Business Studies 3 Marks Question

Preference shares are kind of shares which promise the holder a fixed dividend, whose payment takes priority over that of ordinary shares. Benefits are in the form of an absence of a legal obligation to pay the dividend, improves borrowing capacity, saves dilution in control of existing shareholders, and no charge on assets.

The four main types of preference shares are callable shares, convertible shares, cumulative shares, and participatory shares. Each and every type of preferred share has a unique feature that may benefit either the shareholder or the issuer in the company.

i. Hawkers and Pedlars
ii. Market Traders
iii. Street Traders
iv. Cheap Jacks

The different types of industries are as follows:
i. Primary Industries: These industries deal with obtaining or offering raw materials which are processed as commodities for the customers. For example: Farming, Fishing.
ii. Secondary Industries: These are concerned with using the materials which have already been extracted at the primary stage. For example, manufacturing of steel is a secondary industry.
iii. Tertiary industries: These are concerned with providing support services to primary and secondary industries as well as activities relating to trade. These industries provide service facilities like transport, banking etc.

Industry, trade, and commerce are interrelated. Industry produces goods that are distributed through commerce. No commercial activity is possible in the absence of industry. At the same time, industrial production is meaningless without the distribution of goods through commerce. If the industry is the backbone of commerce, commerce serves as the lifeline of the industry.

Under contract manufacturing, a firm enters into a contract with some local manufacturers in foreign countries to manufacture certain components of goods produced as per their specifications. As a result, contract manufacturing is less risky and does not require resources for setting up the production facilities.
However, in the case of a wholly-owned subsidiary, the company has to make 100% equity investments in the foreign subsidiary and has to bear the entire losses in case of failure of its foreign operations.