary Industries
Manufacturing Construction

21. MANUFACTURING INDUSTRY
Manufacturing Industry includes those
economic activities that produces
manufactured goods by changing the form or
splitting or assembling some other goods.
Manufacturing Industries includes:-
* Analytical Industry:- Oil Refinery.
* Synthetic Industry:- Cement Industry.
* Processing Industry:- Sugar Industry.
* Assembling Industry:- Automobile Industry.
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22. CONSTRUCTION INDUSTRY
Construction
Industry includes
those economic
activities that are
concerned with
making or
constructing
buildings, dams,
bridges, canals,
roads etc,
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23. TERTIARY OR SERVICE INDUSTRY
Manufacturing Industry includes that renders
services to facilitate production and smooth
flow of goods and services and supply of
necessary services for a comfortable living of
people.
Example of Tertiary Industries:-
* Banking.
* Insurance.
* Transportation.
* Warehousing.
* Entertainment.
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24. COMMERCE
Commerce includes all those activities that
are involved in transfer of goods and
services from the point of production to
the point of consumption.
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Commerce
Trade
Internal
Trade
External
Trade
Auxiliary to
Trade
Transportation Banking Storing Insurance Advertising

25. FUNCTIONS OF COMMERCE
Role or functions of commerce can be
summarised as:-
* Remove the hindrance of person. (Trade)
* Remove the hindrance of place. (Transport)
* Remove the hindrance of time. (Storing)
* Remove the hindrance of risk. (Insurance)
* Remove the hindrance of Finance. (Bank)
* Remove the hindrance of information.
(Advertising)
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26. TRADE
Trade refers to the branch of commerce
that involve in dealing or exchange
(buying and selling) of goods or services.
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TRADE
Based on Area of
operation
Internal
Trade
External
Trade
Based on volume of
trade
Wholesale
Trade
Retail Trade

27. WHOLESALE AND RETAIL
Wholesale Trade:- Wholesale trade refers
to buying and selling of limited variety of
goods at bulk quantity. Here the traders
purchase goods from the producers in large
quantity and sells to the retailers in
relatively smaller quantity.
Retail Trade:- Retail trade refers to
purchase of goods from the wholesaler in
large quantity and sells to the consumers
in usable quantity.
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28. INTERNAL AND EXTERNAL TRADE
Internal Trade:- Internal trade refers to the
exchange of goods and services within the
geographical or political frontier of a
country. It is also known as Home Trade.
External Trade:- External trade refers to the
exchange of goods and services between
two or more countries. It is also known as
International Trade. It includes Export,
Import and Entrepot.
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29. EXPORT, IMPORT AND ENTREPOT
Export:- Export means buying goods or
services from foreign countries to satisfy
the need of the domestic market.
Import:- Import means selling of goods or
services to foreign country from the
domestic market.
Entrepot:- Entrepot means buying goods or
services from one foreign market in order
to sell to the market of some other
country.
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30. AUXILIARIES TO TRADE
Auxiliaries to trade or business means the
activities which assist industries and trade.
They provide infrastructure and facilitate
the smooth production and distribution of
goods and services.
Example:-
Transportation, Communication, Banking,
Finance, Insurance, Warehousing,
Advertising Etc.
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31. BUSINESS RISK
Business risk means the possibility of
occurrence of some undesirable
consequence or event which may
result in loss in a business. All business
irrespective of its nature and size must
exist with some risk. The degree of risk
to be borne may very with the size and
nature of business.
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32. CAUSES OF BUSINESS RISK
* Natural Causes:- flood, cyclone, fire, etc.
* Human Causes:- theft, pilferage, fraud, etc.
* Economic Causes:- supply, competition, etc.
* Technical causes:- technological obsolesce,
power failure, etc.
* Political Causes- industrial policy, fiscal
policy, etc.
* Legal Causes:- Change in Law. Court
directive, etc.
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33. THANKS
WELCOME FOR CONSTRUCTIVE FEEDBACK.
Pankaj Saikia
PGT-commerce
Modern English School. Guwahati- 19
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