Lesson 01
INTRODUCTION
CONCEPT OF BUSINESS
Literally, the word “business” means the
state of being busy. Generally, the term
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. The goods and services produced or purchased
for personal use are not
included in “business”.
DEFINITION
- According to L. H. Haney
“Business may be defined as human activities
directed toward providing or acquiring
wealth through buying and selling of goods.”
- James Stephenson says that:
“Every human activity which is engaged in
for the sake of earning profit may be called
business.”
- In the words of B. W. Wheeler
“An institution organized and operated to
provide goods and services to the society,
under the incentive of private gain” is
business.
Structural Diagram
CHARACTERISTICS
Buying and
Business
Selling
Following are the essential characteristics
of a good business:
1. Capital
Capital is the lifeblood of every
business.
It is the most essential and
important element of business. In case of
Buying and
deficiency, loans can be taken from various
Wealth
Selling
financial institutions.
2. Creation of Utility
Utility is an economic term referring to
that characteristic of a certain commodity,
which
can satisfy any human need. Business creates utility, which gives benefit
to the entire society
as well as the businessmen.
3. Dealing in Goods and Services
Every business deals with sale, purchase,
production and exchange of goods and services for
some consideration.
4. Employment
Business is a good source of employment for
its owners as well as for other people, for
example, employees, agents, transporters
etc.
5. Islamic Process
Business is an Islamic way of earning
living. Income from business is known as
profit, which
is Rizq-e-Halal. The Holy Prophet Muhammad himself did
prosperous business.
6. Motive
The motive of business is to earn
profit. Otherwise it will not be termed as
business.
7. Organization
Every business needs an organization for its
successful working. A proper
organization is
helpful in the smooth running of business
and achieving the objectives.
8. Productions or Purchase of Goods
A businessman deals in production or
purchase of goods. These goods are
supplied to the
people.
So, it is necessary that more goods should be produced so that demand of
people
may be fulfilled.
9. Regular Transaction
Business has a nature of regular dealings
and series of transactions. So, in
business, only
those transaction s included which have
regularity and continuity.
10. Risks and Uncertainty
Business involves a large volume of risk and
uncertainty. The risk element in
business keeps
a person vigilant and he tries to ward off
his risk by executing his policies properly.
11. Sale or Transfer for value
Another characteristic of business is the
sale or transfer of goods for value.
12. Social Welfare
Business does not only satisfy the producer,
but also the consumer when products are offered
for sale at low prices in markets.
NATURE OF BUSINESS
The following points state the nature of
business in brief:
1. Economic Activity
Business is an economic activity as it is
concerned with creation of wealth through the
satisfaction of human wants.
2. Human Activity
Business is an economic activity and every
economic activity is done by human beings.
Thus,
business is one of the most important human
activities.
3. Social Process
Business is run by owners and employees with
the help of professionals and customers.
Thus, business is a social process.
4. System
Business is a systematic arrangement of
various elements, which leads to the attainment of
particular objective, according to a
well-established plan.
Components and Scope of business
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.
COMPONENTS OF BUSINESS
Business bears the following components:
Industry
Commerce
Business
Industry
Commerce
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.
KINDS OF INDSTRY
1. Primary Industry
2. Secondary Industry
Industry
Primary Industry Secondary Industry
(a) Extractive (a) Construction
(b) Genetic (b) Manufacturing
(c) Services
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:
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.
(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,
diary 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:
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.
(b) Manufacturing Industry
In this industry, material is converted into
some finished goods or semi-finished goods.
For
example, textile mills, sugar mills etc.
(c) Services Industry
These industries include those industries,
which are engaged in providing services of
professionals such as lawyers, doctors,
teacher 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.
In 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.”
In simple words, “trade and aids to trade”
is called commerce.
SCOPE OF COMMERCE
The scope of commerce can be explained as:
1. Trade
2.
Aids to Trade
Commerce
Trade
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.
TYPES OF TRADE
There are two types of trade:
(a) Home trade
(b) Foreign Trade
Trade
Home Trade
Foreign Trade
(i) Wholesale Trade (ii) Import Trade
(ii) Retail Trade (ii) Export 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
(i) 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.
(ii) 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.
(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:
(i) Import Trade
(ii) Export Trade
(i) Import Trade
When goods or services are purchased from
other country it is called import trade.
(ii) Export Trade
When goods or services are sold to any other
country it is called export trade.
2. AIDS TO TRADE
Trade mans biting and selling of goods,
whereas, aids to trade means all those things which
are helpful in trade.
(a) Banking
(b) Transportation
(c) Insurance
(d) Warehousing
(e) Agents
(f) Finance
(g) Advertising
(h) 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.
(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.
(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.
(d) Warehousing
The 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.
(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.
(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.
(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.
What are the qualities of a good
businessman?
QUALITIES OF A GOOD BUSINESSMAN
The modern business is very complex. Due to scientific and technological
development,
changes are taking place very fast in every
business field. Following are the basic
personal
skills or qualities which a good businessman
must possess:
1. Ability to Plan
A businessman, if he wants to shine in
business, must have the ability to plan and organize it.
2. Activator
He had to activate his workers. If he activates his workers then this is good
for business.
3. Bold or Courage
Courage is a great asset of a
businessman. A good businessman should
be a courageous
and bold person. May be his some angry decisions gave him loss
in future, so he has to be
courageous and be bold.
4. Cooperation
A good businessman should have to cooperate
with his workers. With the help of
cooperation
with his workers he can run his business
well.
5. Courtesy
Courtesy is to business what oil is to
machinery. It costs nothing but wins a
reputation. So
businessman has to win the heart of everyone
with his polite manners.
6. Decision Making
A good businessman should be a good and
quick decision maker. Quick decision of
a
businessman is an important asset of
businessman. And businessman has to know
that his
quick decision will give him benefit or not.
7. Discipline
A good businessman should have to care about
the discipline of the business. If he
doesn’t
care about the discipline then nobody (who
concern to his business) obeys the discipline and
business can’t go well.
8. Evaluator
A businessman has to check himself that how
he is working. This thing can make the
business good in progress.
9. Foresight
A good businessman must have the quality of
foresight. He must keep in touch with
the
business world. He should move about and see what is going on
for he has to estimate new
wants and new inventions for creating fresh
demands.
10. Honesty
A businessman should be honest in dealing
with others. Honesty of a businessman
helps him
in his business.
11. Hardworking
A businessman must be hard working. Without have working no business can be
successful.
If the owner is not hard working then other
workers of the business can’t be hardworking.
12. Initiation
The business world is moving at a very fast
speed. A businessman should have the
ability to
take initiative by producing new things and
new methods of marketing the products and
services.
13. Knowledge
A good businessman should have knowledge of
his business. It should be supplemented
by
the knowledge of trade, finance, marketing,
income tax, etc.
14. Leadership
Leaders are not made, they are born; but the
businessman has to get some qualities of a
leader.
With the help of leadership a businessman can control his business and
workers.
15. Negotiator
If a businessman is a good negotiator, then
he can run his business well, because without
good communication he can’t impress his
consumer.
16. Personality
A businessman should have a graceful
personality because it can impress his customers. If
his personality is not good or not graceful
then his business can’t go well.
17. Quick Decisions
A businessman has decision-making
power. He decides on all matters in the
best interest of
the business. A businessman must have technical knowledge,
judgment power and
intelligence to take sound and quick
decisions.
18. Responsibility
A successful businessman should have to
realize his responsibilities. If he
doesn’t do his duty
then his business can’t go well.
19. Reviewer
A good businessman has to review his
mistakes, which he committed in the past, and try his
best never to do it again in his life.
20. Sound Financial Management
Sound financial management is an important
factor for successful business. Without
it no
business can go well. So a business must possess good financial
position.
21. Self-Confidence
A good businessman should have
self-confidence. Without self-confidence
he can’t make
quick decisions and business suffers a lot.
22. Tact
A good businessman should be a tactful
person. He has to handle persons or his
customers
very tactfully. It helps to earn profit in future.
23. Technical Skills
A good businessman must have the knowledge
about technical skills. He should have
complete command of specialized knowledge in
his field, which he has to perform.
No comments:
Post a Comment