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Class 11 Business Studies Notes

Chapter 1 Nature & Purpose of Business

Meaning of Business

Business refers to an economic activity involving production or purchase and sale of goods and services with the objective of earning profit.

Characteristics of Business

1. Economic Activity
   Related to production or distribution of goods/services.
2. Production or Procurement
   Goods are produced or purchased for sale.
3. Sale or Exchange
   Business involves transfer of goods/services for value.
4. Regular Dealings
   Activities must occur regularly.
5. Profit Earning
   Main aim is earning profit.
6. Uncertainty of Return
   Profit is never guaranteed.
7. Element of Risk
   Possibility of loss due to uncertainties
8. Business vs Profession vs Employment.

9. Basis	Business	Profession	Employment
   Meaning	Trade activities	Specialized services	Working for salary
   Qualification	Not compulsory	Required	Depends on job
   Motive	Profit	Service + income	Salary
   Risk	High	Low

   IndustryIndustry means production or extraction of goods.Types of Industry

   1. Primary Industry
      • Extractive (mining, fishing)
      • Genetic (agriculture)
   2. Secondary Industry
      • Manufacturing
      • Construction
   3. Tertiary Industry
      • Service industries like banking, transport.
      • CommerceCommerce helps in distribution of goods and services.Components of Commerce1. TradeBuying and selling of goods.Types of Trade
        • Internal Trade
          • Wholesale
          • Retail
        • External Trade
          • Import
          • Export
          • Entrepot

        2. Auxiliaries to TradeActivities helping trade:

        • Transport
        • Banking
        • Insurance
        • Warehousing
        • Advertising
        • Communication

        Objectives of BusinessEconomic Objectives

        • Earning profit
        • Growth
        • Market standing

        Social Objectives

        • Quality products
        • Fair prices
        • Employment generation
        • Environmental protection

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