Definition of Business & Primary Activities
Urwick & Hunt's core framework and human wants satisfaction
"Business is any enterprise which makes, distributes, or provides any article or service, which other members of the community need and are able and willing to pay for."
Key Objective: Production, purchase, or rendering services with the object of selling them at a profit.
Cause of Business Activities
Unlimited wants of human beings and the necessity to satisfy them. While basic needs are food, clothing, and shelter, complex modern needs include electronics, soap, and vehicles.
Two Core Categories
Business activities are broadly divided into:
1. Industry: Production side of business.
2. Commerce: Distribution side of business.
Industry & Its Classification
Production side, supply side of market & 6 categories of industries
Consumer Goods
Goods used finally by ultimate consumers directly.
Examples: Food grains, textiles, cosmetics, soap, bread.
Producer's / Capital Goods
Goods used by manufacturers for producing other goods.
Examples: Machinery, tools, industrial equipment.
Detailed Types of Industries
Concerned with production of goods with direct help of nature. Nature-oriented requiring minimal human effort.
Engaged in reproduction and multiplication of certain species of plants and animals with the objective of sale for profit.
Concerned with drawing out goods from soil, air, or water. Outputs serve as raw materials for manufacturing/construction.
Transforming raw materials into finished products using machines and manpower. Produces consumer or producer goods.
Takes up work of erecting structures. Distinct because goods are produced and erected at fixed locations.
Modern sector delivering intangible services that drive national development.
Commerce: Trade & Aids to Trade
Distribution framework and the 5 critical auxiliaries
Concept of Trade
Trade denotes buying and selling. A trader acts as an essential middleman between the producer and consumer.
Textbook Application Case Study
Dalmia Oil Mills produces refined oil → Ruchi Oil Depot lifts the whole production → Sells to Balaji Groceries → Mrs. Priti buys 2 kg.
5 Aids to Trade (Auxiliaries)
1. Transportation
Moves men and materials across land (road/rail), air, and water.
2. Warehousing
Careful storage in godowns from production time until final sale.
3. Insurance
Covers risk of fire, theft, or accidents by paying a periodic premium.
4. Advertising
Creates demand. Indoor (TV, radio, press) & Outdoor (hoardings, cinema).
5. Banking
Supplies finance, accepts deposits, and lends money required for smooth operations.
E-Commerce & Operating Models
Electronic transactions, benefits, and market categories
Definition of E-Commerce
Buying and selling of goods/services over computer networks (Internet) through electronically performed financial transactions. Online retail selling is also known as e-tailing.
Business-to-Business
Manufacturers to distributors; wholesalers to retailers. Pricing is quantity-based and negotiable. Highest dollar volume.
Business-to-Consumer
Businesses selling directly to general public using online store catalog & shopping cart software.
Consumer-to-Business
Consumer posts project & budget online; companies bid for the project. Empowers global consumers.
Consumer-to-Consumer
Person-to-person online classifieds, auctions (e.g. eBay), and payment transfers.
Traditional Business vs. E-Business (NIOS Textbook Table)
| Basis of Difference | Traditional Business | E-Business |
|---|---|---|
| i. Formation | Difficult | Easy |
| ii. Physical Presence | Necessary | Not necessary |
| iii. Cost of Establishment | More | Less |
| iv. Operating Cost | High (procurement, marketing, physical facilities) | Low (no physical marketing facilities needed) |
| v. Dealing Time | More | Less (transactions settled on Internet) |
| vi. Interpersonal Touch | More | Less |
| vii. Length of Business Cycle | Longer (sequential process relationship) | Shorter (processes completed simultaneously) |
| viii. Government Help | Less | More (priority given to IT sector) |
| ix. Global Reach | Less | More |