CHAPTER 1 BUSINESS STUDIES CLASS 11 COMMERCE - D. Panjrolia

Chapter 1 Business Trade and Commerce Notes

 Meaning of Business

 

Indigenous Banking System

Hundi as an instrument of exchange, which was prominent in the subcontinent. It involved a contract which — (i) warrant the payment of money, the promise or order which is unconditional (ii) capable of change through transfer by valid negotiation.

Hundi as practised by Indian Merchant Communities:

Name of Hundi	Broader Classification	Functions of Hundi
Dhani-jog	Darshani	Payable to any person—no liability over who received payment.
Sah-jog	Darshani	Payable to a specific person, someone ‘respectable’. Liability over who received payment.
Firman-jog	Darshani	Hundi made payable to order
Dekhan-har	Darshani	Payable to the presenter or bearer
Dhani-jog	Muddati	Payable to any person—no liability over who received payment, but payment over a fixed term.

Firman-jog	Muddati	Hundi made payable to order following a fixed term
Jokhmi	Muddati	Drawn against dispatched goods. If goods lost in transit, the drawer or holder bears the coasts, and the Drawee carries no liability

Rise of Intermediaries

· Prominent role in promotion of trade

· Provide Financial security in return of risk taken

· Comprises of Commission agent, broker, distributor

· Foreign Trade were financed by loans.

· Later with emergence of credit transaction, exports exceeded import and benefited indigenous banking system

· Commercial bank and industrial bank evolved to finance trade and commerce

· Agricultural bank evolved to provide short term and long term finance to agriculturist

Maritime Trade

· Trade maintained by means of sea is referred to as maritime trade.

· Maritime trade was another important branch of global trade network.

· Malabar Coast, on which Muziris is situated. Pepper was particularly valued in the Roman

Empire and was known as ‘Black Gold’.

· It was in the search for an alternate route to India for spices that led to the discovery of America by Columbus in the closing years of 15th century and also brought Vasco da Gama to the shores of Malabar in 1498.

· Calicut was such a bustling emporium that it was even visited by Chinese ships to acquire items, like frankincense (essential oil) and myrrh (fragrant resin used in perfumes, medicines) from the Middle East, as well as, pepper, diamonds, pearls and cotton from India.

· On the Coromandel Coast, Pulicat was a major port in the 17th century. Textiles were the principal export from Pulicat to Southeast Asia.

Merchant Corporation

· Formed to protect the interest of traders

· Framed their own rules of membership and code of conduct which kings also accepted

· Trade and industrial taxes were major source of revenue

· The chief directly deal withking, tax collector and settle market toll on behalf of merchant at fixed sum of money.

Major Trade centres

Ø Pataliputra-Export of stones

Ø Peshawar-Export of wool and import of horses

Ø Taxila-Centre for learning

Ø Indraprastha-Commercial route on royal road

Ø Mathura-emporium of trade, people here subsisted on commerce

Ø Varanasi-Centre for textile industry

Ø Mithila-Traded at ports on the island of java, Sumatra, borneo

Ø Ujjain- Agate, Muslin, carnelian cloth trading

Ø Surat-Textile trading mainly for their gold border (zari)

Ø Kanchi- Pearl, glass, rare stone

Ø Madura-Pearl fisheries

Ø Broaach-Linked to all important marts

Ø Kaveripatta-Trade of perfumes, cosmetics, scent, silk, wool, cotton, corals, pearls, gold, precious stone, ship building

Ø Tamralipti-Greatest port connected by both sea and land.

Basic		Business		Profession	Employment
Mode of establishment		Entrepreneur’s decision and other legal formalities, if necessary		Membership of a professional body and certificate of practice	Appointment letter service agreement	and
Nature work	of	Provision of goods services to the public	and	Rendering of personalised, expert services	Performing work as per service contract or rules of service
Qualification		No minimum qualification is necessary		Qualifications, expertise and training in specific field as prescribed by the professional body is a must	Qualification and training as prescribed by the employer
Reward return	or	Profit earned		Professional fee	Salary or wages
Capital investment		Capital investment required as per size and nature of business		Limited capital needed for establishment	No capital Required
Risk		Profits are uncertain and irregular; risk is present		Fee is generally regular and certain; some risk	Fixed and regular pay; no or little risk
Transfer interest	of	Transfer possible with some formalities		Not possible	Not possible
Code conduct	of	No code of conduct is prescribed		Professional code of conduct is to be Followed	Norms of behaviour laid down by the employer are to be followed
Example		Shop, factory		Legal, medical profession, Chartered accountancy	Jobs in banks, insurance companies, government departments

Characteristics of Business

1. Production or procurement of goods and services:

· Enterprise either manufactures the goods it deals in or acquires them from producers, to be further sold to consumers or users

· Goods may consist of consumable items of daily use or capital goods

· Services may include facilities offered to consumers, business firms and organisations

2. Sale or exchange of goods and services

· business involves transfer or exchange of goods and services for value.

· Cooking food at home for the family is not business but cooking food and selling it to others in a restaurant is business.

3. Dealings in goods and services on a regular basis

· Business involves dealings in goods or services on a regular basis.

· One single transaction of sale or purchase, therefore, does not constitute business

4. Profit earning

· No business can survive for long without profit.

· That is why, businessmen make all possible efforts to maximise profits, by increasing the volume of sales or reducing costs.

5. Uncertainty of return

· lack of knowledge relating to the amount of money that the business is going to earn in a given period

· there is always a possibility of losses being incurred, despite the best efforts put into the business.

6. Element of risk

· uncertainty associated with an exposure to loss.

· It is caused by some unfavorable or undesirable event

Business Activities are classified into:

1. Business- Business is the activity of making one's living or making money by producing or buying and selling products (goods and services)

2. Industry- An industry is a group of manufacturers or businesses that produce a particular kind of goods or services

3. Commerce- Commerce is the fundamental action that takes place in every transaction involving money and/or trade.

Industry

 

Note: The author does not claim over content. It is made on research and study.