Please refer to the Nature and Significance of Business Revision Notes given below. These revision notes have been designed as per the latest NCERT, CBSE and KVS books issued for the current academic year. Students will be able to understand the entire chapter in your class 12th Business Studies book. We have provided chapter wise Notes for Class 12 Business Studies as per the latest examination pattern.
Revision Notes Chapter 1 Nature and Significance of Business
Students of Class 12 Business Studies will be able to revise the entire chapter and also learn all important concepts based on the topic wise notes given below. Our best teachers for Grade 12 have prepared these to help you get better marks in upcoming examinations. These revision notes cover all important topics given in this chapter.
All Human beings where ever they may be require different type of goods and services to satisfy their needs. Business is a major economic activity in all modern societies concerned with production and sale of goods and services required by the people. It is aimed at earning money by satisfying human demands.
Literal meaning of Business is “BUSY”.
Business is defined as an economic activity
involved in the production and sales of goods and services
undertaken with the motive of earning profit
by satisfying human needs in the society.
- Characteristics of Business activities:
- An Economic activity: It means an activity aimed at earning money. Business is also aimed at earning money or livelihood by satisfying human needs.
- Production and procurement of goods and services: Every business enterprise must either manufacture the goods or it acquires from producers. Goods may be consumer goods or Capital goods. Services means facility offered to consumers like banking, insurance etc.
- Sale or exchange of goods and services: Business involves transfer or exchange of goods and service for value.
- Dealing in goods and services on a regular basis: It should be a regular activity. One time sale or exchange will not be considered as business.
- Profit earning: Business always aims at earning profit.
- Uncertainty of earning: There is always a possibility of less amount of profit or even loss in business.
- Element of Risk: There is always a possibility of Uncertainty of earnings.
- Comparison of Business, Profession and Employment:
- Classification of Business Activities:
- Industry: Production or processing of goods and services. It is concerned with changing the form of the products. It gives form utility to the products. It is classified into the following:
- Commerce: It includes all those activities which are concerned with removing all the hindrances in the movement of goods from the manufacturer to the consumers. It includes the following activities.
Commerce includes the following activities :
2. Trade – Export, Import
3. Transport and communication
8. Warehousing etc.,
- Trade : Trade means exchange of goods and services between sellers and buyers with profit motive.
Auxiliaries to Trade:
- Role of Profit in Business:
- It is source of income for the business man.
- It provides funds for expansion
- It is an indicator of efficiency of business man.
- It builds up reputation.
Business Risk: It refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events.
Causes of Business Risks:
1. Natural Causes : Risk may be due to Flood, earth quake, lightning, heavy rains etc.
2. Human Causes: It includes dishonesty, carelessness or negligence of employees, strikes, riots, etc.
3. Economic Causes: It includes uncertainties relating to demand for goods, competition, price, collection of dues from customers, changes in economic policies etc.
4. Other Causes: It includes political disturbances, mechanical failures etc.
- Basic factors to be considered before starting a Business:
1. Selection of Line of Business: Based on the requirements in the market nature and type of business to be selected.
2.Size of the Firm: Based on the amount of funds available and demand for the product in the market size of the firm i.e small scale or medium or large scale to be decided.
3.Choice of form of ownership: Based on the amount of capital required, legal formalities to be filled in, liability of the owner, etc. the form of ownership is to be decided.
4.Location of the Business enterprise: Based on the availability of raw material and infrastructure facilities location of the Business is to be selected.
5. Financing the Proposition: Requirement of Capital and its sources must be decided.
6.Physical facilities: Availability of physical facilities including machines and equipment, building and supportive services to be considered before starting a business.
7. Plant layout: Plant layout should draw to show the arrangement of these facilities.
8.Competent and committed worked force: Every business needs work force. So careful planning should be about selection, training and motivation of employees.
9. Tax Planning: Tax liability and its impact on business to be considered.
10. Launching the enterprise: After fulfilling the formalities entrepreneur can launch the business.
Short Answer type Questions :
Question. State examples of Analytical industries.
Ans. Petrol, diesel
Question. Which industry provides services to primary and secondary industry?
Ans. Tertiary industry
Question. Name the trade where the goods are bought from the foreign country.
Ans. Import trade.
Question. What is meant by Business Risk? Explain the features of it.
Ans. Meaning and Features
Question. Describe the meaning of Commerce.
Ans. Meaning of commerce.
Question. State the different types of economic activities.
Ans. Business, profession and Employment.
Long Answer type Questions:
Question. Explain the meaning and causes of business risk.
Ans. Meaning and causes.
Question. Compare the business, profession and employment.
Ans. Table showing the comparison above.
Question. Profit play an important role in business. Give four reasons to justify the statement.
Ans. Role of profit in business
Question. Give the meaning and two examples of Economic activities.
Ans. Meaning. Ex. A person selling tea and coffee in the railway station 2. Doctor treating patients at his clinic.
Question. Risk is an inherent element of a Business. Do you agree? Explain.
Ans. Meaning and Nature of Business Risks .
Question. Harish produces wheat for personal consumption. Will it be a business activity?
Ans. No.As it is not for performed for earning profit.
Question. A person sells his old car at a profit. Can it be termed as a business activity? Explain.
Ans. No. because business involves dealing in goods on regular basis. Brief Explanation of features of business.