1.1 INTRODUCTION
In our day-to-day life, we use words
like business, commerce, trade. industry, etc. quite often. These words have a
definite meaning in 'Business Organisation'. In this introductory unit, you
will learn the exact connotation of such terms. You will also learn the
distinction between economic and non-economic activities, objectives of
business, the classification of business activities, importance of
'organisation and the role of entrepreneur in business.
1.2 HUMAN ACTIVITIES
All of us participate in various kinds
of works from the time we get up from bed in the morning till the time we go to
sleep at night. We get up from bed in the morning; brush our teeth, take bath
and get breakfast. Then children go to school or college to study, elders go
to office or factory or shop or field
to work, and housewives work at home. In the evening all of us come back home,
take food and sleep. All the activities in which we, thus, participate from
morning till night are called 'human activities'.
If you closely examine the human
activities, you will find that some of these produce economic benefits e.g.,
working in a factory or in an office or at the farm,. Some other activities
like brushing teeth, taking breakfast, going to school, playing, cooking food
for the family, etc., do not produce any direct economic benefits. Thus
we can classify the human activities into two groups: (1) no-economic
activities, and (2) economic activities. .
1 Non-economic
activities: These
are the activities which are conducted by the human beings due to love and
affection, social obligation, religious obligation, physical requirement,
patriotism, etc. but not for earning money. The housewife cooking for the family,
children going to school and playing games, people going to a temple or a mosque
for prayer, a social worker working for the uplift of the poor, etc., are some
such examples. Persons who participate in such activities do not get any
direct economic benefit.
2. Economic Activities: These are activities
which are undertaken by human beings for earning money or livelihood. These
economic activities are concerned with production, exchange and distribution of
goods and services. For example, a doctor working in the hospital, a teacher
working in a school, an employee going to his office, a farmer working in the
field, etc. They are all doing this to earn his or her livelihood or to acquire
wealth.
We can further classify these economic
activities into three groups: (a) business, (b) profession, and (c) employment.
a) Business: Any
activity carried primarily with the object of earning profit can be called a
business activity. This objective of earning profit is achieved by
production and/or exchange of want satisfying goods and services. Therefore, we
can define business as "any activity concerned with the production and/or
exchange of want satisfying goods and services carried with a view of earning
profit". Production of soaps, sale of eggs, production of TV sets,
transport, etc., are some examples of business. A person who is engaged in
business is called a businessman or entrepreneur. Similarly, a firm formed for the
purpose of carrying a business activity is called a business enterprise or a
business firm. You will learn in detail about business later in this unit.
b) Profession: An
activity which involves the rendering of personalised services of a specialised
nature, based on professional knowledge, education and training is called a
profession. Services rendered by doctors, lawyers, chartered accountants, etc.,
come under this category. Generally, for each category of profession, there
would be a professional body. For example, Bar Council of India is the
professional body of lawyers which guides and regulates the law profession in
India. The professional body prescribes the nature and type of educational
qualifications and training required to practice the concerned profession. A
professional should become the member of concerned professional body and
follow the code of conduct prescribed by such body. Professionals charge some
fee for the professional service they render.
C) Employment: Any activity
assigned to a person by the employer under an agreement or rules of service
comes under the category of employment. A person who undertakes such
activity is called employee. For performing such activity, the employee
receives remuneration from the employer in the form of wage or salary,
allowance, bonus, etc. The employment is also called 'service'. Working in a
factory, office, hotel, college, etc., are a few examples of employment. Even
professionally qualified persons also work as employees in various
organisations. For example, doctors employed in government/private hospitals,
engineers employed in a factory, etc.
Although business, profession and
employment are distinguished from each other, they are also
inter-dependent. Business enterprises provide employment to a large number of
people in the, country. Similarly, professionals like engineers, chartered
accountants, cost accountants, management consultants, legal experts, doctors,
etc., work with the business firms for tackling complicated technical problems.
Thus, business enterprises provide 'employment opportunities to professionals
and general public. At the same time the success of the business is dependent
on its employees and professionals working with it.
1.3 BUSINESS
You have learnt that the entire range
of economic activities of the human beings could be classified into business,
profession and employment. Among these three categories, profession and
employment, though important, are outside the scope of this course. We are
primarily concerned with business. So, let us discuss about business in more
detail.
1.3.1 Essential
Features of Business
You have learnt that business refers
to the human activities engaged in production and/or exchange of want
satisfying goods and services carried with the intention of earning profits.
Now let us study the important characteristics of business. We can list the
following five broad features of business.
1. Dealings in goods and services: Business
deals with goods and services. The goods may be consumer goods such as sweets,
bread, cloth, shoes, etc: They may be producer's goods such as machinery,
equipment, etc., which are used to produce further goods for consumption.
Business also deals with services such as transport, warehousing, banking,
insurance, etc., which are intangible and invisible goods.
2. Production and/or exchange: You can call an
economic activity a 'business' only when there is production or transfer or
exchange or sale of goods or services for value. If goods are produced for
self-consumption or presentation as gift, such activities shall not be treated
as business. In a business activity, there must be two parties i.e., a buyer
and a seller. Such activity should concern with the transfer of goods or
exchange of goods between a buyer and a seller. The goods may be bartered or
exchanged for money.
3. Continuity and regularity in dealings: A
single transaction shall not be treated as business. An activity is treated as
business only when it is undertaken continually or at least recurrently. For
example, if a person sells his residential house, it is not considered as
business. If he repeatedly buys houses and sells to others, such activity comes
under business. But how frequently the transaction should occur depends on the
nature of the activity. For example, a ship building company takes a long time
to manufacture and sell a ship. At the same time, a vegetable vendor purchases
vegetables from the market in the morning and sells out to his customers by
evening. But both these activities are treated as business.
4. Profit
motive: Earning profit is the primary motive of business. This is not to
undermine the importance of the element of service in business activity. In
fact a business will flourish only when it is able to serve its customers to
their satisfaction. Profits are essential to enable the business to survive, to
grow, expand, and to get recognition.
5. Element of risk: In every business,
there is a possibility of incurring loss. This possibility of incurring loss is
termed as risk. The element of risk exists due to a variety of factors
which are outside the control of the business enterprise. There are two kinds
of risks. (1) Risks whose probability can be calculated and can be insured.
Losses due to fire, floods, theft, etc., are some examples. (2) Risks whose
probability cannot be calculated and which cannot be insured against, e.g.,
changing technology, fall in demand, changing fashions, short supply of raw
materials, etc. These risks are to be completely born by the enterprise.
1.3.2 Objectives of
Business
You have learnt that the primary
objective of business is to earn profit. Although profit plays an important
role as a criterion of success, business may not exist for long with the sole
objective of earning profit. As stated by Henry Ford, "business is not
mere money chasing ' but it also should aim at serving the
community". According to Urwick,
"profit can no more be the objective of a business than eating is
the objective of living". Thus, serving the community is regarded as
another important objective of business. In fact, some authors regard 'service
to community' as the major objective of business and state that this provides
the main justification for the existence of business as an important human
activity. Therefore, while profit is necessary for the businessman to stay in
business, he ought to aim at something more for its survival and growth. 'The
objectives of business could be listed under three broad headings: (1) economic
objectives, (2) social objectives, and (3) human objectives.
Basic Concepts and Forms of Economic
Objectives: Basically being an economic activity, primary objectives of
business are economic. Some of the main economic objectives are :
1. Earning of satisfactory profits.
2. Exploring new markets and creation
of more customers.
3. Growth and expansion
of business operations of the firm.
4. Making innovations and improvements
in goods and services so that customers get improved and more economic goods
and services.
Social Objectives: Business, being a
part of the society, has obligations towards the society also. Some major
social objectives are :
1. Providing more and more employment
opportunities to the people in the country.
2. Supply of quality goods to the
community.
3. Providing goods at
reasonable prices.
4. Ensure fair returns to investors.
5. Avoidance of
profiteering and unfair practices.
6. Production of goods in accordance
with national interests and priorities.
Human Objectives: Business activity
is, generally, carried out through employees who are human beings. In fact, the
efficiency and the success of the business enterprise depends on the motivation
and ability of its employees. Therefore, business must also have some human
objectives to safeguard the interests of its employees. Some of the major human
objectives are :
1. Fair deal to employees in terms of
wages and incentives.
2. Providing better working conditions
and environment to the employees.
3. Provide job satisfaction.
4. Provide the employees more and more
promotional/growth opportunities.
1.3.3 Business
Distinguished from Profession and Employment
You have learnt about the essential
characteristics of business. Keeping in mind these characteristics, let us now
analyse how business is different from profession and employment.
Read Table 1.1 carefully. You will
find the distinct features of business. profession and employment.
Table 1.1
Characteristics
of Business, Profession and Employment
Features
|
Business
|
Profession
|
Employment
|
1. Establishment
|
An individual or a
group of individuals decides to start business. Legal formalities like
registration, etc. are to be fulfilled
|
Acquire required
qualifications, training etc. Become the member of concerned professional
body
|
Enter into service
contract with the employer.
|
2. Qualifications
|
Specific
qualifications are not required
|
Professional
knowledge and training in the specific field is necessary
|
In some cases
specific qualifications required and in some other cases not required.
|
3. Investment
|
Capital is
required, Actual amount depends on the nature of business.
|
Some amount of
capital required for equipment and establishment of office.
|
Capital not
required.
|
4. Nature of work
|
Production and/or
exchange of goods and services.
|
Renders
personalized services of a specialized nature to the clients.
|
Performing the work
assigned by the employer under the service contract.
|
5. Motive
|
Mainly profit
motive
|
Although fee is
charged. Service is the main motive.
|
No specific motive
Mainly to earn livelihood.
|
6. Reward
|
Profit
|
Professional fee
|
Wage or salary
|
7. Transferability
of ownership interest
|
By following
required legal formalities, business can be transferred to others.
|
Not possible to
transfer
|
Not possible to
transter
|
Risk
|
There is risk of
loss
|
Possibility of not
getting enough fee to meet the expenditure on establishment
|
No risk, Employee
gets wage or salary regularly so long as the farm continues in operation.
|
1.3.4 Classification
of Business
You just recollect what we have stated
about business. We stated that business is concerned with production and/or
exchange of goods and services with the intention of earning profit. It states
that business is concerned with two aspects i.e, production and exchange. Based
on this, we may classify business activities into two categories. In the first
category we can group all the business activities relating to production.
Similarly, all the activities relating to exchange may be grouped under the
second category. The first category is known as 'industry', while the second
category is called 'commerce'.
Check Your Progress A
1. What is the main distinction
between the economic activity and non-economic activity?
2 What is business?
3 What is profession?
4 What is employment?
5 Classify the
following activities into business, profession and employment.
Activity Classification
i) Selling vegetables. ..................................................
ii) A person working in a medical shop
as salesman .............
iii) A doctor working in a government
hospital. ...................
iv) A chartered accountant started
private practice..............
V) Manufacture of biscuits. ...................................
1.4 INDUSTRY
As you have learnt,
industry refers to that part of business activities which is concerned with The
production of want satisfying goods through utilisation of available material
resources. Industry utilises the natural resources and brings them into the
form useful for final consumption or further use. It means that the industrial
activity aims at ensuring the supply of goods in that form which suits the
objects, needs and convenience of the persons expected to use them. Thus,
industry creates form utility to goods. For example, farms, factories, mines,
etc:, make available a wide range of goods. These goods cater to the needs and
convenience of the people. In a nut shell, the activities of human beings
engaged in extraction, production, processing, construction and fabrication of
products come under industry. There is another explanation for industry. Under
this second explanation, industry means a group of factories usually
specialising in a particular product line. For example, all the factories which
produce fertilizer are collectively called fertiliser industry. Similarly, all
automobile factories together constitute automobile industry. But in the
present context, this approach is not relevant. We adopt the first approach.
1.4.1 Classification
of Industry
There are various approaches of
classifying industries. All these approaches are listed below.
1. On the basis of the nature of
activity
a) Extractive industries
b) Genetic industries
c) Manufacturing
industries
d) Construction industries
2 On the basis of the nature of goods
produced
a) Consumer goods industries
b) Producer goods industries
3 On the basis of the level of
investment
a) Heavy industries
b) Light industries
4. On the basis of size
of the activity
a) Small scale industries
b) Large scale industries
5 On the basis of area
of operations
a) Regional industries
b) National industries
C) Multinational industries
Since the theme of the discussion in
this unit is centred around human activity, the classification based on the
nature of activity is more appropriate for us. So, let us discuss about the
first classification in detail.
a) Extractive
Industries: Activities
engaged in the discovery and extraction of natural resources like minerals,
animals, plants, trees, etc., from the surface or beneath the surface of the
earth or air or water come under this category. Extractive industries are also
called exhaustive industries because with every attempt there is a depletion of
resources and this wealth exhausts. Mining, farming, quarrying, hunting,
fishing, etc., come under this category.
b) Genetic Industries: Activities
which are concerned with reproducing and multiplying plants and animals with
the objective of earning profit from their sale come under this category.
Examples are nurseries which multiply and sell plants, poultry farms, cattle
breeding farms, fish culture, etc. There is one important difference between an
extractive industry and a generic industry.
In the case of extractive industry,
man cannot add to the wealth which he withdraws from the earth; sea, and air.
However, in the case of genetic industry, man not only adds to the growth but
also reproduces the nature made goods.
C) Manufacturing
Industries: These
types of industries are engaged in the conversion or transformation of
raw-materials and semi-finished materials into finished products. Generally,
the products of extractive industries become raw-materials for manufacturing
industries. In other words, manufacturing industries create 'form utility' to
the products of extractive industries. Cement industry, sugar industry, cotton
textile industry, iron and steel industry, fertilizer industry, etc., are some
examples for manufacturing industries.
d) Construction
Industries: These
industries are engaged in the construction activities like the construction of
buildings, bridges, dams, roads, canals, railway lines, etc. These industries
consume the products of manufacturing industries (e.g., bricks, cement, iron
and steel) and extractive industries (e.g., quarries, wood). The products of
construction industries are immovable. They are erected, built or fabricated at
a fixed site.
1.5 COMMERCE
You have learnt that the business
activities are classified into: 1) industry, and 2) commerce. You also learnt
that the industrial activities are concerned with the production of want
satisfying goods and services. Unless these goods and services are made
available to those who need them, they may not fulfill their objectives i.e,
satisfying human wants. Therefore, the goods produced by the industries should
be made available to the consumers at right place, right time, right quantity,
right price and in right manner. Here comes the activity of commerce to fulfill
all these requirements. All the activities which establish link between the
producers of goods and consumers of these goods, and maintain a smooth and
uninterrupted flow of goods between them come under commerce.
A smooth and
uninterrupted flow of goods and services from producer to consumer is beset
with many barriers and hindrances. For instance, goods produced by one may be
consumed by another. In such a case, unless the producer and consumer identify
each other, there is no scope for exchange of goods between them. This is the hindrance
of person.
Similarly, for buying a product,
consumers should have the knowledge about the existence of that product, its
features, etc. Therefore, there is a need to provide such information to the
consumers. This is the hindrance of
knowledge.
The hindrance of time arises
out of the time gap between the time of production and the time of consumption.
In many cases goods are produced at one place while they are consumed at
another place. So, the goods should be carried from the place of production to
the place of consumption. This gives rise for the hindrance of place. Commerce
eliminates all these hindrances and facilitates the exchange of goods between
producers and consumers. Later, in this section, you will learn in detail how
these hindrances are eliminated through various business activities which form
Part of commerce.
In a nutshell, commerce is mainly
concerned with the purchase and sale of goods, and also embraces all those
functions which are essential for maintaining smooth and uninterrupted flow of
goods and services between the buyers and sellers. Thus, there are two main
aspects in commerce: i) purchase and sale of goods, and ii) activities
essential for the smooth and uninterrupted flow of goods. Therefore, we can
classify the whole range of commerce activities into two categories :
1 ) Trade-activities of purchase and
sale.
2) Aids to Trade- activities which
facilitate the smooth and uninterrupted flow of goods.
1.5.1 Trade
You have already learnt that the human
activities engaged in buying and selling of goods and services come under
trade. Therefore, trade includes sale, transfer or exchange of goods
and services with the intention of
earning profit. The objective of trade is to make goods available to those
persons who need them and are willing to pay for them. Thus, trade plays
a major role in establishing contact
between the producers and the consumers and eliminates the hindrance of person.
A person who is engaged in trade is
called 'trader' or 'middleman'. Various traders operate in between producers
and consumers and remove the hindrance of person. We can classify
trade into two broad categories: I )
internal trade, and 2) external trade.
1 Internal Trade: When the trade takes
place within the boundaries of the country, you can call it 'internal trade'.
It means that both buying and selling should take place within
the country. Payment for the same is
generally made in national currency. This internal trade is also termed as
inland trade or national trade or home trade or domestic trade. On the basis of
the scale of operations, we can classify internal trade into:
a) Wholesale-trade, and b) retail
trade.
a) Wholesale Trade: Buying and selling in
relatively larger quantities is called wholesale trade. A person who is
involved in wholesale trade is called wholesaler.
b) Retail Trade: This refers to buying
and selling in relatively smaller quantities. A person engaged in retail trade
is called a retailer. Let us now discuss in some detail how these wholesalers
and retailers operate and eliminate the hindrance of person. A wholesale
trader buys goods in large quantities from the manufacturers and sells in
relatively smaller quantities to the retailers. Thus, the wholesale traders
constitute a link between the producers on the one hand and the retailers on
the other hand. Retailers, who buy goods from the wholesalers, sell them in smaller
quantities to the consumers. Thus, retail traders establish link between
wholesale traders on the one hand and consumers on the other. Thus, the
wholesalers and retailers establish a link between the producers and consumers
and eliminate the hindrance of person. However, sometimes producers may take
the services of only either wholesalers or retailers, or may establish a direct
link with the consumers. The whole chain of traders/middlemen operating in
between producer and consumer is referred to as 'channel of distribution' about
which you will learn in detail in Units 10 and 11 in this course.
2 External Trade: This is also called
'foreign trade' or 'international trade'. When the trade takes place across the
boundaries of a country, you can call such trade as external trade. In other
words, external trade refers to the trade between nations. This trade could be
in the form of exchange of one commodity for another or for money.
We can classify foreign trade into
three categories: a) import trade, b) export trade, and c) re-export trade.
a) Import Trade: when a country buys
goods from another country, it is called 'import trade'. For example, India
bought machinery from the USA. This is an import trade for India.
b) Export Trade: When a country sells
goods to another country, it is called 'Export Trade'. For example, India sells
leather goods to USSR, and tea to USA, for India such selling of goods shall be
termed as 'export trade'.
c) Re-export Trade: This is also called
'entrepot trade', When the goods are imported from one country and the same are
exported to another country, such trade is called 're-export trade'. Re-export
is done by those countries which have ports that are conveniently situated to
serve as distributing points for neighboring countries. Such countries import
large quantities of goods and re-export the same to the neighboring countries.
1.5.2 Aids to Trade
Activities which facilitates the trade
are called 'aids to trade'. Thus, all human activities which eliminate the
hindrances and facilitate the flow of goods from producers to consumers come
under aids to trade. They are also called 'auxiliaries to trade'. The whole
range of activities coming under aids to trade may be classified into five
categories: 1) transportation, 2) warehousing, 3) insurance, 4) advertising,
and 5) banking.
1. Transportation: Generally, all the
goods are not consumed at the same place where they are produced. Therefore,
goods are to be moved from the place of production to the place where they are
demanded. The activity which is concerned with such movement of goods is called
'transportation'. Thus, transportation eliminates the hindrance of place and
creates place utility to goods. Transportation can be of three types:
a) Land transportation - road, rail
b) Air transportation- aero plane
C) Water transportation-boat, ship
2. Warehousing: Goods may not be
consumed immediately after production. Normally there will be time gap between
production and consumption. This is the hindrance of time. Therefore, goods
once produced should be preserved properly till they are consumed.
Particularly, perishable goods like milk, meat, vegetables, flowers, etc.,
should be preserved very carefully. Otherwise, they get spoiled and become
useless. For this reason warehousing is recognised as yet another aid to trade.
Warehousing refers to preservation of goods to make them available as and when
needed by consumers. Thus, warehousing eliminates the hindrance of time and
provides time utility to goods.
3. Insurance: The goods may be
destroyed while in production process, or in transit due to accidents, or in
storage due to fire or theft, etc. The businessmen would like to cover these
risks. Insurance companies come to their rescue in this regard. They undertake
to compensate the loss suffered due to such risks. For this purpose, the
business has to take an 'insurance policy' and pay a certain amount regularly,
called 'premium'. Thus, insurance eliminates the hindrance of risk.
4. Advertising: Exchange of goods is
possible only when the consumers have the knowledge about the existence of a
product. This is the hindrance of knowledge. This hindrance is eliminated
through advertising. Through advertisement, producers communicate all
information about their goods to the prospective consumers and create in them a
strong desire to buy the product. Thus, advertising facilitates the flow of
goods between producers and consumers by bringing the knowledge about the
products to the consumers. Advertising is done through TV, radio, newspapers,
magazines, hoardings,
Wall posters, etc.
5. Banking: Banking facilitates
the flaw of goods by removing the hindrance of finance and credit. Now-a-days
we cannot think of business without banks. To start the business or to run it
smoothly we require money. Banks supply money. A bank is an organization which
accepts deposits of money from the public, withdrawal on demand or otherwise, and
lends the same to those who need it. Banks also provide many services required
for the business activity.
1.6 ORGANISATION
You have learnt what is a business
activity and various types of business activities like industry, trade,
transportation, banking; etc. Whatever business activity you may take up, you
have to bring together various resources like capital, machinery; raw-materials,
labour, technicians, etc. Mere presence or availability of these resources is
not enough. Such resources are to be put in action in a systematic way to
achieve its objective.
For example, take the case of textile
production. First you get some land and construct buildings, buy machinery and
install them in the buildings, employ labour and technicians to work on the
machinery, buy raw-materials (cotton, dyes, etc.), and process the
raw-materials in the factory and produce the cloth. Once cloth is
produced it is to be sold to consumers through wholesale and retail dealers.
Thus, to produce cloth you have to assemble resources such as factory, cotton,
dyes; labour, wholesalers, retailers, etc. But simple presence of these resources
may not achieve the purpose. We have to put these resources together in action very
systematically and coordinate their activities. Then only it is possible to
produce the cloth, distribute it to consumers, and get profits. This is true
with any business activity.
A business activity
becomes a reality only when efforts are made to bring the required resources
together, put them at work systematically, and coordinate their activities
properly. This is referred to as business organisation.
In the opinion of J.W. Shulze,
"organisation is a combination of necessary beings, materials, tools,
equipment, working space apparatus and finance brought together in a systematic
and effective correlation to accomplish some desired objective".
Oliver Sheldon defined it as "the
process of combining the work which individuals and groups have to perform with
the facilities necessary for its execution so that they provide the best
channels for efficient, systematic, positive and coordinated application of the
available effort".
As viewed by F.J. Wright, "organisation
is the arranging or combining of resources to achieve an economic aim--either
with the resources available to achieve the maximum result or profit, or to
achieve a given aim with the least possible expenditure of resources".
Thus, business organisation means
bringing together various components of business such as workforce,
raw-materials, machines, capital, energy, etc., putting them on work systematically,
and coordinating and controlling their activities effectively to achieve the objective
of earning profit.
Forms of Business Organisation:
Business may be owned and managed by a single man, or a group of persons
forming a partnership firm or as a joint stock company or even as a cooperative
society.
Thus, on the basis of ownership and
management, we can classify business organisation into four groups.
1 Sole proprietorship
2 Partnership firm
3 Company
4 Cooperative society
The first two categories (sole
proprietorship and partnership forms) may be called non-corporate forms of
organisations. The remaining two categories (company form and cooperative
society) may be called as corporate forms of organisations. About these forms of
organisations, you will study in detail in Units 2 and 3.
Entrepreneur: You know that the
business is carried with the primary objective of earning profits. You also
know that setting up of the business to achieve this objective requires bringing
together various resources, coordinating them and controlling all activities.
This has to be done by somebody who may conceive the idea of doing a particular
type of business, mobilise the resources and bring the organisation into
existence. Such a person who does all this is called an entrepreneur. He is the
one who also bears the risk of the business. You know that although each
enterprise is started with the objective of earning profit but the possibility
of loss cannot be ruled out. Thus, the entrepreneur is the person who conceives
the business idea, brings the organisation into existence and carry on the business
activity, and prepared to bear the risk of loss. You will learn in detail about
the entrepreneur in Unit 4.
1.7 LET US SUM UP
The whole range of human activities
can be classified into: 1) economic activities, and 2) non-economic activities.
Economic activities are further divided into: 1) business, 2) profession, and
3) employment. Business is concerned with production and/or exchange of goods
and services carried with the primary objective of earning profits. Activities concerned
with the rendering of personalised services of a specialised nature come under profession.
Employment refers to the activity assigned to a person by the employer under an
agreement or rules of service.
The main features of business activity
are: 1) dealings in goods and services, 2) production and/or exchange, 3)
regularity in dealings, 4) profit motive, 5) element of risk, and 6)
enterprise. Besides earning profit, the business also serves certain economic,
social, and human objectives. Business activities are classified into:
1) industry, and 2) commerce. Industrial activities are classified into four
categories: 1) extractive industries, 2) genetic industries, 3) manufacturing
industries, and 4) construction industries.
Commerce is classified into: 1) Trade,
and 2) aids to trade. Activities concerned with buying and selling come under
trade. Activities which facilitate buying and selling, and maintain smooth flow
of goods and services come under aids to trade. These are: 1) transportation,
2) warehousing, 3) banking, 4) insurance, and 5) advertising.