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Explanation:
In any business, one of the main motive is to earn profit. No business can survive for long without earning profit. Moreover, a part of the profit is also required to be re-invested in the business for growth prospects. That is why businessmen make all possible efforts to maximise profits, by increasing the volume of sales or reducing costs.
Explanation:
The various types of industries are :
Explanation:
Business refers to those economic activities, which are connected with the production or purchase and sale of goods or supply of services with the main object of earning profit. The term business is derived from the word ‘busy’ which means ‘engaged in an activity.
Explanation:
Business is considered to be an economic activity because it is undertaken with the object of earning money or livelihood and not because of love, affection, sympathy or any other sentimental reason.
Explanation:
The term ‘business risks’ refers to the possibility of inadequate profits or even losses due to uncertainities or unexpected events. There are two types of risk – speculative and pure. Speculative risk involve both the possibility of gain as well as the possibility of loss. It arises due to changes in the market conditions including fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers. Pure risks involve only the possibility of loss or no loss.The chance of fire, theft, strike are examples of pure risks.
Causes of business risks may be classified as follows:
Explanation:
Industry may be broadly classified as:
a) Primary Industries – These include activities concerned with extraction and production of natural resources; reproduction and development of living organisms, plants, etc. These industries may be further sub divided into extractive and genetic industries.
Extractive industries draw out products from natural sources. Genetic industries engage in breeding plants and animals for their use in further reproduction.
b) Secondary Industries – These are concerned with using the materials which have already been extracted at the primary stage. These industries process materials derived from the primary industries to produce goods for final consumption or for further processing by other industrial units. These may be further divided into manufacturing and construction industries.
Manufacturing industries are engaged in producing goods through processing of raw materials. These are further sub divided into analytical, synthetical, processing and assembling industries. Construction industries are involved in the construction of buildings, dams, bridges, roads, etc. by using products of extractive and manufacturing industries.
c) Tertiary Industries – These industries provide support services to primary and secondary industries as well as activities relating to trade. As business activities, these may be considered as a part of commerce since auxiliaries to trade assist in trade. These include: banking, warehousing, insurance, transportation, communication, packaging and advertising.
Explanation:
Comparison of business with profession and employment can be explained with the help of the chart as below-
Basis |
Business |
Profession |
Employment |
Mode of establishment |
Depends on an entrepreneur’s decision |
Obtaining membership of a professional body and certificate of practice |
Receiving appointment letter and service agreement |
Qualifications required |
Formal qualifications not required |
Professional qualifications and training essential |
Qualifications and training as prescribed by employer required
|
Reward or return |
Profit |
Professional fee |
Salary
|
Risk of loss |
Greater degree of risk of loss |
Some risk |
No risk
|
Explanation:
The term ‘business risks’ refers to the possibility of inadequate profits or even losses due to uncertainities or unexpected events.
The following are the characteristics of business risks:
Explanation:
Services which facilitate the purchase and sale of goods is called auxiliaries to trade and include transport, banking, insurance, communication, advertisement, packaging and warehousing. The following are the two business activities which are auxiliaries to trade –
Explanation:
Business activities can be classified into industry and commerce.
Industry: It refers to economic activities which are connected with conversion of resources into useful goods. It is concerned with the production or processing of goods and materials. Industry is used for activities in which mechanical appliances and technical skills are involved. Example , cotton textile industry refers to all manufacturing units producing textile goods from cotton.
Commerce: It includes two types of activities, viz.,i) trade and ii)auxiliaries to trade. Buying and selling of goods is termed as trade and activities required to facilitate the purchase and sale of goods are termed auxiliaries to trade and include banking, transport, insurance, communication, advertisement, packaging and warehousing.
Explanation:
There are three types of economic activities. They are:
Survival of the business largely depends upon the ability of the entrepreneurs to anticipate problems and solve them with minimum cost.
Some of the basic factors which must be considered while starting a business are as follows –
Explanation:
Since a business has to balance a number of needs and goals, it requires multiple objectives. Objectives have to be specific in every area and sphere of business. Objectives define in concrete terms what the business is going to do. Objectives also enable the business to analyse their own performance and take steps to improve their performance in future.
The following are five multiple objectives that a business tries to achieve-
Explanation:
Commerce provides the necessary link between producers and consumers. Commerce include two types of activities- trade and auxiliaries to trade. Buying and selling of goods is termed trade and activities that are required to facilitate the purchase and sale of goods is called auxiliaries to trade. It includes all those activities which involves the removal of hindrances in the process of exchange .
The various branches of auxiliaries to trade are:
a) Transport – It facilitates movement of raw materials to the place of production and finished products from factories to places of consumption. It creates ‘place utility’ and helps a producer to increase production and earn a remunerative price.
b) Banking – Funds are required for running business activities and to meet day to day expenses, which can be obtained from banks. Banks help in overcoming the problem of finance by providing loans, overdrafts or cash credit.
c) Warehousing – It refers to storage of goods. Goods have to be stored for some time before transportation by manufacturers, wholesalers and retailers. It creates ‘time utility’.
d) Advertising – It helps in providing information about the available goods & inducing customers to buy specific items. It persuades the potential customers by making them aware of a product’s availability, usage, quality, price etc.
e) Insurance - It provides security against various risks faced by a business. Assets of the business, stocks of raw materials, finished goods and employees are required to be protected from the risks. Hence, insurance makes trade and business secure by making provision against all probable losses.
Business refers to an occupation in which people regularly engage in activities related to purchase, production and /or sale of goods and services with the view to earning profits. The following are the main characteristics of business:
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