BUSINESS STUDIES U-1

Short answer type questions-

Q.1. What are types of Human activities?

Ans:- There are two types of human activities:-

        i.            Economic activities.

      ii.            Non-Economic activities.

Q.2. Name the Economic activity in which specialized knowledge required?

Ans:- Profession.

Q.3. What reward businessmen gets for bearing the risk.

Ans:- Profits

Q.4. Name the occupation in which people work for other and get remuneration in return?

Ans:- Employment.

Q.5. What type of industry fishing?

Ans:- Primary industries.

Q.6. What type of industries of banking?

Ans:- Tertiary industry.

Q.7. Name the one features of business?

Ans:- Profits earning.

Q.8. State the role of profits in the business?

Ans:- Survival, Expansion and growth.

Long answer type question:-

Q.1: What is Economics Activity? With example? What are the types of Economics activity?

Ans: Economics Activity: Activities which are under taken by people with the object of earning money are known as economics activities. These activities are concerned with production, exchange and distribution of goods and services.

     Production of goods in a factory, practicing as a doctor, lawyer are the example of economics activities.

The economics activities can be divided into three categories:

          I.            Business: Business refers to those activities which are connected with the production, purchase, sale with the main objectives of earning profit.

        II.            Profession: Profession refers to the activities which required special knowledge and skill to be applied by an individual in his work to earn a living. For example, doctors are professional who are in medical profession and governed by the medical council of India.

      III.            Employment: Employment refers to activities in which individual works regularly for another person and get remunerated in return. For example, working in office, working in shop.

Q.2: What do you mean by Non-Economics Activities?

Ans: The activities which are undertaken by an individual with a motive of getting psychology satisfaction are known as non-economics activities. For examples, going to temple, charity, social services.

Q No 3: What are the differences between Economics and Non Economics activities?

Ans: The following are the main different between Economic and Non-Economic activities:-

Points of Difference	Economics Activity	Non Economics Activity
Motive	These activities are undertaken with the motive of earning money and creation of wealth.	These activities are under taken with the motive of social welfare or psychology satisfaction.
Purpose	The purpose of economic activity is creation of wealth.	The purpose of non economic activity is psychological satisfaction.
Expectation	Income is expected from these activities.	Income is not expected from these activities.
Outcome	The outcome of economic activities production of goods and services.	The outcome of non economic activity is mental satisfaction of person who undertaken them
Examples	Business, professing, employment.	Family-oriented activities, religious, social services.

Q.4: Define Business? What are the characteristics/nature/feature of Business?

Ans:  Following are the main feature of business:

1.      An economic activity: Business is considered as economic activities as it is undertaken with the objective of earning money and livelihood.

2.      Dealing in goods or services on a regular basis: Another important feature of business is that it must sell or exchange goods or services on a regular basis. Buying or selling goods or services once or twice is not business.

3.      Customer satisfaction:- The one of the main characteristics of every business enterprises is customer satisfaction. The customer is the king of market. Business enterprise believes in satisfying the customer by providing quality of product at a reasonable price.

4.      Profit earning: The main purpose of business is earning profit. No businessman can survive without earning sufficient profit if the profit motive is missing in a transaction then it can’t be considered as business transaction.

5.      Uncertainty of risk: Another Important feature of business is the presence of risk factor in the transaction. There is always a possibility of losses it is not certain that a businessman will always earn adequate profit.

Q.5: What are the objectives of Business?

Ans:     There are three objectives of business:

1.      Economic Objective: As business is an economic activity so the most important objective of business are economic objective. The following are included under economic objective:

A.     Survival: The basic purpose of every organization is to survive and exist in the competition market for a long period of time and it is possible only when it is able to cover its cost and earn profit.

B.      Profit: The most important objectives of every organization is earning adequate amount of profit. Profit is essential for survival, growth, and expansion of business. Profit is the reward given to businessmen for bearing risk.

C.      Growth: Business organization must grow and expand their activities. The source of any organization is measured by the growth rate and growth is measured in term of sales, number of branches, number of product, number of employees etc.

2.      Social objectives: Social objective deals with commitment of business towards the society. Business is an integral part of society. It makes use of resource of society and    earns profit by selling its products or services to members of society. No businessman can be successful in the long run by ignoring the interest of the society. The social object of a business are:

A.     Supply of Desired Quality of Product: Customers prefer to buy the product only when they are of satisfactory quality and are available at a reasonable price.

B.      Avoidance of Unfair Trade Practice: Unfair trade practices include black marketing, adulteration, hoarding, overcharging etc. The businessman adopts policies to avoid these practices for earning in long term.

C.      Employment Generation: The businessman must create employment opportunities and help in overcoming this basic problem of developing countries.

D.     Social Service: The large business houses undertake various projects of social services such as running charitable dispensaries, schools, hospitals etc.

3.      Human or Individual Objectives: Human or individual objectives are related to employees of the organization. To get maximum from employees and keep the employees motivated, the business must take care of their employees by pursuing the individual objectives. The common individual objectives are:

A.     Providing good working conditions.

B.      Payment of competitive and satisfactory wages and salaries.

C.      Personal growth and development of employee by imparting training to employees and keep updating their knowledge.

D.     Peer recognition and respect by encouraging employees to take initiative and participating in decision-making.

E.      Providing special benefits such as housing facility, medical facility, free education of children etc.

Q.9:  Discuss the role of profit in the business?

Ans:  Business is an economic activity. So earning profit is the main objective of every business. A businessman earns profit for various reasons. These reasons are

        i.            Survival: A business and businessman can’t survive for a long time without earning adequate profit. Profit is a source of income for a businessman which becomes his means of livelihood.

      ii.            Expansion and Growth: The business is expanded only when it is earning sufficient amount of profit. When profit is large, a part of it can always be reinvested for expansion or diversification of production and other operations of the business.

    iii.            Symbol of Efficiency or Index of Performance: Profits indicate whether a business is being managed efficiently or not. Higher profits indicate the efficiency of management and lower profits indicate inefficiency of management.

    iv.            Reward for bearing the risk:- Profit is considered as a price or reward paid to a businessman for bearing the risk. Businessman invests money in the business only with the hope of earning profits.

      v.            Helps to gain reputation:- A profit earning company always has a better reputation in the market as compared to companies which are running in loss. The rate of earning profit helps in creating a goodwill of the company in the market.

Q.7: What are the classifications of business activities?

 Ans: Business activities can be classified as:

        i.            Industry

      ii.            Commerce.

Q.8: What do you mean by Industry and what are its types?

Ans: Industry refers to an activity which convert raw material into useful products. Industry included activity related to production and processing.

       The term industry is also use to refer to a group of firms producing similar or related goods.

Industry can be classified into two broad categories:

        i.            Primary Industry and

      ii.            Secondary Industry.

    iii.            Tertiary industry or service industry

Q.9. What do you mean by primary industry and what are the types of primary industry?

Ans:- Primary industry includes all those industry which are concerned with extraction of resources and reproduction of living species.

These industries can further be classified into two categories:

        i.            Extractive industries:- Extractive industries are those which involve extraction of something from natural resources such as minerals from earth, fish from rivers and seas, timber from forest etc.

      ii.            Genetic industry:- The industries involved in the activities of rearing and breeding of living organisms i.e. birds, plants, animals etc. are known as genetic industries.

Q.10. What is secondary industry? What are the types of secondary industry?           

Ans:- The secondary industry makes use of products which are extracted and produced b primary industry as their raw material ad produce finished products.

There are three kinds of Secondary industry:-

        i.            Manufacturing industries.

      ii.            Construction industry

Q.11. What is Tertiary industry? What are the services provided by tertiary industry?

Ans:- Tertiary industry is concerned with providing services which facilitate a smooth flow of goods and services. This industry provides services which support the activities of primary and secondary industry.

The following are the services provided by tertiary industry:-

        i.            Transport:- it facilitates movement of goods from one place to another.

      ii.            Banking:- provides credit facility to industries and trading firms.

    iii.            Insurance:- Provides coverage from various types of risks.]

    iv.            Warehousing:- provides storage place for gods produced by primary and secondary industry.

Q.12. What do you mean by Manufacturing industry? What are its types?

Ans:-Manufacturing Industries:- Manufacturing industry are engaged in the transforming of raw material into finished goods. These industries create form utility by changing the form of raw martial into finished products. For example:- Sugarcane converted into sugar, cotton into cloth etc.

Manufacturing industry is of the following types:-

        i.            Analytical industries:-In Analytical industry the basic raw material is broken into different parts to produce finished products.

      ii.            Synthetic industry:- In synthetic industry two or more material are mixed to manufacture some new product.

    iii.            Processing industry:- in processing industry the raw material is processed through various stages of production.

    iv.            Assembly industry:- In assembly industry the various finished products are combined to produce a new finished product.

Q.13. What do you mean by commerce? Discuss the function or role of commerce?

Ans:- Commerce refers to all those activities which help directly or indirectly in the distribution of goods to the ultimate’s consumer. There will be no use of producing goods unless and until these goods reach the ultimate consumer. Goods are produced at one place and consumers are scattered at different places.

The following are the role and Function of Commerce:-

1.      Help in Removing the Hindrance of persons:- Traders helps in exchange of goods or services from the producer to consumer and helps removing the Hindrance between producers and consumers.

2.      Helps in Removing the Hindrance of place:- Goods are produced at one place whereas consumers are scattered in different corners of the country. There is a place gap between the producers and consumers. The transport segment of commerce helps in removing the place gap.

3.      Helps in Removing the Hindrance of Time:- Some goods are produces in a particular season only but are demanded throughout the year. But some goods produced throughout the year but are demanded in a particular season. So there is a time gap between the production and consumption. The goods need to be kept safe and fresh during this time gap. Warehousing segment of commerce helps in removing the problem.

4.       Helps in removing the hindrance of exchange:-  The goods and services produced by the manufacturing are sold to buy in exchange of money. The banks help the buyers and the sellers in making and collecting payments.

5.      Helps in removing the hindrance of risk:- There are different types of risks which a businessman has to face. The insurance branch of commerce helps in removing the hindrance of risk by providing protection and compensation to the insured.

6.      Helps in removing the hindrance of Knowledge:- Generally the consumer and buyer are unaware about the new goods produced by the manufacturer. The advertisement branch of commerce helps in removing the hindrance of knowledge by spreading the awareness about the new products and their utility.

Q.14.What is trade? What are the different types of trade?

Ans:- Trade is a internal part of commerce. If refers to buying and selling of goods and services. The trade segment of commerce brings together the manufacturer and the consumer.

Trade can classify into two types:-

        i.            Internal trade.

      ii.            External trade.

Q.15. Define Internal trade? What are its types?

Ans:- Internal trade refers to buying and selling of goods or services within the geographical boundaries of a country. It is also known as home trade.

There are two types of Internal trade:-

(a)   Wholesale trade.   (b) Retail trade.

Q.16. Define external trade? What are its types?

Ans:- External trade refers to buying and selling of goods and services beyond the geographical limits of the country. It is also known as trade between two or more countries.

There are following types of external trade:-

        i.            Export trade:- It refers to sale of goods to foreign country.

      ii.            Import trade:- It refers to buying of gods from foreign country.

    iii.            Entrepot:- It refers to import of goods for the purpose of export.

Q.17. What is business risk? Discuss the Nature of business risk?

Ans:- Business risk refers to the chances of losses or in a inadequate profits due to uncertainties or unexpected events, which are beyond control. In simple words, we can say business risk means chance of incurring losses or less profit than expected.

The natures of business risk are as follows:-

1.      Business risk arises due to uncertainties:- Uncertainties mean when you are not sure of what is going to happen in future. In business there is always risk involved.

2.      Risk is an essential part of every business:- risk is an important characteristic of business no businessman can avoid risk.

3.      Profits is the reward for bearing the risk:- Businessmen earn profit because they are bearing risk. “No risk no gain”. Larger the risk more is the profits.

4.      Degree of risk depends upon the nature and size of business:- The degree of risk depends upon the types of business. A business operating at large scale bears more risk as compared to small-scale business.

Q.18. Discuss the causes of business risk?

Ans:- The following are the main causes of business risk:-

•      Natural causes:- Human being have no control over the natural causes. Natural causes like, heavy rain, earthquake, fire, etc. affect a business and can result in heavy losses.
• Human causes:- Human causes are also very important causes of business risk. These causes includes dishonesty, carelessness and strike etc. The dishonesty of employees can bring can bring heavy losses for business.
•   Economic causes:- Economic causes are related to a chance of loss due to change in marker condition. There can be price fluctuation in the market, there can be change in fashion, taste and demands of customers.
•   Physical causes:- All the causes which result in damage of assets are considered as physical causes, for example, Use of old technology, mechanical defects may also result in damage of assets such as bursting of boiler, accident to employees etc.