MDU BBA NOTES

SEMESTER-1

Business Organisation

Scope Of Business

Business

Business means buying and selling goods and services with a view of earning money . for example, in a cloth–shop, transport company, etc. in the cloth shop, things are bought and sold and the transport company does the same in respect of services. A transport company does not sell and buy goods but offers services for transporting goods from one place to another and changing carriage.

Scope Of Business

Scope of business refers to a statement summing up all the activities performed by a company.

Business activities may be broadly classified into two categories:-

Scope Of Business

Industry

• The industry involves production or processing of goods and materials whereas commerce is concerned with the distribution of goods and services .industry is nothing but a business activity, which is concerned with the production or manufacturing or processing, or fabricating of goods, required for the consumption of the people to satisfy their wants. the industry creates from a utility.
• The industry is a part of business activity that is related to the raising, producing, processing, or manufacturing of products. any business undertaking which is engaged in extracting, growing, reproducing, or manufacturing material goods is called an industrial enterprise.

Industries are divided into two parts:-

Primary Industries

Primary industries include all those activities which are connected with the extraction, production, and processing of natural resources. These industries may be further divided into two types (i) extractive and (ii) genetic industries.

• Extractive industries

These consists of processes that involve the extraction of raw materials from the earth to be used by consumers e.g, farmers growing crops, business houses extracting oil and gas, mining, dredging, and quarrying.

• Genetic industries

Genetic industries are engaged in the reproduction and multiplication of certain species of plants and animals with the object of sale. the main aim is to earn profit. e.g. plant nurseries, cattle rearing, poultry, dairy farming, etc.

Secondary industries

Secondary industries are concerned with the material which has already been produced at the primary stage. for example, the mining of iron ore is a primary industry, but the manufacturing of steel is a secondary industry. Secondary industries may also be of two types :
(i)Manufacturing, and (ii) Construction industries.

• Manufacturing industries

These industries are concerned with the process of raw materials into finished products .they include cotton, textile, cement, steel, chemical, paper, jute industries, etc.

• Construction industries

The activities of construction industries include the erection of buildings, bridges, roads, railways, canals, etc. their outputs do not consist of movable goods. it makes use of the output of other industries like bricks, cement, steel, etc.

Tertiary industries

• Assembly Industry

In Assembly Industry, the various finished products are combined to produce a new finished product. It means that the industry assembles various different parts to make a new product.

For example:- Manufacturing of computers, television, watches, automobiles, cars, etc.

• Service industry

An industry in that part of the economy that creates services rather than real objects. Economists split all economic activity into two broad categories, goods, and services. This type of industries is providing product services like warranties, and product maintenance Availabilities.

Trade And Commerce

• Commerce is a branch of business. Commerce deals with the distribution part of business activities .commerce involve the movement of goods from the place of production to the place of consumption. Commerce removes all the difficulties which are involved in the movement of goods.

Commerce can be further divided into two parts:-

1. Trade
2. Aids To Trade

Trade

Trade is the primary part of commerce. it involves the sale, transfer, and exchange of goods and services. it covers buying and selling activities.

Trade can be further divided into two parts:-

• Inland Trade or National Trade 

National trade means buying and selling activities are carried on within the boundaries of the nation. it can be further divided into two parts : (a) wholesale trade, and (b)retail trade.

(a). Wholesale trade involves buying goods on a large scale from producers and selling them in small quantities to retailers. the Wholesaler generally deals in large quantities of goods of a limited number of varieties. He serves as a connecting link between the producer and the retail dealers.

(b). A retail trade consists of selling goods directly to consumers in small quantities. A retailer usually purchases goods from wholesalers or manufactures and deals in a variety of goods from different manufacturers.

• Foreign Trade or External Trade 

External trade refers to trade between two countries. it implies buying and selling of goods by traders of two different countries. it creates a very wide market for goods produced in different countries. External trade involves:- (a) Export and (b) Import.

i). Export is concerned with the sale of goods to foreign countries.

ii). Import trade relates to the purchasing of goods from other countries.

Aids To Trade

Aids-to-trade is those auxiliary activities that make trade easy and possible .without aids-to-trade, international or national trade would not be possible.

Aids to trade can be further divided into the following parts:-

i). Banking

It removes the difficulty of finance bank supplies finance to the business .it is a financial institution. Banking means a collection of funds for the purpose of lending or investing a deposit of money from the public. In the public. In the modern money economy, the bank performs the following main functions –(i)Accepting deposits,(ii) Granting loans and advances,(iii) discounting bills of exchange,(iv) Remittance of money.

ii). Transporting

It is one of the most important auxiliaries to trade. it removes the difficulty of place by helping in carrying the goods to the marketplace. it reduces the distance between producer and consumer. It creates “place utility” by making available the goods, where they are highly demanded. It facilitates the physical movement of raw materials, semi-finished and finished goods.

iii). Insurance

Business risks are covered under insurance. there are various kinds of risks involved in the business that traders have to face. For example:- (i)Risk to human life,(ii) Risk of damage or quality deterioration during the time of transport,(iii) Risk due to fire, when the goods are stored in warehouses, and (iv) Risk due to theft, burglary, etc.

Insurance tries to reduce risk by spreading them out over a number of people, it is an agreement between an insurer and the insured (trader) to compensate or cover the loss of goods against the regular payment of premium.

iv). Warehousing

Most of the goods need storage facilities either before production or after production. Warehousing provides facilities for the storage of goods. Warehousing creates time utility. It helps to adjust the time of production and the time of consumption.

v). Mercantile Agents

Mercantile agents are the middlemen who create a link or relationship between the buyers and the sellers. They remove the personal problems of both. They do not hold on to business in their own name. In the process of distribution, producers and consumers are unable to have direct contact, as customers are distributed over a vast area. They remove this difficulty of personal communication and aid in connecting parties involved in the trade.

There are various types of mercantile agents such as brokers, commission agents, auctioneers, underwriters, insurers, etc.

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