CBSE Business Studies Class XI

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Business Studies - CBSE CLASS XI

Nature And Purpose of Business

 

1. Trade : Refers to buying and selling of goods and services with the objective of earning profit. It is classified into two categories.

   i) Internal Trade :- Takes place within a country. Internal trade is classified into two categories.

   ii) Retail Trade :- Refers to buying of goods and services in relatively small Quantities and selling them to the ultimate consumers.

2. External Trade :- between two or more countries. External trade can be classified into three categories.
   
   
   1. Import Trade :- If goods are purchased from another country, it is called import trade.
   
   
   2. Export Trade :- If goods are sold to other countries it is called export trade.
   
   
   3. Entrepot Trade :- Where goods are imported for export to other countries e.g. Indian firm may import some goods from America and export the same to Nepal.
   
   
3. Auxiliaries to Trade :- All those activities which help in removing various hindrances which arise in connection with the production and distribution of goods are called auxiliaries to trade. An overview of these activities is given below.


1. Transportation and Communication :- The production of goods takes place at one place where as these are demanded in different parts of the country. The obstacle of place is removed by the transport. Along with transport communication is also an important service. It helps in exchange of information between producers, consumers and traders. The common communication services are postal service, telephone, fax, internet etc.


2. Banking and Finance :- Business needs funds for acquiring assets, purchasing raw materials and meeting other expenses. Necessary funds can be obtained from a bank.


3. Insurance :- It provides a cover against the loss of goods, in the process of transit, storage, theft, fire and other natural calamities.


4. Warehousing :- There is generally a time lag between the production and consumption of goods. This problem can be solved by storing the goods in warehouses.


5. Advertising :- Advertising brings goods & services to the knowledge of prospective buyers. It is through advertising that the customers come to know about the new products and their utility.



Basis	Industry	Commerce	Trade
Meaning	Production of good & services	Distribution of goods & services	Buying and selling of goods and services
Capital requirement	Large amount of capital invested	Comparatively lesser Invested capital	Less capital depending on the nature of business
Scope	It includes primary, secondary and services industries	It includes trade & auxiliaries to trade	It includes home and foreign trade
Risk	Involves maximum risk	less risk as Compared to industry	Least risk involved
Utility	Created form	Creates place and time utility	Creates possession utility

CBSE Business Studies Class XI ( By Mr. Kailash Gururani )
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