Economic System

PART I

Foundations of Business

CHAPTER 1

NATURE

AND

PURPOSE

OF

BUSINESS

LEARNING OBJECTIVES After studying this chapter, you should be able to:

• • • • • • • •

explain the concept and characteristics of business; compare the distinctive features of business, profession and employment; classify business activities and clarify the meaning of industry and commerce; state various types of industry; explain the activities relating to commerce; analyse the objectives of business; describe the nature of business risks and their causes; and discuss the basic factors to be considered while starting a business.

NATURE AND PURPOSE OF BUSINESS

3

Imran, Manpreet, Joseph and Priyanka have been classmates in Class X. After their exams are over, they happen to meet at a common friend Ruchika’s house. Just when they are sharing their experiences of examination days, Ruchika’s father, Mr. Raghuraj Chaudhury intervenes and asks about their well-being. He also enquires from each one of them about their career plans. But none of them has a definite reply. Mr. Raghuraj, who himself is a businessman, suggests to them that they can opt for business as a promising and challenging career. Joseph gets excited by the idea and says, “Yes, business is really good for making lots of money even more than is possible by becoming an engineer or a doctor.” Mr. Raghuraj opines, “Let me tell you, young man, there is a lot more to business than merely money”. He then gets busy with some other guests. However, the four classmates begin raising many questions: What exactly business is all about? What else is there in business besides money? How is business different from non-business activities? What does one require to start a business? And, so on.

1.1 INTRODUCTION

The conversation among the four classmates is obviously focused on the meaning, nature and purpose of business. All human beings, wherever they may be, require different types of goods and services to satisfy their needs. The...