Commerce Exam > Commerce Notes > Business Studies (BST) Class 11 > Cheat Sheet: Nature and Purpose of Business
Cheat Sheet: Nature and Purpose of Business | Business Studies (BST) Class 11 - Commerce PDF Download
What is Business?
Business is an economic activity focused on producing and selling goods or services to satisfy human needs with the primary aim of earning profit. It supports society by creating products, providing employment, and fostering economic growth.
Literal Meaning: "Busy" – an activity involving production and sales for profit.
Key Activities:
- Production: Making goods
- Trade: Buying and selling
- Commerce: Supporting trade (e.g., transport, banking, advertising)
Characteristics of Business Activities
Comparison of Business, Profession, and Employment
Classification of Business Activities
1. Industry
Production or processing of goods/services, creating form utility.
2. Commerce
Activities that remove hindrances in the movement of goods from producers to consumers.
Role of Business in Economic Development
Objectives of Business
Role of Profit
- Source of income for business owners
- Funds expansion
- Indicates efficiency
- Builds reputation
Business Risk
Business risk is the possibility of inadequate profits or losses due to uncertainties.
Nature of Business Risks
Types of Business Risks
- Speculative: Possibility of gain or loss (e.g., market fluctuations).
- Pure: Only possibility of loss (e.g., fire, theft, strikes).
Causes of Business Risks
Starting a Business: Basic Factors
Entrepreneurship involves setting up a business to deliver value, create jobs, and earn profits. Key factors to consider:
The document Cheat Sheet: Nature and Purpose of Business | Business Studies (BST) Class 11 - Commerce is a part of the Commerce Course Business Studies (BST) Class 11.
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FAQs on Cheat Sheet: Nature and Purpose of Business - Business Studies (BST) Class 11 - Commerce
| 1. What is the definition of business? |  |
Ans. Business is an organized effort by individuals or groups to produce and sell goods and services for profit. It involves various activities such as production, marketing, finance, and management, all aimed at meeting the needs and wants of consumers.
| 2. What are the main characteristics of business activities? | |
Ans. The main characteristics of business activities include:
1. Economic Activity: Businesses are primarily focused on earning profits through the sale of goods and services.
2. Risk and Uncertainty: Every business faces risks due to market fluctuations and competition.
3. Continuous Process: Business operations are ongoing and require continuous input and effort.
4. Profit Motive: The ultimate goal is to earn a profit, which motivates the business activities.
5. Customer Orientation: Businesses aim to satisfy customer needs and preferences to ensure success.
| 3. How do business, profession, and employment differ? | |
Ans. Business, profession, and employment differ in several ways:
1. Nature of Work: Business involves the production and selling of goods/services for profit, while a profession requires specialized knowledge and skills (e.g., doctors, lawyers). Employment refers to working for someone else in exchange for a salary or wage.
2. Risk: Business entails a higher level of risk compared to professions, which generally offer more stability. Employment usually provides a fixed income with less risk.
3. Ownership: In a business, the individual or group owns and manages the operation, while professionals may work independently or as part of an organization. Employees work under the direction of an employer.
| 4. What are the various classifications of business activities? | |
Ans. Business activities can be classified into three main categories:
1. Primary Activities: These involve the extraction and production of raw materials (e.g., agriculture, mining).
2. Secondary Activities: These are related to manufacturing and construction, where raw materials are transformed into finished products.
3. Tertiary Activities: This category includes services provided to consumers and businesses (e.g., retail, banking, hospitality).
| 5. What role does business play in economic development? | |
Ans. Business plays a crucial role in economic development by:
1. Generating Employment: Businesses create job opportunities, which contribute to lower unemployment rates.
2. Economic Growth: Through production and consumption, businesses drive economic activity and growth.
3. Innovation and Technology: Businesses invest in research and development, leading to technological advancements and improved efficiency.
4. Contribution to National Income: Businesses contribute to the national revenue through taxes, which can be used for public services and infrastructure development.
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Document Description: Cheat Sheet: Nature and Purpose of Business for Commerce 2025 is part of Business Studies (BST) Class 11 preparation.
The notes and questions for Cheat Sheet: Nature and Purpose of Business have been prepared according to the Commerce exam syllabus. Information about Cheat Sheet: Nature and Purpose of Business covers topics
like What is Business?, Characteristics of Business Activities, Comparison of Business, Profession, and Employment, Classification of Business Activities, Role of Business in Economic Development, Objectives of Business, Business Risk, Starting a Business: Basic Factors and Cheat Sheet: Nature and Purpose of Business Example, for Commerce 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Cheat Sheet: Nature and Purpose of Business.
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