STD. XI Commerce Organization of Commerce & Management

Size: px

Start display at page:

Download "STD. XI Commerce Organization of Commerce & Management"

Victoria James
5 years ago
Views:

1 Written as per the revised syllabus prescribed by the Maharashtra State Board of Secondary and Higher Secondary Education, Pune. STD. XI Commerce Organization of Commerce & Management Salient Features: Exhaustive coverage of syllabus in Question Answer Format. Covers answers to all Textual Questions. Relevant Marking Scheme for Each Question. Includes Additional Important Questions for better preparation. Mnemonics to facilitate easy answer recall. Quick Recap at the end of each chapter to facilitate quick revision. Simple and Lucid language. Includes GG - our very own mascot. Printed at: Dainik Saamana, Navi Mumbai Target Publications Pvt. Ltd. No part of this book may be reproduced or transmitted in any form or by any means, C.D. ROM/Audio Video Cassettes or electronic, mechanical including photocopying; recording or by any information storage and retrieval system without permission in writing from the Publisher. P.O. No _11740_JUP

2 Sr. No. Topic Name Page No. 1. Nature and scope of Business 1 2. Small Business Private, Public and Global Enterprises Internal Trade International Business Business Environment Marketing Nature and Significance of Management 219 Note: All Textual questions are represented by * mark.

3 01.Nature and Scope of Business Introduction Chapter 01: Nature and Scope of Business Ms. Priya is conducting her first OCM class for class XI. She is eager to start with the chapter Nature and Scope of Business. She wants the class to be interactive. So, she asks them to introduce themselves one by one. The conversation flows as given below: Ms. Priya: Hi all, welcome to class XI. I am your OCM teacher. Today we are starting with the first chapter. But before that, let s have a quick round of introduction about you and your family. Praful: Hi, my name is Praful. My dad works as an engineer with an MNC. My mother is a home maker. Ms. Priya: Thanks for the introduction Praful. Let s take your example. Everybody in Praful s family does some or the other activity. Praful studies, his dad works with an MNC and his mom looks after household duties. Is that right? Students: Yes. Ms. Priya: Great. However, do all of them receive money for the activity they perform? Students: No. Ms. Priya: Only Praful s dad receives money for the activity he does. Hence, the work that he does is termed as economic activity and the activity of studying and performing household duties are termed non economic activity. Ravi: Hi, I am Ravi. My mom is a doctor and runs her own clinic. My dad deals in purchase and sale of old furniture. Ms. Priya: Thanks Ravi. Ravi s introduction takes me towards the classification of Economic activities. Economic activities are classified into Business, Profession and Employment. Business includes manufacturing and/or trading in goods or services. Profession includes rendering expert services. Employment means hiring somebody to do a job. Ravi: I understood. The work my mom does is termed as Profession and the work my father does is termed as Business. Is that right, ma am? Ms. Priya: Absolutely Yes. Anuj: Ma am, I have a question. We sold some furniture last month. Does that also mean Business? Ms. Priya: No, Anuj. Business is a regular activity. If you purchase and sell furniture on a regular basis, then it would be termed as Business. Thus, we conclude that human activities can be of two types viz. economic activities and non economic activities. Economic activities take place on pursuing a business, profession or an employment. In this chapter, you will learn the meaning of economic activity and its classification. Human Activities What are Human Activities? Every human being engages himself/herself in some kind of activity. All human activities can be broadly classified into two categories. They are as follows: Non Economic Activities: These activities are performed for gaining happiness, pleasure and satisfaction. These activities do not involve money matters at all. For e.g. Reading a book, attending a family function, chatting with friends, worshipping god, etc. 1

4 2 2 Std. XI : Commerce Economic Activities: These activities are undertaken for the purpose of earning livelihood. A person conducting economic activities receives money in return of it. For e.g. Running a shop, working in an MNC, practicing as a chartered accountant, selling second hand goods, etc. Economic activities can be further classified into three types viz. Business, Profession and Employment (Service). Economic Activities Business Meaning of Business: Business is a state of being busy. The primary aim of conducting business is to earn profit. Business is related to the continuous and regular production & distribution of goods & services for the purpose of satisfying human wants and earning profit. Production refers to changing the form of resources and/or adding value to them so that they can be used for consumption. Goods can be either agricultural goods or manufactured goods. Such goods are made with the help of manpower or with the use of machines. For e.g. Growing mangoes on a piece of land is an example of agricultural production. Converting the mangoes into pulp/juices and selling them in the market is an example of manufactured goods. Distribution, on the other hand, is the process of making the products and/or services available for consumption in the market. This process includes actual buying and selling along with the arrangement for transportation, advertising, warehousing and other aids to trade that help the products to reach the consumers. Definitions of Business: Stephenson defines business as, The regular production or purchase and sale of goods undertaken with the object of earning profit and acquiring wealth through the satisfaction of human wants. According to Prof. Haney, Business activities are all those human activities which are directed towards the production and processing of wealth. *Q.1. Define Business. Explain its Features. [10] Ans: Stephenson defines business as, The regular production or purchase and sale of goods undertaken with the object of earning profit and acquiring wealth through the satisfaction of human wants. According to Prof. Haney, Business activities are all those human activities which are directed towards production and processing of wealth. Features of Business (Traditional Business): The features of business are as discussed below: [Mnemonic: DIRECT Plan] i. Deals in Goods and Services: Every business transaction is concerned with either goods and/or services. In their absence, business cannot take place. Goods are tangible in nature. They may either be capital goods (like tools and machinery) or consumer goods (like clothes, shoes, toothpaste etc). Services are intangible in nature. They include transport, banking, insurance etc. ii. Involves Production and Distribution: Every business deals with production of goods / creation of services and their distribution. Any activity or transaction that is required to complete the process of making goods or services available for a price to the consumers is called a business activity.

5 iii. iv. Chapter 01: Nature and Scope of Business Risk: Risk and uncertainty are a part of any business activity. The element of risk exists due to a variety of factors such as: change in the demand of goods; risk of loss due to fire, earthquake, pilferage, theft etc. competition, changes in government policies etc. A businessman tries to predict the future uncertainties and plans his business activities accordingly. However, the element of risk always remains associated with a business. Involves Exchange: Business means exchange of goods or services for money or money s worth. When goods are exchanged for money s worth, it is called monetary exchange. On the other hand, when goods exchanged for some other goods is called Barter Exchange. However, exchange does not include goods donated or gifted to someone. Also, business does not include goods used for personal consumption by a businessman. v. Continuity: vi. vii. Business involves a regular activity of production and/or distribution of goods and services. A single transaction of buying and selling cannot be termed as business, even if it involves monetary exchange. For e.g. If a person sells his old television for money, then it cannot be called as business. It can be just termed as an economic activity. However, a dealer dealing in second hand electronic goods can be called a businessman. Two Parties: A business transaction involves an exchange. Every business transaction, thus, involves at least two parties i.e. a buyer and a seller. A business transaction is a result of an agreement; hence the presence of two parties is a must. Aims at Profit: The primary aim of a business concern is to earn profit as it is a driving force behind every business. Every business transaction includes profit, though its amount may vary based on the nature and size of the transaction. Features of Modern Business: The above mentioned features of business are related to traditional businesses. However, the modern businesses operate in a much more competitive and dynamic world. Hence, in addition to the basic features mentioned above, modern businesses have some additional features too. These additional features are listed below: [Mnemonic: I M a STAR] i. Information: Information plays an important role in today s business world. A business unit frames its plans and policies depending upon the information on market conditions, consumers tastes and preferences, government policies etc. gathered through various sources of information such as market surveys, internet, newspaper and journals. Information so collected helps the business units to take correct and timely decisions. 3

ii. iii. iv. Std. XI : Commerce Many Lines of Products: With the expansion of markets, Good to Know: the business world has become A company like HUL very competitive.

The combination of all Thus, even if one product does these product lines not yield sufficient profits, the forms the product mix.

Thus, production and distribution of goods and services takes place on a large scale.

They make use of latest technology for producing goods. v. Adaptability: The ability of a business to react as per the changing situation is known as adaptability.

change very rapidly and hence, the business has to change its policies to suit the changing environment. vi.

quality with minimal expenditure. Good to Know: Jalgaon's farmers owe their prosperity to precision farming, an agricultural method first tried out in the district in 2002 03.

6 ii. iii. iv. Std. XI : Commerce Many Lines of Products: With the expansion of markets, Good to Know: the business world has become A company like HUL very competitive. has numerous product In order to survive, companies lines like Shampoos, produce and distribute many detergents, Soaps etc. products at the same time. The combination of all Thus, even if one product does these product lines not yield sufficient profits, the forms the product mix. company can recover the reduction in profit by selling other products. Large Scale of Business: Owing to the development in transport and communication, businesses have crossed national boundaries. Thus, production and distribution of goods and services takes place on a large scale. Science and Technology: Modern businesses make use of scientific techniques for making budgets, recruitment of employees, handling employees and overall control. They make use of latest technology for producing goods. v. Adaptability: The ability of a business to react as per the changing situation is known as adaptability. The business environment is ever changing. Factors like consumers tastes and preferences, government policies, technology, etc. change very rapidly and hence, the business has to change its policies to suit the changing environment. vi. Good to Know: Barrix Ago Sciences, a Bangalore based startup offers eco friendly crop protection methods after much research on products that support organic farming to increase crop produce and quality with minimal expenditure. Good to Know: Jalgaon's farmers owe their prosperity to precision farming, an agricultural method first tried out in the district in This technique reduces fertiliser and pesticide use, prevents soil degradation, utilizes water optimally and raises productivity. Globally, this is done with the aid of modern, eco friendly farming practices and technology, including satellite imagery and information technology. Over the last decade, Jalgaon's farmers, with some help from companies such as Jain Irrigation Systems, have adapted precision farming practices without depending on satellite imagery and the like. Role of Government: In a modern business scenario, the government possesses a crucial role to play. It plays the role of a regulator by forming various acts and policies. Through such regulations, it regulates the working of the business units in national and international markets to restrict unfair and unethical trade practices. The government, by such acts, intends to protect the welfare of the consumers, investors, creditors, employees, etc. 4 4

STD. XI Commerce Organization of Commerce & Management

Written as per the revised syllabus prescribed by the Maharashtra State Board of Secondary and Higher Secondary Education, Pune. STD. XI Commerce Organization of Commerce & Management Salient Features: