CHAPTER 1

EVOLUTION AND FUNDAMENTALS

ŸOF BUSINESS
History and Evolution of Business
1.

Business Risk 2. Indigenous Banking System

9.

Business Activities 3.

8.
Trading Communities
Brain Map

4.
Business 7.
Transporting
6. 5.

Major Trade Centres

Rise of Interonediaries
Trade and commerce has played an important role in growth of an
economy from time immemorial. Example, Harrappa and Mohenjodaro
were commercial cities in 3rd millennium BC in Indian sub continent.
Physical environment of Indian subcontinent has helped it in evolving as
a major power in economic world from ancient times.
The silk route facilitated its further progress in terms of domestic and
international trade.
1. Spread of trade and Commerce
After Barter Diverse Metal began Documents
System types of to supplement such as
coins and other Hundi & Chitti
weighting commodities were used
practices of money
stated

Trading Transport Rise of Indigenous

communities inland and intermediaries banking
strengthened maritime helped took place system played
important role
2. Indigenous banking system
— Helped in lending money and financing domestic and foreign
trade with currency & letter of credit.
— People began to deposit precious metals with bankers called
seths.
— Money become an instrument for supplying the manufacturers
with a means of producing more goods.

Hundi: It was an instrument of exchange which was used in Indian

subcontinent. It involved a contract which
(i) Warrants the payment of money, the promise or order which is
unconditional
(ii) Capable of change through transfer by valid negotiation.

Hundi as practised by Indian Merchant Communities

Name of Hundi Broader Functions of Hundi

Classification
Dhani-jog Darshani Payable to any person-no
liability over who received
payment.
Sah- jog Darshani Payable to a specific person,
someone 'respectable'.
Liability over who received
payment.
Firman-jog Darshani Hundi made payable to order.

Dekhan-har Darshani Payable to the presenter or

bearer.
Darshani-jog Muddati Payable to any person-no
liability over who received
payment, but payment over a
fixed term.
Firman-jog Muddati Hundi made payable to order
following a fixed term.
Jokhmi Muddati Drawn against dispatched
goods. If goods lost in transit,
the drawer or holder bears the
costs, and the Drawee carries
no liability.

3. Trading communities
In different parts of the country, different communities dominated trade.
(i) Punjabi and Multani merchants handled business in the nouthern
region, while the Bhats managed the tread in the states of Gujarat and
Rajasthan
(ii) In western India, these groups are called Mahajan Chalt wre
important traders from the South.
(iii) In Urban centres, such as Ahemdabad, the Mahajan community
collectively represented by their chef called Nagarseth.
(iv) Other Urban groups included professional classes like Hakim and
vaid (Physician), Wakil (Lowyer), Pundit or Mulla (teachers),
Painters musicians, calligraphers etc..
Merchant corporations were formed: Merchant communities derived
power & prestige from guilds which were autonomous corporations
formed to protect interest of traders.
These corporations framed their own rules of membership and
professional code of conduct which even kings were supposed to
accept and respect.
The guild chief dealt directly with loan or tax collections and settled the
market toll on behalf of its fellow merchants at a fixed sum of money.
4. Transport
In the ancient time, transport by Land and (Sea) water was popular.
5. Rise of Intermediaries
(Brokers, commission agents, distributions) for whole sale & retail
goods
(I) Intermediaries provided security to the manufacturers by taking
responsibility for risk involved.
(ii) Emergence of credit transactions and availability of loans &
advances enhanced commercial operations.
6. Major Trade Centres
Patliputra, Peshwar, Taxila, Indraprastha, Mathura, Varanasi, Mithila,
Ujjain, Surat, Kanchi, Madura, Broach, Kaveri pata, Tamralipti.
Major Exports and Imports
Exports: Spices, wheat, sugar, indigo, opium, sebame oil, cotton, live
animals & animal products like hides, furs, pearls etc.
Imports: Horses, animal products, Chinese silk flax and liner, gold,
silver, tin etc.
Position of Indian Subcontinents in World Economy (IAD upto 1991)

1 AD: 32% (the largest 1000 AD: 32% (the largest 155 AD: 24.36%
regional contribution regional contribution) (second in regional
share)

1850 AD: 5-10% 1700-1750 AD: 25% of worlds' 1700 AD: 1600 AD:
industrial output 24.46% 24.41%

1970 AD: 9.2% (world 1900 AD: 2% (global 1913 AD: 5.4%
income British Empire) industrial output) (British Empire)

1991 AD: Economic 1973 AD: 1952 AD: 3.8% of the

Liberalisation 3.1% world income

After independence five year plans were initiated. Despite these efforts
Indian economy could not develop at a rapid pace. Lack of capital
formation, rise in population, huge expenditure on defence and
inadequate infrastructure were major reasons.
Finally in 1991 India agreed to economic liberalisation. Because of this
now India is one of the fastest growing economies of the world.
Initiatives like 'Digital India',' 'Make in India', 'Skill India' are expected to
help the economy in terms fo exports and imports.
Trade and commerce has played an important role in growth of an
economy from time immemorial eg. Harappa & Mohanjodaro were
commercial cities in 3rd millennium BC in Indian sub continent. Physical
environment of Indian subcontinent has helped if in evolving as a major
power in economic world from ancient times. The silk route facilitated its
further progress of domestic and international trade.

Q.1. What is Hundi?

Q.2. How were the different types of Hundi in use by trades in ancient
times?
Q.3. Name any two commercial cities of ancient India.
Q.4. Write any four major exports and imports in ancient time.
Q.5. Why do you think Indian subcontinent stood out in terms of trade
and commerce in ancient times?
Q.6. What was the role of Indigenous Banking system in enhancing
trade & commerce?
Q.7. Name any two trading communities of ancient times.
Q.8. How did the position of Indian sub continent in world economy
change form being referred British was ruling India?

Business : Meaning and Characteristics

All Human beings have different types of needs. So in order to

fulfill those needs they have to performs some or the other activity.
Human activities are classified into Economic & non economic
activities.
Basic Meaning Economics Non-Economic

Meaning T h o s e a c t i v i t i e s w h o s e Those activities whose aim is

Objective is to earn money not to earn money but to satisfy
and to create Wealth. social psychological and
emotional needs. For example
love, sympathy, patriotism etc.

Main objective is to achieve

Objective Main aim to generate Good or Mental satisfaction.
services to earn profit.
- A house Wife cooking food
Examples - People working in factories. for her family.
- Cooking food in a - A teacher training his
restaurant. daughter at home.
- A teacher teaching in a
school.

HUMAN ACTIVITIES

Economic Non-Economic

Profession Business Employment

Industry Commerce

Primary Secondary Tertiary Trade Auxiliary

to Trade

Genetic Extractive 1. Transport 1. Transport

1. Animal 1. Mining 2. Banking 2. Banking
Husbandry 2. Quarring 3. Insurance 3. Insurance
2. Poultry Farm 3. Agriculture 4. Advertising 4. Advertising
3. Plantation 5. Warehousing 5. Warehousing

Manufacturing Construction Internal External

1. Sugar 1. Building 1. Retail 1. Import

2. Cement 2. Roads 2. Wholesale 2. Export
3. Textile 3. Bridge 3. Enterpot
Concept of Business
It is an economic activity which involves production, purchase, sale or
distribution of goods and/ or services with a purpose of earning projects
through the satisfaction of human needs.

Characteristics of Business :-
1. An economic activity :- Business in considered as an
economic activity as it is undertaken with the objective of earning
money.
2. Production or procurement of goods and services :-
Business includes all the activities concerned with the production
of procurement of goods & services for sales. Services include
transportation, banking, Insurance etc.
3. Sale or exchange of goods & service :- There should be sale
or exchange of goods and service between the seller & the buyer.
If goods are produced not for the purpose of sale but say for
internal consumption it cannot be called a business activity.
4. Dealing in goods & services on a regular basis :- There
should be regularity of dealings or exchange of goods & services.
One single transaction of sale or purchase does not constitute
business.
5. Profit Earning :- The main purpose of business is to earn profit.
A business cannot survive without making profits. So
businessman try to maximize profit by increasing the volume of
sales or reducing costs.
6. Uncertainty of return :- Every business invests money with the
objective of earning profit but the amount of profit earned may
vary also there is always a possibility of losses.
7. Element of Risk :- All business activities carry some elements
of risk because future is uncertain and business has no control
over several factors like, strikes, fire , theft, change in consumer
taste etc.
 Discuss with teacher & peer group
Q.1 Prakash, a farmer went to the market and exchanged his rice
with pulses. It is an economic activity ?
Q.2 Mohan sells his old dressing table on OLX for `4000. Is it a
business activity ? Justify.
Q.3 Lalita , a housewife sells old newspaper of two months at `300,
will you classify it as business activity ? Why?

Comparison of Business, Profession and Employment :-

Economic Activities
Basis Business Profession Employment
Concept It Refers to those economic It includes those It refers to the
activities which are activities which require occupation in
connected with purchase, special knowledge be which people work
production and/or sale fo skills in the occupation. for others and get
goods & services with the remuneration in
objective of earning profit. return .

Example - Fishing - Medical (Doctor) - Worker

- Manufacturing Goods - Legal (Lawyer) - Employee
- Mining - Accountancy (CA) - Salesman
- Producing or selling of
electronic goods
- Banking

Basis of Difference Business Profession Employment

1. Mode of Establishment Starts after completing Membership of a Start after getting
some legal formalities it professional body appointment letter.
needed. and certificate of
practice required.
2. Nature of Work It involves buying & Personalized services Work allotted by the
selling of goods and/ or of expert nature. employer according
services to the public. to the contract.

No minimum Professional
3. Qualification Qualification and
Qualification is Qualification and
training as
necessary. training required. prescribed by the
employer.
Capital needed Limited capital for
4. Capital Investment according to its nature
established No capital required.
& size

5. Reward/Return Profits Professional Fee Salary or wage

6. Risk It involves high The degree of No risk in it
risk risk is low

7. Code of conduct Professional The terms and

No code of code of conduct conditions of
conduct is to be services contract
followed. are to be
followed.

8. Transfer of interest Transfer Not Possible Not Possible

possible with
some formalities

Discuss with teacher and peer group

Q.1 Dr. Hussain is operating his own clinic. Classify his economic
activity.
Q.2 Ranjana is managing her own bakery. What type of economic
activity is she doing ?
Q. 3 John is working is Ranjana's bakery for a Salary of `10,000 per
month. What is the nature of activity performed by him ?

Objectives of Business :- The objectives of business means the

purpose for which a business is established and carried on. Proper
selection of objectives is essential for the success of a business.
The Businessman always have multiple objectives. All objectives
may be classified into two broad categories. These are (1) Economic
objectives and (2) Social objectives.
Business Objectives

Economic Objectives Social Objectives

Quality goods &

Earning Profit
services at fair price

Market Standing Avoidance of antisocial &

unfair fords practices
Innovation
Generation of employment
Optimum Utilization
of resources Employee welfare
Improving Productivity
Community service
1. Economic Objectives
Business is an economic activity and therefore, its purpose is to
show economic results. The economic objectives of business are
follows:-
(i) Earning profit : Profit means excess of income over the
expenditure. The foremost and prime objective of every
businessman is to earn profit. A business cannot serve
without earning profit. Not only for survival but it is also
required for growth and expansion of business.
(ii) Market standing/creation of customer : Business can
survive for a longer period only if is able to capture a big
share in the market & has market standing. It is possible
only when business provides goods and services to satisfy
the needs & wants of customers. Therefore, creation and
satisfaction of customers (market) is an important objective
of business.
(iii) Innovations : Innovation means making new products or
adding new features of old products for making it more
useful, improving methods of production & distribution
exploring new markets, etc. In these days of competition, a
business can he successful only when it creates new
designs - better machines, improved techniques, new
varieties etc.
(iv) Optimum utilisation of resources : It refers to the best use
of men, material, money and machinery employed in
business. The resources of business are scarce so these
must be utilised in the best possible manner so that the
business can get maximum benefit, from their resources.
(v) Improving productivity : It is used as a measure of
efficiency. Every business enterprise must aim at greater
productivity - to ensure continuous survival and growth. This
objective can be achieved by reducing wastage and making
efficient use of machines and equipments, human
resources, money etc.

2. Social Objectives
Business is an integral part of society. It makes use of resources
of society. It earns profit by selling its products or services to members
of society. So it becomes obligatory on the part of the businessman to
do something for the society. The important social objective of business
are as follows :
(i) Quality goods and services at fair price : The first social
objective of business is to provide better quality product at
reasonable price and in proper quantity on continuous basis
to consumers.
Example :- Consumers look for ISI mark on electrical goods,
FPO mark on food products, Hallmark on Jewellery.

(ii) Avoidance of anti-social & unfair trade practices : Anti-

social practices include hoarding, black marketing and
adulteration. Making false claims in advertisements to
mislead and exploit people is an example of unfair trade
practice. Business should not indulge in such practices.
(iii) Generation of employment : Now a days, employment is
the biggest problem of society. Business should provide
employment to more and more people living in the country.
Handicapped & disabled people should be given extra care.
(iv) Employee welfare : Employees are a valuable asset and
they make significant contributions towards the success of
business. Another social objective of business, therefore, is
to ensure welfare of employees by providing good working
conditions. fair wages and facilities such as housing,
medical and entertainment etc. such welfare facilities help
to improve physical and mental health of employees.
(v) Community service : Business should contribute
something to the society where it is established and
operated. Library, dispensary, educational institutions etc.
are certain contributions which a business can make and
help in the development of community.

Role of Profit in Business

Business is established for the purpose of earning profit. Profit
plays a very important role in business. The role of profit in business can
be brought out by the following facts :-
(1) For long survival : Profit alone help a business to continue
 to exist for a long period. In the absence of profit the
establishment of a particular business loses its justification.
(2) For growth and expansion : All businessmen want their
business to expand and to grow. For development of
business, additional capital is needed. Retained earnings is
a very good source of capital.
(3) For increasing efficiency : Profit is that power which
motivates both the parties - owner and workers to do their
best. As they know that in case of good profits they will get
good compensation for their efforts, so it finally helps in
increasing the efficiency of business.
(4) For building prestige and recognition : For gaining
prestige in the society, business has to satisfy all the parties
concerned. It has to supply good quality product/service at
reasonable price to customers, adequate remuneration to
employees, to pay sufficient dividend to the shareholders
etc. and all these are possible only if the business is earning
good profit.

Business Activities
Classification of Business Activities

Industry Commerce
(Deals with production (Deals with distribution
of goods services) of goods & services)

Primary Secondary Tertiary or Trade Aids/Auxilliaries

Industries Industries Service to Trade
1. Extractive 1. Manufacturing Internal Trade External
2. Generic 2. Construction 1. Transportation
1. Wholesale 1. Import
& Trade
Trade 2. Export
2. Banking &
2. Retail Trade 3. Entrepot
Finance
3. Insurance
4. Warehousing
5. Advertising

1. PRIMARY INDUSTRY - The primary industry includes those

activities through which the natural resources are used to
provide raw material for other industries.
 Primary Industry

Extractive Genetic

Industry under which something Industries under which the breed

is extracted out of earth, water or of animals and vegetables are
air eg. Coal, Iron, gas improved and made more useful.

- Mining, Lumbering, Hunting & - Poultry Farms, dairy Farming, Fish

Fishing Hatching, cattle breeding etc.

2. SECONDARY INDUSTRY - Under this industry new products

are manufactured by using the previously produced things e.g.
producing cotton is a primary industry and manufacturing cloth
out of cotton is a secondary industry. It is of two types.
i) Manufacturing - These industries convert raw materials or
semi-finished products e.g. paper from bamboo, sugar from
Sugar cane. It is further divided into four parts.
Manufacturing

Analytic Processing Synthetic Assembling

Different things are Industries wherein Many raw materials Where in the parts
manufactured out of useful things are are mixed to manufactured by
one material eg. manufactured by produce more useful different industries
petrol, diesel, making raw material products eg. paints, are assembled to
gasoline out of to pass through cosmetics cement. produce new and
crude oil. different production useful product eg.
process. e.g. steel computers, watches
from iron or, Sugar & cars, television etc.
paper industries.

ii) Construction Industries - Industries that are involved in the

construction of building, dams, bridge, roads as well as
tunnels and canals. It involves engineering and architectural
skills.
iii) Tertiary or Service Industry - Includes those services which
help business to move smoothly e.g. transport, bank,
insurance, storage and Advertising.
 Classify the industry under which the following come under :-
i) Mining project undertaken in Chota Nagpur Plateau region.
ii) Oil refineries in Gujrat.
iii) Cement industry based in Mangalore (Karnatka)
iv) In Uttar Pradesh there are many factories where Sugar is
created from Sugarcane.

Commerce :-
Meaning - Commerce refers to all those activities which are
concerned with the transfer of goods and services from the
producers to the consumers. It embraces all those activities
which are necessary for maintaining a free flow of goods and
services.
The functions of commerce are as follows
Hindrance of person Through Trade

Hindrance place Through Transportation

Hindrance of time Through Warehousing

Removal Through
of Hindrance of risk Insurance

Hindrance of finance Through Banking & Finance

Hindrance of information Through Advertising

1. Removing the hindrance of person by making goods available to

consumers from the producers through trade.
2. Transportation removes hindrance of place by moving goods from
the place of production to the markets for sale.
3. Storage and warehousing activities remove the hindrance of time
by facilitating holding of stock of goods to be sold as and when
required.
4. Insurance removes hindrance of risk of loss or damage of goods
due to theft, fire, accidents etc.
5. Banking removes hindrance of finance - by providing funds to a
businessman for acquiring assets, purchasing raw materials and
meeting other expenses.
6. Advertising removes hindrance of information by informing
consumers about the goods and services available in the market.
Commerce includes two types of activities
Trade :- Refers to buying and selling of goods and services with
the objective of earning profit.
It is classified into two categories :-
1. Internal Trade:- Takes place within a country. Internal Trade is
classified into two categories :-
(i) Wholesale Trade :- Refers to buying and selling of goods in
large quantities. A wholesaler buys goods in large quantities
from the producers and sell them to other dealers. He serves
as a connecting link between the producer and retailer.
(ii) Retail Trade :- Refers to buying of goods and services in
relatively small quantities & selling them to the ultimate
consumers.
2. External Trade :- Trade between two or more countries.
External trade can he classified into three categories:-
(i) Import trade :- If goods are purchased from another country.
it is called import trade.
(ii) Export trade :- If goods are sold to other countries it is called
export trade.
(iii) Entrepot trade :- Where goods are imported for export to
other countries eg. Indian firms may import some goods from
America and export the service to Nepal.
External Trade

Buying soft toys Selling Basmati Buying electronic

from China and Rice to USA from items from Japan
selling its here in India. and selling them
India. in Thailand.

Import Trade Export Trade Entrepot Trade

2. Auxiliaries to Trade - All those activities which help in removing

various hindrances which arise in connection with the production
and distribution of goods are called auxiliaries to trade. An
overview of these activities is given below.
(i) Transportation and Communication - The production of
goods takes place at one place where as these are
demanded in different parts of the country The obstacle of
 place is removed by the transport. Along with transport
communication is also an important service. It helps in
exchange of information between producers. consumers
and traders. The common communication services are
postal service, telephone, fax, Internet etc
(ii) Banking and Finance - Business needs funds for acquiring
assets, purchasing raw materials and meeting other
expenses. Necessary funds can be obtained from a bank.
(iii) Insurance - It provides a cover against the loss of goods, in
the process of transit, storage, theft, fire and other natural
calamities.
(iv) Warehousing - There is generally a time lag between the
production and consumption of goods. This problem can be
solved by storing the goods in warehouses from the time of
production till the time they are demanded by customers.
(v) Advertising - Advertising brings goods and services to the
knowledge of prospective buyers. It is through advertising
that the customers come to know about the new products
and their utility.
7. Business Risk
Business risk refers to the possibility of inadequate profits or
even losses due to uncertainties or unexpected events. For example,
demand for a particular product may decline due to change in tastes
preferences of consumers, or increase in competition etc.
There are two types of business risks -

Nature of Business Risks

1. Business risks arise due to uncertainties : Lack of
knowledge of what is going to happen in future create
uncertainties in business. It may be due to natural calamities,
change in demand and prices. strikes etc.
2. Risk is an essential part of every business : No business
can avoid risk although the amount of risk may vary from
business to business. Risk can be minimised but cannot be
eliminated.
 3. Degree of risk depends mainly upon the nature and size
of business : Level of risk is lower for small scale business
while it is higher for large scale organization.
4. Profit is the reward for risk taking : A business gets profit
as return for undertaking risk. Greater the risk involved in a
business, higher is the chance of profit.
Causes of Business Risks
1. Natural causes - Human beings have little control over
natural calamities like flood, earthquake, famine etc. They
result in heavy losses of life, property & income of business.
2. Human causes - Human causes include such unexpected
events like dishonesty. carelessness or negligence of
employees, strikes, riots, management inefficiency etc.
3. Economic causes - They are related tc a chance of loss due
to change in market condition e.g.. fluctuations in demand
and prices, competition. change in technology etc
4. Physical causes - Mechanical defects or failures may also
lead to losses e g., bursting of boiler or machine may cause
death or destruction.
5. Other causes - These include unforeseen events like
political disturbances. fluctuation in exchange rates etc.
8. Starting a Business :- Basic Factors
1. Selecting the line of business :- The first thing to be
decided by the entrepreneur is the line and type of business
to be undertaken.
2. Scale or size of business :- After deciding the line of
business the businessman must decide whether he wants to
set up large scale or small scale business.
3. Choice of form of business organization :- The next
decision must be taken is to finalize the form of business i.e.
to set up sole proprietorship, partnership or joint stock
company.
4. Location of business enterprise :- The entrepreneur has to
decide the place where the enterprise will be located. Before
taking this decision he must find out availability of raw
 materials, power, labour, banking, transportation etc.
5. Financial requirement :- The businessman must analyze
the amount of capital he might require to buy fixed assets and
for working capital (day to day expenses). Proper financial
planning must be done to determine the amount of funds
needed.
6. Physical facilities :- include machinery, equipment, building
etc. This decision depends upon the size, scale and type of
business activities he wants to carry on.
7. Plant Layout :- Showing the physical arrangement of
machines and equipment needed to manufacture a product.
8. Competent and committed workforce :- The entrepreneur
must find out the requirement of skilled and unskilled
workers and managerial staff to perform various activities.
9. Tax planning :- The entrepreneur must try to analyze the
types of taxes because there are a number of tax laws in the
country which affect the functioning of business.
10. Setting up of the enterprise :- After analyzing the above
mentioned points carefully, the entrepreneur can start the
business which would mean mobilizing various resources
and completing legal formalities.

Multiple Choice Questions

1. Which is not an economic activity?
(a) Clerical work in a bank
(b) Teaching in Govt. school
(c) Cooking by a housewife
(d) Car production
2. Which is not included in 'Auxiliary to Trade'?
(a) Animal Husbandry (b) Insurance
(c) Transport (d) Warehousing
3. Which is Extractive Industry?
(a) Building construction (b) Plantation
(c) Mining (d) Textile
4. Which is service industry?
(I) Sugar (ii) Cement
(c) Poultry farm (d) Banking
5. Risk is the result of _____________.
(a) Uncertainty (b) Certainty
(c) Business activities (d) None of the above
6. Which is not the objective of business?
(a) Making profit
(b) creation of customers
© Investment
(d) Innovation
7. Capital is required in -
(a) Profession (b) Employment
(c) Business (d) Non-economic activity
8. Code of conduct exist in -
(I) Business (ii) Profession
(iii) Employment (iv) All of the above
9. 'Fraud by Employee' is a type of business risk -
(i) Human (ii) Natural
(iii) Economic (iv) All of the above
10. Which economic activity has zero risk?
(i) Business (ii) Profession
(iii) Employment (iv) All of the above
Match the following
Global Enterprises
Column – I Column – II
Enterprises

1. Manufacturing Industries 1. Mining

2. Genetic 2. Building
3. Secondary Industry 3. Import
4. Trade Center 4. Technical change
5. Code of Conduct 5. Honesty
6. Business Risk 6. Advertising
7. External Trade 7. Kolkata
8. Constructive Industry 8. Cement
9. Extractive Industry 9. Textile
10. Service Industry 10. Poultry Farm

EXPECTED QUESTIONS (ONE MARK QUESTION)

Q1. Give an example of activity which is economic on one side and
non economic on other side.
Q2. Why is business considered an economic activity?
Q3. If is a person sells his domestic computer at a profit, will it be
considered a business? Also explain the characteristic of
business which is being stressed upon in the above said
example.
Q4. Name the economic activity in which specialized knowledge is
required.
Q5. Why is insurance known as a tertiary industry?
Q6. Mr. Rajnesh sold his furniture and bike on OLX as he was
shifting base to London. Is this a business activity ? Which
element of business is being referred to here ?
Q7. A lawyer is working in a knowledge process outsourcing (KPO)
organization. What type of economic activity is he performing ?
Q8. A company has decided to donate 1% of its sales to an
NGO, serving mentally disabled people. This initiative by the
company was highly appreciated by the public and their sales
increased by 10%.
(i) Identify the objective depicted in the given example.
Ans. (i) Social objective

3/4 MARKS
Q9. ABC Ltd. Is planting a tree on roadside. Which objective it is
trying to achieve?
Q10. All human being fulfill their different needs by performing certain
activities. Can you suggest and explain the activities undertaken
by them.
Q11. Write four differences among business profession and
employment.
Q12. No business is risk free in the light of this statement. Explain the
concept of business risk and its any three causes.
Q13. Explain any four objectives of business.
Q14. Define commerce. Why is it of great importance in modern life?
Q15. Distinguish between primary & secondary industry. Give
examples.
Q16. Tea is mainly produced in Assam, while cotton in Gujrat and
Maharastra but they are required for consumption in different
parts of the country. How can this hindrance of place be removed ?
Also under what business activity will it be categorized?
Q17. It is one of the activities / means for assisting trade and help in the
promotion of the product by providing information to the
consumers. Business does not exist in isolation, it has to
communicate with others and the activity help in making
consumers aware and informed about the product of the company
and inducing them to buy particular items.
i) Which activity is discussed in the above para ?
ii) What are those activities called which are meant for assisting
trade ?
 iii) Name and explain the categories into which communication
services can be classified.
Q 18. A factory emits a lot of smoke and pollutants while manufacturing
sugar. It is overlooking the impact of its activities on the
environment and is engaged in profit maximization.
i) Which objective is not being fulfilled by the manufacturers?
ii) Which type of industry will you classify sugar manufacturing in?
Q 19. Rising Heights Ltd. wants to expand and grow. For this it needs
funds to acquire land, building, machinery etc. Also since these
assets cost a lot, they want the risk associated with them to be
reduced. Identify the hindrances and explain how they can be
removed.
[Hint : Hindrance of Finance and Risk]
Q 20. Ramesh sells winter wear in the month of December, January and
February but he is not able to sell his complete stock.
i) Identify the hindrance
ii) How can he resolve this hindrance?
iii) Will this hindrance always occur ? Why ?
[Hints : Hindrance of time resolved by warehousing, because
there is time gap between production and consumption.]
Q 21. Rajni, a house wife exchanges utensils for old clothes on a regular
basis. Is it a business and why ?
Q 22. Mr. X and Y are having a discussion. Mr. X feels that business is
based on selfish desire to gain higher and higher profits while
Mr. Y thinks that profit is essential for a business. Can you support
Mr. Y's case by giving strong points in his favour?
5/6 MARKS
Q23. Categorise the following into business, profession and
employment. (i) A farmer (ii) An advocate (iii) A clerk
(iv) A hawker selling toys for children (v) A doctor
(vi) A person repairing scooter on roadside
Q24. Define business. Explain the characteristics of business, (any
four)
Q 25. Commerce is considered as the backbone of indutry and other
business activities. Discuss the various functions performed by
commerce.
Q 26. Commerce is the sum total of activities that remove hindrances in
the free flow of goods from producers to consumers. Explain.
Q 27. Explain any six factors that are important to be considered while
starting a business.
Q 28. Write difference among industry, commerce and trade on any five
basis.
Q 29. Profit maximization can not be the sole objective of a business.
Explain.
Q 30. ‘Creative Strokes’ is an advertisement agency initiated by Rohit
Shagun & Pratima They have called a meeting to discuss the
below giiven points :-
(i) Increase the profit margin by 10% in May.
(ii) Capturing a bigger share in the market.
(iii) Making use of better cameras & improved techniques.
(iv) Making best use of cameras lights. cameramen. finance etc.
employed by the business.
(v) Improve efficiency in all regards of functioning of business.
(a) Which aspects of business objectives are being referred
to here?
(b) Also develop each point to be discussed in the meeting
by classifying the objective.
[Hint : (a) Economic objectives]
Q 31. Nathu Lal prepares 'sonpapri' for customers during Diwali season
every year. He prepared more 'Sonpapari' than he could sell this
year. He employed women and children also arid paid them less
salary manufacturing on the packages. This way he generated
profit for himself.
(a) Do you think he is fulfilling all the objectives of business ?
(b) If not which aspects of this objective are not being fulfilled ?
[Hint : No. Social objectives are not being fulfilled]
Q32. Classify the below given business into different types of
industries.-
(i) Crude oil business
(ii) Producing steel from iron are
(iii) Cosmetics manufacturing
(iv) producing computers
(v) construction of dams.
Q33. In business activities, there are some activities that are involved in
the removal of hindrances in process of exchange i.e. from the
producer to the consumer Identify them. Also classify the activities
which help in removing the following hindrances:-
(i) Hindrance of place
(ii) Hindrance of risk
(iii) Hindrance of time
(iv) Hindrance of finance
(v) Hindrance of information
Q34. Different situations in different business are being elaborated
below:-
(i) Raghunath Gorkha had a match stick factory in Nepal which
got destructed by the recent earthquake.
(ii) Mr. Arya, a senior manager in a telecom company shared
confidential information about the company with a
competitor which led to huge losses for the company.
(iii) Vodafone Company was charged with evasion of tax and
asked to pay fine in crores which would lead to heavy losses
for the company.
(iv) Type writers becoming redundant because of laptops.
(a) Which characteristic of business is being referred to in
all the above cases ?
(b) How can you classify the different cases based on this
characteristic ?
[Hint : Business Risks - Causes]
Q35. Dr. Kumar is an orthopedic surgeon in Jaipur Golden Hospital
and Dr. Mahajan, his friend is a Pediatrician who has set his own
clinic. Dr. Mahajan's wife, Ms. Rajni operates her Jewellery store.
Compare & differentiate the nature of tasks undertaken by them.
Q36. Zainab, Shelly & Ravina are friends. They have just completed a
fashion designing course. They wish to start a business together.
They have `10,00,000 savings put together and are planning to
take a bank loan of additional `10 lakhs. They have found a prime
location in Karol Bagh where they can set their boutique. They
decide that they will initially not take very big orders.
Based on this information, quote the lines associated with
factors affecting the decision to start a business and classify them.
Q37. lmran, Manpreet, Joseph and Priyanka have been classmates in
Class-X. After their exams are over, they happen to meet at a
common friend Ruchika's house. Just when they are sharing their
experiences of examination days. Ruchika's father Mr. Raghuraj
Chaudhury intervenes and asks about their well-being. He also
enquires from each one of them about their career plans. But none
of them has a definite reply. Mr. Raghuraj who himself is a
businessman, suggests to them that they can opt for business as a
promising and challenging career. Joseph gets excited by the idea
and says, "Yes, business is really good for making lots of money
even more than is possible by becoming an engineer or a doctor."
Mr. Raghuraj opines "Let me tell you, young man". There is a lot
more to business than merely money? Do you agree with
Mr. Raghu Raj Chaudhary's statement? What according to you
are other objectives of business.
Q 38. A cloth manufacturer supplies his clothes to Sri Lanka, Thailand
and Bangladesh. While manufacturing, some defective material
was set asides the manufacturer believes in providing good
quality products only. The defective material was given to
Nari Niketan's women for repairing and later donated to
orphanage for free.
i) What kind of business is the cloth manufactures doing ?
ii) Which objectives are being followed by it by donating the
defective material. State them.
Q 39. Naveli, a Home Science graduate from a reputed collage has
recently done a cookery course. She wished to her own venture
with a goal to provide 'health food' at a reasonable price. After
analyzing various option she decides to sell 'ready-made' and
'ready to make' vegetable shakes and milk shakes. She has a
saving of `5,00,000 and will take a loan of `10 Lakhs.
Based on the above para, identify and quote the factors that she
has considered till now for starting the business.
Also explain other three factors that need to be considered.
Q 40. Classify the following into business, profession and employment.
i) Hari sells mobile phones on behalf on his employer.
ii) It requires minimum academic qualifications.
iii) A hawker sells toys for children outside a function.
iv) Sanjay is the advocate of High Court.
v) Dhruv is the manager of a company.
vi) A person repairs scooters on road side.
Q 41. Ms. Meena is a lecturer in a college. She gets `72,000 p.m. as
remuneration. Mr. Kunal is a farmer producing 20 quintals of wheat
for his own consumption and 2,000 quintals for sale. Ms. Kirti, a
journalist in an agency, teaches slum children after her office
hours. She doesn't charge anything from them. This gives her
psychological and mental satisfaction.
i) Teaching in a college by Ms. Meena refers to which type of
human activity.
ii) Production of wheat by Mr. Kunal for his own consumption
refers to which human activity and why ?
[Hints]
Ans. i) Economic Activity.
ii) Economic activity as production of wheat by Mr. Kunal for his
own consumption helps him for his livelihood.