Chapter -1 : NATURE AND SCOPE OF BUSINESS - Chapter Notes, Business Study - Chemical Engineering PDF Download

 Page 1


1 Business Studies
Notes
MODULE-1
Business Around Us
1
NATURE AND SCOPE OF BUSINESS
I
n your day-to-day life you may be engaged in several activities. However, when some
one asks you as to what you want to become in your life or what you want to do in
future, your answer may be – “I want to join a suitable job or I want to become a doctor,
an engineer, a dancer or a musician”, or you may say , “I want to do my own business”. But
why do you want to do any of such activities? Obviously , it is mainly to earn your livelihood.
Broadly speaking, every human activity in which one is engaged for the purpose of earning
one’s livelihood is known as economic activity. In this lesson we shall learn about all such
activities, their categorisation and some other related aspects.
 OBJECTIVES
After studying this lesson, you will be able to:
• define human activities;
• classify human activities  as economic and non-economic activities;
• explain the meaning and characteristics of different categories of economic activities;
• explain the concept of business and distinguish it from profession and employment;
• describe the objectives and importance of business in modern society; and
• identify different types of business activities.
 1.1 HUMAN ACTIVITIES
Every human being is engaged in one activity or the other. It may be cultivating land,
preparing food, playing football, reading storybooks, studying in a school, teaching in a
college, working in an office, jogging in the park and so on. If you try to ascertain as to
why individuals engage themselves in one activity or the other, you will find that by doing
such activities they are trying to satisfy some of their needs or wants. All these activities
which human beings undertake to satisfy their needs or wants are called human activities.
Page 2


1 Business Studies
Notes
MODULE-1
Business Around Us
1
NATURE AND SCOPE OF BUSINESS
I
n your day-to-day life you may be engaged in several activities. However, when some
one asks you as to what you want to become in your life or what you want to do in
future, your answer may be – “I want to join a suitable job or I want to become a doctor,
an engineer, a dancer or a musician”, or you may say , “I want to do my own business”. But
why do you want to do any of such activities? Obviously , it is mainly to earn your livelihood.
Broadly speaking, every human activity in which one is engaged for the purpose of earning
one’s livelihood is known as economic activity. In this lesson we shall learn about all such
activities, their categorisation and some other related aspects.
 OBJECTIVES
After studying this lesson, you will be able to:
• define human activities;
• classify human activities  as economic and non-economic activities;
• explain the meaning and characteristics of different categories of economic activities;
• explain the concept of business and distinguish it from profession and employment;
• describe the objectives and importance of business in modern society; and
• identify different types of business activities.
 1.1 HUMAN ACTIVITIES
Every human being is engaged in one activity or the other. It may be cultivating land,
preparing food, playing football, reading storybooks, studying in a school, teaching in a
college, working in an office, jogging in the park and so on. If you try to ascertain as to
why individuals engage themselves in one activity or the other, you will find that by doing
such activities they are trying to satisfy some of their needs or wants. All these activities
which human beings undertake to satisfy their needs or wants are called human activities.
Senior Secondary
Notes
2
MODULE -1
Business Around Us
However, even if all human activities satisfy the needs and wants, they differ among each
other in terms of the purpose for which they are undertaken and the end result. For example,
let us take the activity of preparing food – one prepared by a mother at home for her
family and the other by a cook in a hotel. Here you will notice that the purpose and end
result of the activity of preparing food (a) by a mother and (b) by a cook varies. In the first
case, the purpose is to feed the family members without any expectation of monetary
return while in the second case, cooking food is a part of his job so as to earn money in
terms of salary or wage. The end result in the first case is ‘self-satisfaction’ and looking
after the family , while in the second case it is ‘earning money’ for livelihood.
The human activities that are undertaken with an objective to earn money or livelihood  are
called economic activities. Whereas the other types of activities that are undertaken to
derive self-satisfaction, are called non-economic activities. A farmer growing crops, a
worker working in a factory for wage/salary , a businessman  engaged in buying and selling
of goods are examples of economic activities. While activities like meditation, engaging in
sports for physical fitness, listening to music, providing relief to flood victims etc., are
examples of non-economic activities.
INTEXT QUESTIONS 1A
1. Define ‘economic activities’.
______________________________________________________________
______________________________________________________________
2. Below are given certain non-economic activities. Convert them into economic activities.
Example: A nurse attending her ailing son. (Non-economic activity)
A nurse attending patients in her hospital. (Economic activity)
(a) A person working in his own garden.
___________________________________________________________
(b) A lady preparing food for her husband.
___________________________________________________________
(c) A man white-washing his own house.
___________________________________________________________
(d) A teacher teaching his son at home.
___________________________________________________________
(e) A chartered accountant preparing his own accounts.
___________________________________________________________
Page 3


1 Business Studies
Notes
MODULE-1
Business Around Us
1
NATURE AND SCOPE OF BUSINESS
I
n your day-to-day life you may be engaged in several activities. However, when some
one asks you as to what you want to become in your life or what you want to do in
future, your answer may be – “I want to join a suitable job or I want to become a doctor,
an engineer, a dancer or a musician”, or you may say , “I want to do my own business”. But
why do you want to do any of such activities? Obviously , it is mainly to earn your livelihood.
Broadly speaking, every human activity in which one is engaged for the purpose of earning
one’s livelihood is known as economic activity. In this lesson we shall learn about all such
activities, their categorisation and some other related aspects.
 OBJECTIVES
After studying this lesson, you will be able to:
• define human activities;
• classify human activities  as economic and non-economic activities;
• explain the meaning and characteristics of different categories of economic activities;
• explain the concept of business and distinguish it from profession and employment;
• describe the objectives and importance of business in modern society; and
• identify different types of business activities.
 1.1 HUMAN ACTIVITIES
Every human being is engaged in one activity or the other. It may be cultivating land,
preparing food, playing football, reading storybooks, studying in a school, teaching in a
college, working in an office, jogging in the park and so on. If you try to ascertain as to
why individuals engage themselves in one activity or the other, you will find that by doing
such activities they are trying to satisfy some of their needs or wants. All these activities
which human beings undertake to satisfy their needs or wants are called human activities.
Senior Secondary
Notes
2
MODULE -1
Business Around Us
However, even if all human activities satisfy the needs and wants, they differ among each
other in terms of the purpose for which they are undertaken and the end result. For example,
let us take the activity of preparing food – one prepared by a mother at home for her
family and the other by a cook in a hotel. Here you will notice that the purpose and end
result of the activity of preparing food (a) by a mother and (b) by a cook varies. In the first
case, the purpose is to feed the family members without any expectation of monetary
return while in the second case, cooking food is a part of his job so as to earn money in
terms of salary or wage. The end result in the first case is ‘self-satisfaction’ and looking
after the family , while in the second case it is ‘earning money’ for livelihood.
The human activities that are undertaken with an objective to earn money or livelihood  are
called economic activities. Whereas the other types of activities that are undertaken to
derive self-satisfaction, are called non-economic activities. A farmer growing crops, a
worker working in a factory for wage/salary , a businessman  engaged in buying and selling
of goods are examples of economic activities. While activities like meditation, engaging in
sports for physical fitness, listening to music, providing relief to flood victims etc., are
examples of non-economic activities.
INTEXT QUESTIONS 1A
1. Define ‘economic activities’.
______________________________________________________________
______________________________________________________________
2. Below are given certain non-economic activities. Convert them into economic activities.
Example: A nurse attending her ailing son. (Non-economic activity)
A nurse attending patients in her hospital. (Economic activity)
(a) A person working in his own garden.
___________________________________________________________
(b) A lady preparing food for her husband.
___________________________________________________________
(c) A man white-washing his own house.
___________________________________________________________
(d) A teacher teaching his son at home.
___________________________________________________________
(e) A chartered accountant preparing his own accounts.
___________________________________________________________
3 Business Studies
Notes
MODULE-1
Business Around Us
 1.2 CLASSIFICATION OF ECONOMIC ACTIVITIES
Economic activity can be a one-shot affair or a continuous one. For example, you know
how to stitch clothes and one day you stitch a shirt for your friend and he pays some
money to you. Of course, this is an economic activity as you have some monetary gain but
it is a one-shot affair. But, if you start stitching shirts on a continuous basis and charge
money for that, you are said to be engaged in some continuous or regular economic activity .
It may be noted that by getting themselves engaged regularly in a particular economic
activity people try to earn their livelihood. So, the activities in which individuals engage
themselves on a regular basis and earn their livelihood are known as their ‘occupations’.
In fact everyone is engaged in one occupation or the other, and these can be broadly
categorised as –
(a) Profession;
(b) Employment; and
(c) Business.
Let us know a few more details about these occupations.
1.2.1 PROFESSION
Y ou are aware of doctors. What are they and what do they do? They are basically individuals
who have a special knowledge and training to examine the patients, find out the ailment, if
any, and then treat them to be cured from such ailment. And, for doing all these they
charge a fee from patients. Similarly, we have Chartered Accountants who specialise in
matters related to accounts, taxes etc. and help people and organisations for such jobs for
a fee. If we look further, we find Engineers, Architects, Film-stars, Dancers, Artists and
many others engaged in their own field having specialised knowledge and training. They
are all known as professionals and the activities they are engaged in are called profession.
In order to gain clarity on the concept of a profession, let us look at its basic features
which can be summarised as follows:
(a) Profession is an occupation for which the individual has to acquire a special knowledge
and skill.
(b) The money they get for providing such a service is usually known as ‘fee’.
(c) Most of the professionals are regulated by a professional body, which frames the
code of conduct to be followed by the member professionals. For example, Chartered
Accountants in India are regulated by a professional body known as Institutes of
Chartered Accountants of India, Cricketers by International Cricket Council (ICC),
and so on.
(d) Professionals acquire the specialised knowledge mostly from colleges, universities or
specialised institutes. In some cases, individuals also acquire such knowledge and skill
through training or coaching by an expert in the same field, say for example, dancers
and musicians, etc.
 
Any activity, which 
requires special 
knowledge and skill to 
be applied by an 
individual to earn a 
living, is known as 
Profession.  
 

 Medical Profession 
is regulated by 
Medical Council of 
India 

 Law Profession is 
regulated by Bar 
Council of India. 

 Engineering 
profession is 
regulated by The 
Institution of 
Engineers.  
Page 4


1 Business Studies
Notes
MODULE-1
Business Around Us
1
NATURE AND SCOPE OF BUSINESS
I
n your day-to-day life you may be engaged in several activities. However, when some
one asks you as to what you want to become in your life or what you want to do in
future, your answer may be – “I want to join a suitable job or I want to become a doctor,
an engineer, a dancer or a musician”, or you may say , “I want to do my own business”. But
why do you want to do any of such activities? Obviously , it is mainly to earn your livelihood.
Broadly speaking, every human activity in which one is engaged for the purpose of earning
one’s livelihood is known as economic activity. In this lesson we shall learn about all such
activities, their categorisation and some other related aspects.
 OBJECTIVES
After studying this lesson, you will be able to:
• define human activities;
• classify human activities  as economic and non-economic activities;
• explain the meaning and characteristics of different categories of economic activities;
• explain the concept of business and distinguish it from profession and employment;
• describe the objectives and importance of business in modern society; and
• identify different types of business activities.
 1.1 HUMAN ACTIVITIES
Every human being is engaged in one activity or the other. It may be cultivating land,
preparing food, playing football, reading storybooks, studying in a school, teaching in a
college, working in an office, jogging in the park and so on. If you try to ascertain as to
why individuals engage themselves in one activity or the other, you will find that by doing
such activities they are trying to satisfy some of their needs or wants. All these activities
which human beings undertake to satisfy their needs or wants are called human activities.
Senior Secondary
Notes
2
MODULE -1
Business Around Us
However, even if all human activities satisfy the needs and wants, they differ among each
other in terms of the purpose for which they are undertaken and the end result. For example,
let us take the activity of preparing food – one prepared by a mother at home for her
family and the other by a cook in a hotel. Here you will notice that the purpose and end
result of the activity of preparing food (a) by a mother and (b) by a cook varies. In the first
case, the purpose is to feed the family members without any expectation of monetary
return while in the second case, cooking food is a part of his job so as to earn money in
terms of salary or wage. The end result in the first case is ‘self-satisfaction’ and looking
after the family , while in the second case it is ‘earning money’ for livelihood.
The human activities that are undertaken with an objective to earn money or livelihood  are
called economic activities. Whereas the other types of activities that are undertaken to
derive self-satisfaction, are called non-economic activities. A farmer growing crops, a
worker working in a factory for wage/salary , a businessman  engaged in buying and selling
of goods are examples of economic activities. While activities like meditation, engaging in
sports for physical fitness, listening to music, providing relief to flood victims etc., are
examples of non-economic activities.
INTEXT QUESTIONS 1A
1. Define ‘economic activities’.
______________________________________________________________
______________________________________________________________
2. Below are given certain non-economic activities. Convert them into economic activities.
Example: A nurse attending her ailing son. (Non-economic activity)
A nurse attending patients in her hospital. (Economic activity)
(a) A person working in his own garden.
___________________________________________________________
(b) A lady preparing food for her husband.
___________________________________________________________
(c) A man white-washing his own house.
___________________________________________________________
(d) A teacher teaching his son at home.
___________________________________________________________
(e) A chartered accountant preparing his own accounts.
___________________________________________________________
3 Business Studies
Notes
MODULE-1
Business Around Us
 1.2 CLASSIFICATION OF ECONOMIC ACTIVITIES
Economic activity can be a one-shot affair or a continuous one. For example, you know
how to stitch clothes and one day you stitch a shirt for your friend and he pays some
money to you. Of course, this is an economic activity as you have some monetary gain but
it is a one-shot affair. But, if you start stitching shirts on a continuous basis and charge
money for that, you are said to be engaged in some continuous or regular economic activity .
It may be noted that by getting themselves engaged regularly in a particular economic
activity people try to earn their livelihood. So, the activities in which individuals engage
themselves on a regular basis and earn their livelihood are known as their ‘occupations’.
In fact everyone is engaged in one occupation or the other, and these can be broadly
categorised as –
(a) Profession;
(b) Employment; and
(c) Business.
Let us know a few more details about these occupations.
1.2.1 PROFESSION
Y ou are aware of doctors. What are they and what do they do? They are basically individuals
who have a special knowledge and training to examine the patients, find out the ailment, if
any, and then treat them to be cured from such ailment. And, for doing all these they
charge a fee from patients. Similarly, we have Chartered Accountants who specialise in
matters related to accounts, taxes etc. and help people and organisations for such jobs for
a fee. If we look further, we find Engineers, Architects, Film-stars, Dancers, Artists and
many others engaged in their own field having specialised knowledge and training. They
are all known as professionals and the activities they are engaged in are called profession.
In order to gain clarity on the concept of a profession, let us look at its basic features
which can be summarised as follows:
(a) Profession is an occupation for which the individual has to acquire a special knowledge
and skill.
(b) The money they get for providing such a service is usually known as ‘fee’.
(c) Most of the professionals are regulated by a professional body, which frames the
code of conduct to be followed by the member professionals. For example, Chartered
Accountants in India are regulated by a professional body known as Institutes of
Chartered Accountants of India, Cricketers by International Cricket Council (ICC),
and so on.
(d) Professionals acquire the specialised knowledge mostly from colleges, universities or
specialised institutes. In some cases, individuals also acquire such knowledge and skill
through training or coaching by an expert in the same field, say for example, dancers
and musicians, etc.
 
Any activity, which 
requires special 
knowledge and skill to 
be applied by an 
individual to earn a 
living, is known as 
Profession.  
 

 Medical Profession 
is regulated by 
Medical Council of 
India 

 Law Profession is 
regulated by Bar 
Council of India. 

 Engineering 
profession is 
regulated by The 
Institution of 
Engineers.  
Senior Secondary
Notes
4
MODULE -1
Business Around Us
(e) Professionals usually work on their own and get a fee for their services and termed as
those in practice. However, some of them may work in organisations as employees or
consultants.
(f) The primary objective of every profession is to provide service though they may charge
a fee. They should not exploit the people using their knowledge of expertise.
All those economic activities which involves the rendering of personal
service of specialised and expert nature based on professional training
and skill and require the observance of certain rules and regulations
(code of conduct) are termed as Professions.
1.2.2 EMPLOYMENT
Y ou have seen people going regularly to offices, factories, firms etc. for work. These are
individuals who are engaged by organisations or individuals to work for them in return for
a wage or salary. They are said to be in employment. Thus, we find a postman is in
employment in the department of posts to deliver letters. Here the department is called the
employer and the postman is the employee. The postman works on the basis of certain
terms and conditions and gets a monthly salary in return. The main features of employment
are:
(a) It is an occupation where a person (called employee) is to work for another (called
employer).
(b) There are certain terms and conditions of work like hours of work (how many hours
a day), duration of work (how many days or hours in a week or month etc.), leave
facility , salary/wages, place of work etc.
(c) The employees get salary (normally paid on a monthly basis) or wage (normally paid
on daily/weekly basis) in return of their work. This amount is normally predetermined,
mutually agreed upon and may increase over time.
(d) Legally the employer-employee relationship is based on a contract and any deviation
from any side permits the other party to take legal recourse.
(e) There are jobs for which no technical education or specialised skill is required for
employment. But, for skilled jobs, specialised jobs and technical jobs, a certain level
of basic/technical education is required.
(f) The main purpose behind employment is to secure assured income through wages
and salaries.
The economic activity, rendered by one person to another, under a
contract of service, for some remuneration, is called employment.
1.2.3 BUSINESS
Y ou must have heard about T ata Companies. They manufacture so many things from salt
to trucks and buses and sell these to individuals like you and me. In the process, they earn
 
When a person works 
regularly for others 
and gets wages/salary 
in return, he is said to 
be in Employment. 
Page 5


1 Business Studies
Notes
MODULE-1
Business Around Us
1
NATURE AND SCOPE OF BUSINESS
I
n your day-to-day life you may be engaged in several activities. However, when some
one asks you as to what you want to become in your life or what you want to do in
future, your answer may be – “I want to join a suitable job or I want to become a doctor,
an engineer, a dancer or a musician”, or you may say , “I want to do my own business”. But
why do you want to do any of such activities? Obviously , it is mainly to earn your livelihood.
Broadly speaking, every human activity in which one is engaged for the purpose of earning
one’s livelihood is known as economic activity. In this lesson we shall learn about all such
activities, their categorisation and some other related aspects.
 OBJECTIVES
After studying this lesson, you will be able to:
• define human activities;
• classify human activities  as economic and non-economic activities;
• explain the meaning and characteristics of different categories of economic activities;
• explain the concept of business and distinguish it from profession and employment;
• describe the objectives and importance of business in modern society; and
• identify different types of business activities.
 1.1 HUMAN ACTIVITIES
Every human being is engaged in one activity or the other. It may be cultivating land,
preparing food, playing football, reading storybooks, studying in a school, teaching in a
college, working in an office, jogging in the park and so on. If you try to ascertain as to
why individuals engage themselves in one activity or the other, you will find that by doing
such activities they are trying to satisfy some of their needs or wants. All these activities
which human beings undertake to satisfy their needs or wants are called human activities.
Senior Secondary
Notes
2
MODULE -1
Business Around Us
However, even if all human activities satisfy the needs and wants, they differ among each
other in terms of the purpose for which they are undertaken and the end result. For example,
let us take the activity of preparing food – one prepared by a mother at home for her
family and the other by a cook in a hotel. Here you will notice that the purpose and end
result of the activity of preparing food (a) by a mother and (b) by a cook varies. In the first
case, the purpose is to feed the family members without any expectation of monetary
return while in the second case, cooking food is a part of his job so as to earn money in
terms of salary or wage. The end result in the first case is ‘self-satisfaction’ and looking
after the family , while in the second case it is ‘earning money’ for livelihood.
The human activities that are undertaken with an objective to earn money or livelihood  are
called economic activities. Whereas the other types of activities that are undertaken to
derive self-satisfaction, are called non-economic activities. A farmer growing crops, a
worker working in a factory for wage/salary , a businessman  engaged in buying and selling
of goods are examples of economic activities. While activities like meditation, engaging in
sports for physical fitness, listening to music, providing relief to flood victims etc., are
examples of non-economic activities.
INTEXT QUESTIONS 1A
1. Define ‘economic activities’.
______________________________________________________________
______________________________________________________________
2. Below are given certain non-economic activities. Convert them into economic activities.
Example: A nurse attending her ailing son. (Non-economic activity)
A nurse attending patients in her hospital. (Economic activity)
(a) A person working in his own garden.
___________________________________________________________
(b) A lady preparing food for her husband.
___________________________________________________________
(c) A man white-washing his own house.
___________________________________________________________
(d) A teacher teaching his son at home.
___________________________________________________________
(e) A chartered accountant preparing his own accounts.
___________________________________________________________
3 Business Studies
Notes
MODULE-1
Business Around Us
 1.2 CLASSIFICATION OF ECONOMIC ACTIVITIES
Economic activity can be a one-shot affair or a continuous one. For example, you know
how to stitch clothes and one day you stitch a shirt for your friend and he pays some
money to you. Of course, this is an economic activity as you have some monetary gain but
it is a one-shot affair. But, if you start stitching shirts on a continuous basis and charge
money for that, you are said to be engaged in some continuous or regular economic activity .
It may be noted that by getting themselves engaged regularly in a particular economic
activity people try to earn their livelihood. So, the activities in which individuals engage
themselves on a regular basis and earn their livelihood are known as their ‘occupations’.
In fact everyone is engaged in one occupation or the other, and these can be broadly
categorised as –
(a) Profession;
(b) Employment; and
(c) Business.
Let us know a few more details about these occupations.
1.2.1 PROFESSION
Y ou are aware of doctors. What are they and what do they do? They are basically individuals
who have a special knowledge and training to examine the patients, find out the ailment, if
any, and then treat them to be cured from such ailment. And, for doing all these they
charge a fee from patients. Similarly, we have Chartered Accountants who specialise in
matters related to accounts, taxes etc. and help people and organisations for such jobs for
a fee. If we look further, we find Engineers, Architects, Film-stars, Dancers, Artists and
many others engaged in their own field having specialised knowledge and training. They
are all known as professionals and the activities they are engaged in are called profession.
In order to gain clarity on the concept of a profession, let us look at its basic features
which can be summarised as follows:
(a) Profession is an occupation for which the individual has to acquire a special knowledge
and skill.
(b) The money they get for providing such a service is usually known as ‘fee’.
(c) Most of the professionals are regulated by a professional body, which frames the
code of conduct to be followed by the member professionals. For example, Chartered
Accountants in India are regulated by a professional body known as Institutes of
Chartered Accountants of India, Cricketers by International Cricket Council (ICC),
and so on.
(d) Professionals acquire the specialised knowledge mostly from colleges, universities or
specialised institutes. In some cases, individuals also acquire such knowledge and skill
through training or coaching by an expert in the same field, say for example, dancers
and musicians, etc.
 
Any activity, which 
requires special 
knowledge and skill to 
be applied by an 
individual to earn a 
living, is known as 
Profession.  
 

 Medical Profession 
is regulated by 
Medical Council of 
India 

 Law Profession is 
regulated by Bar 
Council of India. 

 Engineering 
profession is 
regulated by The 
Institution of 
Engineers.  
Senior Secondary
Notes
4
MODULE -1
Business Around Us
(e) Professionals usually work on their own and get a fee for their services and termed as
those in practice. However, some of them may work in organisations as employees or
consultants.
(f) The primary objective of every profession is to provide service though they may charge
a fee. They should not exploit the people using their knowledge of expertise.
All those economic activities which involves the rendering of personal
service of specialised and expert nature based on professional training
and skill and require the observance of certain rules and regulations
(code of conduct) are termed as Professions.
1.2.2 EMPLOYMENT
Y ou have seen people going regularly to offices, factories, firms etc. for work. These are
individuals who are engaged by organisations or individuals to work for them in return for
a wage or salary. They are said to be in employment. Thus, we find a postman is in
employment in the department of posts to deliver letters. Here the department is called the
employer and the postman is the employee. The postman works on the basis of certain
terms and conditions and gets a monthly salary in return. The main features of employment
are:
(a) It is an occupation where a person (called employee) is to work for another (called
employer).
(b) There are certain terms and conditions of work like hours of work (how many hours
a day), duration of work (how many days or hours in a week or month etc.), leave
facility , salary/wages, place of work etc.
(c) The employees get salary (normally paid on a monthly basis) or wage (normally paid
on daily/weekly basis) in return of their work. This amount is normally predetermined,
mutually agreed upon and may increase over time.
(d) Legally the employer-employee relationship is based on a contract and any deviation
from any side permits the other party to take legal recourse.
(e) There are jobs for which no technical education or specialised skill is required for
employment. But, for skilled jobs, specialised jobs and technical jobs, a certain level
of basic/technical education is required.
(f) The main purpose behind employment is to secure assured income through wages
and salaries.
The economic activity, rendered by one person to another, under a
contract of service, for some remuneration, is called employment.
1.2.3 BUSINESS
Y ou must have heard about T ata Companies. They manufacture so many things from salt
to trucks and buses and sell these to individuals like you and me. In the process, they earn
 
When a person works 
regularly for others 
and gets wages/salary 
in return, he is said to 
be in Employment. 
5 Business Studies
Notes
MODULE-1
Business Around Us
a profit. Look at a shopkeeper nearby. What does he do? He buys products in bulk and
sells us in small quantities. He also earns some profit in the process. Similarly , the cable TV
operator provides us a connection at a price so that we watch various channels on our
television set. In this process the cable TV operator earns a profit. All of them are said to
be engaged in business and are called businessmen. They all perform their activities regularly
to earn profit. Thus, the term ‘business’ refers to human activities which involve production
or exchange of goods and services regularly with the object of earning profit.
Business may be defined as an activity involving regular production
or purchase of goods and services for sale, transfer and exchange
with an object of earning profit.
W e find people like mill owners, transporters, bankers, traders, tailors, taxi operators etc.
doing business. All of them are engaged in an activity of manufacturing or trading (buying
and selling) or providing some service. They have invested their money, bear the risks
involved and work for earning some profit. Thus, the main characteristics of business are:
(a) It is an occupation where a person is engaged in manufacturing or buying and selling of
goods and services. The goods may be consumer goods or capital goods. Similarly
the services may be in the form of transportation, banking, insurance etc.
(b) The activities must be carried on regularly . A single transaction is usually not treated as
a business. For example, if a person sells his old car at a profit, it is not treated as a
business activity . However, if he is engaged in the activity of buying old cars and selling
them on a regular basis, he shall be treated as engaged in business activity.
(c) The sole objective of business is to earn profit. It is essential for the survival of business.
Of course, it is through provision of some goods or some services.
(d) Every business requires some investment in cash or kind or both. It is usually provided
by the owner or is borrowed by him at his own risk.
(e) The earnings are always uncertain, because the future is unpredictable and a businessman
has no control over certain factors that affect his earnings. Thus, every business involves
an element of risk and the same is borne by the businessman, the owner.
 INTEXT QUESTIONS 1B
1. Define the term ‘profession’ in your own words.
______________________________________________________________
2. Following is a list of activities. Classify these activities as Business, Profession or
Employment by putting their number in the circles provided at the end of the question.
(a) Policeman on duty at your local police station.
Goods used by final
consumers are called
consumers’ goods. Goods
those used in the
production of other
goods are known as
producers’ goods or
capital goods.