Business Studies

Q. Explain The following terms:

1) Business:
A business is an organization or activity that provides goods or services to
people in exchange for money. Its main goal is to make a profit
OR any legal activity which is understated for the purpose of earning profit is
called business. For example, production, trading, whole selling or retailing.
2) Commerce:
Commerce is the activity of buying and selling goods and services. It involves
the trade between businesses or between businesses and consumers.
OR The activities or factors which are responsible or helpful in conveying the
goods and services from producer to consumers/customers.
3) Trade:
Trade is the act of exchanging goods or services between people or
businesses. It can happen locally or between different countries.
4) Industry:
Industry refers to a group of businesses or organizations that produce similar
goods or services. It includes activities like manufacturing, technology, and
agriculture, all aimed at creating economic value.
Q. Explain the types of Business.
1) Sole trader: A sole trader is a person who owns and runs their own business
by themselves. They are responsible for all decisions and profits, but also for
any debts the business may have.
2) Partnership: According to Partnership Act, 1932, A partnership is a business
arrangement where two or more people work together and share the
responsibilities, profits, and losses of the business. Each partner contributes
something, like money, skills, or resources.
3) Private limited Company: According to Company Act, 2017, A private
limited company is a business owned by a small group of people. Its shares are
not available to the public, which means only certain people can buy and own
shares. This type of company protects its owners from personal responsibility
for the company's debts.
4) Public Limited Company: According to Company Act, 2017 A public limited
company is a business that can sell its shares to the public on the stock market.
Anyone can buy shares, and the company is required to follow strict rules to
keep shareholders informed. Examples: Mc Donald’s, KFC, Apple, Tesla etc.
5) Franchise: A franchise is a business model where one person or company
(the franchisor) lets another person or company (the franchisee) use its brand,
products, and business systems in exchange for a fee or a percentage of sales.
This allows the franchisee to run a business with the support and reputation of
a well-known brand.
6) Joint Venture: A joint venture is when two or more businesses come
together to work on a specific project or goal. They share resources, risks, and
profits while keeping their individual companies separate. It's like a partnership
for a particular purpose.
Q. Explain Factor/ aids to Commerce
1. Transportation:
Good transportation systems (like roads, railways, and shipping) help move
goods from producers to customers quickly.
2. Communication:
Efficient communication (phones, internet) allows businesses to share
information and stay in touch with customers and suppliers.
3. Banking and Finance:
Banks provide services like loans and credit, helping businesses manage their
money and invest in growth.
4. Insurance:
Insurance protects businesses from potential losses due to accidents, theft, or
natural disasters, making them more secure.
5. Warehousing:
Storage facilities help businesses keep their products safe until they are sold,
ensuring a smooth supply chain.
6. Marketing and Advertising:
These activities help businesses promote their products and reach more
customers.
7. Legal and Regulatory Framework:
Laws and regulations provide a framework for fair practices and protect the
interests of businesses and consumers.
8. Technology:
Advances in technology can improve efficiency, reduce costs, and enhance
products and services.
Q. Explain the activity.
Ans: Activity is simply a task or action that someone does. It can refer to
anything from playing a game, working, learning, or any movement or process
that involves doing something. Activities can be fun, productive, or a way to
achieve a goal. It has two types like Economic Activity and Non-Economic
Activity.
Q. Explain the types of industry
1. Primary Industry:
This industry focuses on extracting natural resources. Examples include
farming, fishing, mining, and forestry. They provide raw materials for other
industries.
2. Secondary Industry:
This industry takes raw materials from the primary industry and turns them
into finished products. Examples include factories that make cars, clothing, or
furniture.
3. Tertiary Industry:
This industry provides services instead of goods. Examples include healthcare,
education, banking, and entertainment. It focuses on helping people and
businesses rather than producing products.
4. Quaternary Industry:
This is a more advanced sector that involves knowledge-based services like
research, technology, and consulting. It includes things like software
development and scientific research.

Q. Explain the types of trade.

1. Local Trade: This is the exchange of goods and services within a small
area or community. It involves buying and selling products in local
markets or shops.

2. National Trade: This trade occurs between different regions or states

within a country. It involves larger quantities of goods being moved
around the country.

3. International Trade: This is the exchange of goods and services between

countries. It includes importing (getting products from other countries)
and exporting (selling products to other countries).

Q. Explain the parties in involved in home trade

1. Producers:
These are individuals or businesses that create goods or provide services. They
produce the products that are sold in the market.
2. Wholesalers: Wholesalers buy large quantities of goods from producers and
then sell them in smaller quantities to retailers. They act as middlemen
between producers and retailers.
3.Retailers: Retailers are businesses that sell goods and services directly to
consumers. They buy products from wholesalers or producers and sell them in
shops or online.
4. Consumers: Consumers are the end-users who buy goods and services for
personal use. They are the people who shop at retail stores or online.
5. Distributors: Distributors are responsible for getting products from
producers to retailers. They help manage logistics and ensure that goods are
delivered on time.

Q. Explain the parties involved in foreign trade.

1. Exporters:
Exporters are businesses or individuals that sell goods and services to other
countries. They produce or source products locally and ship them abroad.
2. Importers: Importers are businesses or individuals that buy goods and
services from other countries. They purchase products from exporters and
bring them into their own country.
3. Freight Forwarders: These are companies that help manage the shipping
and logistics of transporting goods across borders. They arrange for
transportation, documentation, and customs clearance.
4.Customs Authorities: Customs officials are responsible for regulating the
flow of goods in and out of a country. They inspect shipments, collect duties or
taxes, and ensure that trade laws are followed.
5. Banks and Financial Institutions: Banks provide financing, foreign exchange
services, and letters of credit to facilitate international transactions, helping
both exporters and importers manage their payments.
6. Trade Agents/Brokers: These individuals or firms assist in connecting
exporters and importers, helping to negotiate deals and facilitate trade
agreements.
7. Consumers: Consumers in the importing country are the end-users who
purchase the foreign goods and services. Their preferences drive demand for
imported products.
Q. Explain the difference between home trade and foreign trade
1. Location:
-Home Trade: Involves buying and selling goods and services within the same
country.
-Foreign Trade: Involves buying and selling goods and services between
different countries.
2. Currency:
-Home Trade: Transactions typically involve the local currency of the country.
- Foreign Trade: Transactions may involve multiple currencies, with exchange
rates affecting prices.
3. Regulations:
- Home Trade: Governed by local laws and regulations specific to the
country.
- Foreign Trade: Subject to international laws, customs regulations, tariffs,
and trade agreements between countries.
4. Market Access:
-Home Trade: Focuses on domestic markets where consumers are familiar
with local products and services.
-Foreign Trade: Introduces businesses to new markets and consumers from
different cultural backgrounds, which can affect marketing and sales strategies.
5. Transportation Costs:
- Home Trade: Typically involves lower transportation costs since goods are
moved within a single country.
- Foreign Trade: Often incurs higher transportation costs and complexities
due to international shipping, customs, and logistics.
6. Risk Factors:
-Home Trade: Risks may include market fluctuations and local economic
changes.
-Foreign Trade: Involves additional risks such as political instability, currency
fluctuations, and changes in foreign regulations.
Q. Explain the factors to start a new business

1. Idea or Concept: You need a clear business idea that solves a problem or
fulfills a need in the market. This could be a product or service that
people want.

2. Market Research: Before starting, it's important to research the market

to understand your potential customers, competitors, and trends. This
helps you know if your idea will succeed.

3. Business Plan: A detailed business plan outlines how your business will
operate, including goals, target market, pricing strategy, and financial
projections. It serves as a roadmap for your business.

4. Capital: Determine how you will finance your business. This could be
through personal savings, loans, investors, or grants. You need enough
money to start and run the business until it becomes profitable.

5. Legal Structure: Decide on the legal structure of your business (like sole
proprietorship, partnership, or corporation). This affects taxes, liability,
and regulations.

6. Location: Choose a suitable location for your business, whether it’s a

physical store, office, or an online presence. The right location can
impact your customer reach.

7. Licenses and Permits: Check what licenses or permits you need to

operate legally in your area and industry. These are often required to
comply with local laws.

8. Marketing Strategy: Plan how you will promote your business and reach
customers. This could include advertising, social media, and networking.

9. Team: Consider who will help run the business. You may need managers,
partners, or advisors who bring different skills and expertise.

10.Adaptability: Be prepared to adapt and change your business approach

based on feedback and market changes. Flexibility is crucial for long-
term success.
 11. Factors of Production

The business needs factors of production like land, labor, capital and
enterprise to be able to operate effectively

12. Agents: They are essential for the business as they help to negotiate
contacts with another business and helps to sign deals and contacts.

Q. Explain the Qualities of a good business man

1. Risk-Taker: A good businessman is willing to take calculated risks. This
means they are not afraid to try new ideas or invest in opportunities that might
seem uncertain. They understand that taking some risks can lead to great
rewards, even if there is a chance of failure. Being a risk-taker helps them
explore new possibilities and grow their business.
2. Good Communication Skills: They are great at talking with others and
sharing their ideas clearly. This includes listening well to what others say. Good
communication helps them build strong relationships with customers,
employees, and partners. It ensures everyone is on the same page, which is
essential for teamwork and success.
3. Optimistic: A good businessman has a positive attitude about the future.
They believe that good things will happen and that challenges can be
overcome. This optimism helps them stay motivated during tough times and
encourages their team to do the same. It creates a positive work environment
and helps inspire confidence in others.
4. Innovative: They are creative and open to new ideas. A good businessman
constantly looks for better ways to do things, whether it’s improving products,
services, or processes. Being innovative means, they are willing to experiment
and think outside the box, which can lead to exciting new opportunities and
help set them apart from competitors.
5. Honest
6. Handworker
7. Professional experience
8- Visionary
9. Self-Confident
10- Well Disciplined
Q. Explain the difference between local and multinational company
1. Definition:
- Local Company: A business that operates primarily within a specific country
or region. It focuses on serving the local market and may have a small scale of
operations.
- MNC (Multinational Corporation): A large company that operates in
multiple countries around the world. It has facilities, branches, or subsidiaries
in different countries for global reach and marketing.
2. Market Focus:
- Local Company: Primarily targets local consumers and adjusts its products
and services to meet local preferences and needs.
- MNC: Aims to serve a global market, adapting its products to different
regions while maintaining a consistent brand image.
3.Scale of Operations:
- Local Company: Typically smaller in size, with fewer resources and limited
access to international markets.
- MNC: Much larger in scale, with significant financial resources, extensive
operations, and access to global supply chains.
4. Decision-Making:
- Local Company: Decision-making is usually quicker and more
straightforward, as it involves fewer layers of management and less
bureaucracy.
- MNC: Decision-making can be more complex due to the larger
organizational structure and the need to consider diverse markets and
regulations.
5. Regulatory Environment:
- Local Company: Operates under the laws and regulations of its home
country. Compliance is usually simpler.
- MNC: Must comply with regulations in all the countries where it operates,
which can be more complicated and challenging.

6. Financial Resources:
- Local Company: Usually relies on local funding sources, such as banks and
investors, which may limit its growth potential.
- MNC: Often has access to international market capital, allowing for larger
investments and expansion opportunities.

7. Cultural Influence:
- Local Company: Heavily influenced by local culture, traditions, and
customer preferences.
- MNC: Must learn to navigate various cultures and adapt its strategies
accordingly, which can lead to diverse marketing approaches.

Q. Explain Diversification:
Ans: The term diversification refers to the business that invests in different
channels like Gourmet invests in catering services, medicines, channels,
confectionary, retail services.
Q. Explain Business Objectives in detail
Ans: 1. Profit Maximization
2. Provisions of goods and services
3. Profit Satisficing.
4. Provides employment opportunities
5. Social welfare
6. Growth
7. Contribution to economic development
8. Survival
9. Capital Utilization
10. Higher Market Share