Business Studies 4 Marks Question

(a) Human causes. (b) Natural, economic and other causes.

(a) Economic and Social Objectives.

(b) Values: Concern for society, Concern for environment.

(a) Primary Industry, Genetic Industry.

(b) Tertiary Industry.

(c) Value: Concern for organisational objectives.

(a) Tertiary Industry. (b) Primary and Secondary Industries.

(a) Meaning of auxiliaries of trade.

(b) Transportation, Banking, Insurance Warehousing, Advertising.

(a) Profession.
(b) Business.
(c) Values Ignored: Concern for customers, Concern for law.

(a) The type of business activity performed by Vijay Plastic Pvt. Ltd. is Industry.

(b) The category of type of business activity is Secondary industry (Manufacturing industry).

(c) value ignored by the company is concern for law (As colours used in manufacturing toys are harmful for the children).

The value followed by the company is concern for customers (As managing director assured that the company will use standard colours only after certification from the research laboratory.)

(a) No, Mehar Sweets is not fulfilling all the objectives of business. Mehar Sweets is not focusing on Social objectives.

(b) The values which the company has voilated are:

(i) Fulfilling social responsibility/Concern for Law.

(ii) Concern for employees.

(a) The main cause behind the business failure of Ratan is Human Cause.

Human Causes: Human causes include such unexpected events, like dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.

(b) The other causes of business risks are:

(i) Natural Causes: Human beings have little control over natural calamities like flood, earthquake, famine etc. They result in heavy losses of life, property and income in business.

(ii) Economic Causes: They are related to a chance of loss due to change in market condition e.g., fluctuations in demand and prices, competition, change in exchange rate etc.

(a) Business risk refers to the possibility of inadequate profits or even losses due to uncertainities or unexpected events.

(b)

Features of Business Risk	Line Quoted
(i) Risk is an essential part of every business.	"She is aware of risks which are inherent in every business."
(ii) Profit is the reward for risk taking.	"She will get profit as return for undertaking risk."

(c) Change in taste and preferences of customers is speculative risk as it involves both, the possibility of gain as well as the possibility of loss.

(a) The business activity performed by Rohit and Gurvinder is Secondary Industry (Assembling).

(b) The business activity performed by Atul is Trade (Export trade).

(c) The auxiliary to trade used by Rohit and Gurvinder is Warehousing.

(d) The value which Rohit and Gurvinder have voilated is fulfilling social responsibility/ concern for Law.

(a) The objective of business which is followed by the company is Social Objectives.

Social Objectives refer to consistently creating economic value for various sections of the society. Business is an integral part of society. It makes use of resources of society. It earns profit by selling its products or services to the members of society. So, it becomes obligatory on the part of the businessman to do something for the society.

The important social objectives of business are as follows:

(i) Production and supply of quality goods and services.

(ii) Using fair trade practices.

(iii) Generation of employment.

(iv) Employee welfare.

(v) Community service.

(vi) Helping government at time of natural calamity etc.

(b) Other objective which business should follow is Economic Objectives.

The main economic objectives are as follows:

(i) Profit Earning: Profit is the difference between the revenues and the expense of a particular period. Earning profits is the primary objective of any business enterprise. Profit is the livelihood of any business. Profit helps the businessman to earn a livelihood and expand the business by reinvesting a part of profit.

(ii) Survival: Every business faces competition. Another economic objective of business is to ensure that the business survives in the long run. A business should resources like men, material, money, machines etc. to the best possible way such as employ efficient workers, full usage of machines, reduce wastage etc.

(iii) Growth: A business should not only exist in the long run, it should also ensure that it grows in terms of market share, capital invested as well as in terms of the market value of its shares. Giving quality goods at reasonable prices will ensure that more customers are attracted for existing and new products. This can be achieved by marketing strategies.

(a) The occupation of Monica Khanna is Employment.

(b) The features of employment are:

(i) The employee is required to perform work as per service contract or rules of service.

(ii) The employee is required to possess qualification and training as prescribed by the employer.

(iii) The employee gets salary or wages as reward.

1. Selection of line of Business: They selected to start a boutique in Karol Bagh

2. Size of Firm : They wanted to start business on small scale. Therefore the risk factor is less and capital requirement can also be met.

3. Choice of form of ownership: The choice of the suitable form of ownership will depend on such factors as the line of business, capital requirements, liability of owners, division of profit, legal formalities, continuity of business etc. Here choice of form of ownership is partnership. They have to decide about the liability, division pf profit. They need to sign partnership deed

4. Location: Choice of location should be done based on the availability of raw material and labour, transportation and communication. Karol Bagh is the prime location as well as wholesale market. So, the choice of place is correct.

5. Finance: As they are bringing Rs 10 lac into business and taking an equal amount of loan to run the business.

6. Physical Facilities: They need to buy machine, equipment to start the business.

7. Layout: They need to draw a layout plan showing the arrangement of the facilities, so, as to have efficient use of resources

8. Competent Workforrce: They need to have competent and committed workforce to perform the activities so that desired output is achieved.

9. Tax Planning: There are number of Tax laws which need to be taken into consideration before starting a business.

10. Start up: Now after taken into consideration the above point and checking the feasiability of the project, they can start with the launch of the boutique.

a) No, he is not fulfilling all the objectives of the business. Business is concentrating on the objective of profit earning. 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.

b) Social objectives of business are not fulfilled. Business has two aspect of objectives. One is economic which means profit earning, productivity, innovation, market standing etc. Other aspect is social objective which consist of Quality goods, avoid unfair trade practices, employee welfare, community service, generation of employment etc.

c) Two values lacking in Jawaharlal are as follows :

1. Ethical practices: Jawarharlal has appointed women and children for manufacturing to generate profit. This behavior is unethical as Child labour is unethical practice in India. Business should not indulge in unfair, unethical 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

2. Employee welfare: Employees are a valuable asset and they make significant contributions towards the success of business. Objective of business 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. Jawaharlal paid less wages to manufacture ghujiya. Fair wages are not paid so, employee welfare objective is not met.

a) Economic objectives of the business are emphasized in the above points
b) Increase the profit margin by 20% in July : Profit earning objective is emphasized. Profitability refers to profit in relation to capital investment. Profit earning is important for business survival and growth
Aiming bigger share in the market : Market standing objective is emphasized. Market standing refers to the position of an enterprise in relation to its competitors. A business enterprise must aim at standing on stronger footing in terms of offering competitive products to its customers and serving them to their satisfaction.
Making use of better lenses & improved techniques : Innovation objective is emphasized. Innovation is the introduction of new ideas or methods in the way something is done or made. There are two kinds of innovation in every business i.e., (i) innovation in product or services; and (ii) innovation in various skills and activities needed to supply products and services
Making best use of cameramen, finance etc. employed by the business : Physical and Financial resources objective is emphasized. Any business requires physical resources, like plants, machines, offices, etc., and financial resources, i.e., funds to be able to produce and supply goods and services to its customers. The business enterprise must aim at acquiring these resources according to their requirements and use them efficiently
Improve efficiency in functioning of business : Productivity objective is emphasized. Productivity is ascertained by comparing the value of output with the value of inputs. It is used as a measure of efficiency. In order to ensure continuous survival and progress, every enterprise must aim at greater productivity through the best use of available resources

The various types of industries are:

• Primary Industries: These include all those activities which are connected with the extraction and production of natural resources and reproduction and development of living organisms, plants etc. Agriculture, mining and fishing are some of the examples of these industries.
• Secondary Industries: These industries uses raw material from primary industries to produce goods for final consumption or for further processing by other industrial units. For example, mining of an iron ore is a primary industry, but manufacturing of steel by way of further processing of raw irons is a secondary industry.
• Tertiary Industries: These industries provide support services to primary and secondary industries as well as activities relating to trade. These industries provide service facilities such as transport, banking, insurance, warehousing, communication, packaging and advertising.

Two business activities which are auxiliaries to trade:

1. Transport and Communication: Production and consumption of goods take place at different locations. Thus, it is essential to move goods from the place of production to the place of consumption. Transport facilitates this movement and transfers raw materials to the place of production. In addition to transport facility, communication is required so that information can be exchanged between producers, traders and consumers.
2. Banking and Finance: A business cannot get going unless funds and investments are available for purchasing raw materials and meeting day-to-day expenses. It can obtain funds from banks and financial institutions by taking loans, and thus, banks overcome the business problem of funds. Banks help businessmen in internal and external trade.

Economic activities involve production, distribution, exchange and consumption of services and goods to consumers. Our livelihoods depend on these activities.
The different types of economic activities are as follows:

1. Business: It refers to all those activities which are concerned with production, purchase, sale and supply of goods and services on a regular basis. The main motive of any business is to earn maximum amount of profit.
2. Profession: A profession is an occupation where individuals with specialised knowledge and qualification provide specialised services in the relevant field to the masses to earn a living. Each profession is distinct from the other.
3. Employment: People are hired to work regularly by organisations. Salaries or wages are paid to employees in exchange for the working hours which they provide to a company.

When a person is engaged in an occupation which provides services on the basis of specialized knowledge and experience in their respective occupations, it is called a profession. For example, Legal (Lawyer), Medical (Doctor), Accountancy (C. A). An occupation can be called a profession if it has the following features:

1. Membership of a professional body and certificate of practice is required.
2. Personalised services of expert nature.
3. Professional qualification and training are required.
4. Professional fee is charged in lieu of services.
5. The limited capital for establishment is required.
6. The degree of risk is low.
7. Professional code of conduct is to be followed that has been given by the concerned authority.

1. Two examples of activities undertaken for personal satisfaction.

• Going for a morning walk.
• Pursuing gardening as a hobby.

2. Two examples of activities undertaken to fulfil social obligations.

• Attending the marriage of a cousin.
• Attending the birthday party of neighbour's son.

3. Two examples of activities undertaken to fulfil religious obligations.

• Visiting the temple of Hanuman Ji on Tuesday.
• Celebrating the festival of Diwali.

4. Two activities undertaken out of love and affection.

• To give gifts to your loved ones on special occasions.
• A mother singing lullaby to put her baby to sleep.

1. Pataliputra: It wsa Known as Patna today. It was not only a commercial town, but also a major centre for export of stones.
2. Peshawar: It was an important exporting centre for wool and for the import of horses. It had a huge share in commercial transactions between India, China and Rome in the first century A.D.
3. Taxila: It served as a major centre on the important land route between India and Central Asia. It was also a city of financial and commercial banks. The city occupied an important place as a Buddhist centre of learning. The famous Taxila University flourished here.
4. Indraprastha: It was the commercial junction on the royal road where most routes leading to the east, west, south and north converged.
5. Mathura: It was an emporium of trade and people here subsisted on commerce. Many routes from South India touched Mathura and Broach.

The differences among industry, commerce and trade are:

	Basis	Industry	Commerce	Trade
1.	Meaning	It means production of goods and services.	It means distribution of output of goods and services produced by industry.	It means sale, transfer or exchange of goods and services.
2.	Nature	It represents the supply side of goods and services.	It represents demand side of goods an services.	It represents exchange of goods and services i.e., both supply and demand.
3.	Creation of Utility	It creates utility by changing the form of materials.	It creates place and time utility by movement of goods and services from one place to another.	It creates possession utility through the process of exchange.
4.	Scope	It includes all productive activities i.e., extractive, genetic, manufacturing and construction industries.	It includes trade as well as auxiliaries to trade.	It includes home and foreign trade.
5.	Place of Operation	It may be carried on at factory, workshop or home.	It involves movement of goods and services from centres of production to centres of distribution.	It is carried on in the market.

Financial intermediaries can be divided into two sectors:

1. Organised Sector: It is registered sector of financial intermediaries. These intermediaries have to follow certain norms and policy formulated by RBI (Reserve Bank of India). RBI is the Central Bank of India, which was established on 1st April, 1935. RBI uses monetary policy to create financial stability in India.

There are two parts of organised sector:

1. CAPITAL MARKET INTERMEDIARIES: Capital market is a market for medium and long-terms. The capital market consists of Development Banks, Stock Exchanges, UTI, Insurance Companies, Agricultural Financial Institutions and Non Banking Financial Companies (NBFCs). e.g. The Bombay Stock Exchange (India's first stock exchange) was established in 1875 as Native Share and Stock Broker Association.
2. MONEY MARKET INTERMEDIARIES: The money market is a market for short-term funds, which deals in monetary assets (Treasury bills, commercial paper, call money, commercial bill) whose period of maturity is upto one year.

Money market intermediaries include RBI, Commercial Banks, Cooperative Bank, Post Office Saving Banks.
e.g. The Bank of Hindustan (India's First Bank) was established in 1770 and liquidated in 1829-32.

2. Unorganised Sector: This sector is not directly controlled by the RBI. This sector includes money lenders, indigenous bankers, pawn brokers, traders and landlords. There is a case of entry, smaller scale of operation, local ownership, uncertain legal status, labour intensive and operating using lower technology based methods, flexible pricing, etc.

If one starts their own business, our social objectives will be of utmost importance to me because:

1. It will create employment opportunities in the economy. He/ she will make use of such methods which are desirable from a society point of view.
2. It will help us provide good quality product at reasonable prices to customers.
3. It will keep the environment pollution free.
4. When we will concentrate on these objectives, it will satisfy one consumer and employees. Consumer satisfaction will lead to improvement in these goodwill and market standing. Employee satisfaction will lead to increase in productivity. These two factors will increase profits in the long run automatically.

The term business risk refers to possibility of inadequate profits or even losses due to uncertainties e.g., changes in tastes and preferences of consumers, strike, increased competition, change in Government policy etc. These are of two types—speculative and pure.Nature of Business Risks:

1. Business risks arise due to uncertainties: Natural calamities, change in demand and prices, change in technology etc. are some of the examples of uncertainty which create risks.
2. Risk is an essential part of every business: No business can avoid risk. Risk can be minimised but cannot be eliminated.
3. Degree of risk depends mainly upon the nature and size of business: For small scale business it is less and for large scale business it is more.
4. Profit is the reward for risk taking: An entrepreneur assumes risks and in consideration he gets reward which is called profit. Greater the risk higher is the chance of profit.

Economic activities can be grouped under business, profession and employment. All the three have their own merits and demerits. Therefore, one will decide according to the conditions, he/ she is facing.

1. If one has enough funds to invest and he/ she is a person who has an ability to take initiative and decision making then he/ she will prefer business.
2. If one has a professional degree and minimum funds to start their own practice, he/ she will prefer to be a professional.
3. If one has no such degree and no funds to start any venture of their own, but some qualification to suit the requirement of a job, he/ she will prefer employment.

All economic activities are divided into three categories.

1. Employment is a contract between employer and employee whereby the employee agrees to work on pre-fixed terms and conditions for an employer for a fixed wage or salary. There is no risk associated with employment as wages or salary is pre-fixed.
2. Profession includes those activities, which are requiring special knowledge and skill to be applied by individuals in their occupation to earn fees. A professional also takes a minimal risk of whether he will get clients or not.
3. Business refers to those economic activities, which are connected with production, purchase and sale of goods or supply of services with the main object of earning profit. Since there is no pre-determined contract, return which is profit, is not fixed. There may be profits in millions or there may be a heavy loss.

Therefore, business as an economic activity is different from other economic activities mainly due to profit. However, there are other differences as well. For example, a business man does not need specific qualifications as required in a profession. A businessman has relative more freedom than a person who is employed or is a professional.

Economic activities are undertaken by people with the objective of earning money. For example, production, exchange and distribution of product.
The differences between economic and non-economic activities are:

	Basis	Economic Activities	Non-economic Activities
1.	Meaning	They are undertaken to earn money or livelihood.	They are undertaken to satisfy social or psychological motives.
2.	Result	They result in production of goods and services.	They result in mental/ psychological satisfaction.
3.	Types	Business, profession and employment.	Charity, social service, patriotism, etc.
4.	Purpose/ Motive	Their purpose is to earn money and to create wealth.	Their purpose is to provide psychologicalxo satisfaction.
5.	Contribution to GDP	They contribute towards GDP of a country.	They do not contribute towards a country's GDP.
6.	Example	Labourer constructing a house on contract basis.	Labourer constructing his own hut.

Modes of Transport:

1. ROAD TRANSPORT: India has one of the largest road network in the world with a total length of about 42.3 lakh km. About 85% passenger and 70% of freight traffic are carried by roads.

Sher Shah Suri built Grand Trunk (GT) Road in 16th Century to strengthen and consolidate his empire from Indus Valley (Peshawar) to Sonar Valley (Kolkata) in Bengal.

National Highways Authority of India (NHAI) has keen role in the development and maintenance of road transport.

Achievements of National highway's Authority of India (NHAI) are as follows:

1. Golden Quadrilateral: It is 5,846km long 4/ 6 lane, in high density traffic corridor that connects India's four big metro cities: Delhi-Mumbai-Chennai-Kolkata.
2. North South Corridor: It is 4,076km long road, connecting Srinagar in Jammu and Kashmir with Kanyakumari in Tamil Nadu.
3. East-West Corridor: with 3,640km of road length, a connecting silchar in Assam with the port town of Porbandar in Gujarat.

2. RAIL TRANSPORT: Railways was introduced to India in 1853 during british rule, when a line was constructed from Bombay to Thane covering a distance of 34km. The total length of Indian Railway network is 64,460km (2011).

In September 2016, Indian Government signed a contract with Japan to laid the foundation of Bullet (High speed) Train project between Mumbai and Ahmedabad.

Rail transport serves as the most economical mode of transport. Indian railway is one of the largest employment providers in India with over 13.6 lakhs employees.

3. WATER TRANSPORT: It can be divided into two major categories-Inland waterways and Oceanic waterways. India has 14,500km of navigable waterways, currently 5,685km of major rivers is navigable by mechanised flat bottom vessels.

Major National Waterways of India is Allahabad-Haldia waterway that covers 1,620km.

Roughly 95% of Indian's foreign trade by volume and 75% by value moves through ocean routes.

Maritime trade is a kind of trade that uses water transport i.e. ships.

4. AIR TRANSPORT: Air transport was started in 1911 with the commencement of airmail over a little distance of 10km between Allahabad and Naini. The Airport Authority of India (1995) is accountable for providing safe, efficient air traffic and aeronautical communication services in Indian air space.

The role played by air transport in the development of international trade and tourism is becoming increasingly important. Indigo, Jet Airways and Jetlite, Spice Jet and Air India are the major airlines of India.