Revision Notes for CBSE Class 11 Business Studies Chapter 1 - Free PDF Download
When an enterprise or an organisation is engaged in activities having industrial, commercial or professional aspects, it is known as business. It includes organised activities and efforts of groups or individuals in selling definite services and goods with a profit objective. Businesses in India, previously, had to avail an indigenous banking system, and there was also the presence of a variety of intermediaries. The present business landscape has undergone a massive change. Its various aspects have been discussed in Chapter 1 Class 11 Business Studies Notes by Vedantu.
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Access Class 11 Business Studies Chapter 1 - Business, Trade and Commerce Notes
We indulge in multifarious activities in our daily lives. Hence before understanding what business is, Let’s understand the types of activities: Classification of Activities
1. Economic Activities: Economic activities are any activities that are carried out with the goal of earning money and livelihood. For example, a worker working in a factory , a teacher teaching in school.
It is majorly of three types:
2. Non Economic activities: Activities which are performed out of love, affection, sympathy, etc , and without the aim of earning profit are called non economic activities. For Example social work, religious activities etc.
Role of Business in The Development of Economy:
Business activities have been undertaken since the ancient era. There existed transfer of goods both within and outside the country, and the income received from such economic business activities were used for further investments.
One such example is of:
Hundi: It is an instrument of exchange used in old times which involved a contract that warrants the payment of money, a promise or order which is unconditional, and can be exchanged through transfer by valid negotiation.
In ancient times many trade centres were developed for the import and export of goods like Patliputra, Peshawar, Taxila, Indraprastha, Mithila , Maduram, Surat etc.
Hundi as Practiced by Indian Merchant Communities
Payable to any person - no liability over the receiver.
Payable to a specific person- Liability created.
Payable to order.
Payable to presenter or bearer.
Payable to any person over a fixed term- no liability over who received the payment.
Payable to order following a fixed term.
It is drawn against dispatched goods. Drawer bears the costs if goods get lost in transit.
Any economic activity that is undertaken regularly and continuously to satisfy the societal needs as well as to earn profit through the mechanism of sale and purchase of goods and services is called a business.
Characteristics of Business Activities
An economic activity: Business consists of sale or exchange of goods and services with the primary objective of earning money. Hence it is an economic activity.
Sale or exchange of goods and services for creating value: In business there should be transfer or exchange of goods or services for value. Production of goods for the purpose of personal consumption is not termed as business.
Regularity in dealings: To constitute a business there should be dealings in goods and services on regular intervals. Doing one single transaction does not constitute business. For example selling your old books, or furniture and purchasing a new one is not termed as business.
Production or procurement of goods and services: In every business enterprise before the consumption, production takes place. As a result, a business either manufactures the goods on its own or purchases them from producers, and then sells them to end customers.
Profit earning : The primary objective of every business is to earn more and more profit. No business can survive without earning profit. Hence all the efforts of the businessman are directed towards the earning of sufficient profit.
Uncertainty of return: It’s not certain how much profit a business is going to earn, as there is a possibility of losses as well because of the changing environment. Every business has to handle both losses as well as profits.
Risk: Every business is exposed to certain risks, these risks can either be due to natural factors, human factors, financial factors, or personal factors. Therefore, both profit and losses walk hand in hand and every business has to take some risk in order to survive.
Any economic activity which is carried out by a person with specialised knowledge and skills in order to serve society is called profession.
Any economic activity which involves doing work for someone else in consideration of money is termed as employment.
Comparison of Business , Profession and Employment
Mode of establishment
Establishes after fulfilling some required legal formalities.
A certificate of practice required.
Starts after receiving an appointment letter.
Nature of work
Selling and buying of goods and services.
Rendering specialized services
Work is as per the contract and the rules of service.
No minimum qualification required.
Formal qualification and training from a professional body is a must.
Qualification requirements differ with job type.
Reward or return
Wages or salary earned
It is dependent upon the type and size of business.
Limited capital needed.
High uncertainty and risk.
Little or limited risk
Transfer of interest
Code of conduct
No code of conduct is prescribed.
Professional code of conduct is there.
Rules set by the employer are to be followed.
A person having his shop, factory etc.
Chartered Accountants, Lawyers, Doctors are all professionals.
Jobs in banks, companies etc.
Classification of Business Activities
The business activities are mainly classified into:
Auxiliaries to Trade
It is basically concerned with the production of goods and services for an economic motive. It is further divided into following categories:
1. Primary Industry:
It includes all those activities which are concerned with the extraction and production of natural resources and development of plants, etc.
It is further divided into two parts:
Extractive industries: These industries provide some basic raw materials that are mostly products of the natural environment. It includes farming, mining, etc.
Genetic industries: These industries do breeding of plants and animals for their use in further reproduction. Example- cattle breeding, poultry farms.
2. Secondary Industries
These industries are concerned with further processing of the material extracted at the primary sector so as to convert them into a finished product. Example, Mining of iron ore.
It is further divided into two parts:
a. Manufacturing industries: These industries engage in producing goods through processing of raw materials and creating utilities.
It is further divided into four parts:
Analytical industry: These industries separate and bifurcate different elements from the basic material, so as to produce various by-products from the same element. For example, petrol, diesel etc all are made from one basic material that is crude oil
Synthetical industry: These industries bring together materials and ingredients from varied sources and combine them to form a new product. For example, the cement industry.
Processing industry: These industries are involved in the extraction and processing of resources and raw materials, so as to produce semi-finished or finished products. For example, the sugar industry, paper industry, textile industry etc.
Assembling industry: These industries bring together different components of various firms to form a new product. For example, different components of various industries are brought together to assemble them and convert it into a television, computer, car etc.
a. Construction industries: These industries are involved in the construction sector, and it involves constructive works such as building dams, bridges , buildings,etc.
3. Tertiary Industry
These industries provide support services to primary and secondary industries so that they can perform their work without any hindrances. For Example, banking industry, transportation industry, communication industry, etc.
Commerce includes all the activities which are required for the exchange of goods and services. It also involves all the activities that assists in removal of hindrances of people, place, time, finance, risk, information faced during the exchange of goods and services.
It includes two types of activities:
Auxiliaries to Trade
The buying and selling of goods and services with an aim to earn profit is termed as trade. The people who are involved in trade are referred to as traders.. Trade can be bifurcated as:
a. Home Trade: It involves buying and selling within the domestic country. It can be:
Local Trade: Buying and selling within a local area.
State Trade: Buying and selling within a single state. That is intra-state trade.
National Trade: Buying and selling between the states. That is Inter-state trade.
b. Foreign Trade: It involves buying and selling of goods and services outside the domestic borders of a country. it involves:
Imports: It refers to the purchase of goods and services from other countries.
Exports: Selling goods and services to other countries.
Entreport: Importing goods and services from one country and exporting to some third country
Auxiliaries to Trade
Auxiliaries to trade assists the buying and selling of the goods and services by removing the hindrances of place, people, time, finance, risk and information.
The auxiliaries to trade are:
Transport and Communication: Transportation helps in the movement of raw material and finished products from the place of production to the place of consumption. Communication enables easy interaction by one party with the another who are far away from each other. It assists in removal of the hindrance cause due to place.
Banking and finance: It helps business activities to overcome the problem of finance by lending loans and credit facilities since business can't survive if funds are not available for procuring material. It assists in removal of the hindrance cause due to finance.
Insurance: It provides protection to businesses from various types of risks such as due to fire, theft etc. It assists in curbing hindrances of risk.
Warehousing: It helps business firms to overcome the problem of storage and facilitates the availability of goods. It assists in curbing hindrances of time.
Advertising and Public Relations: It helps them to increase the sales and widen the customer base by promoting business products or services at a wide spectrum. It is a tool to influence customers. It assists in curbing hindrances caused due to information
Middlemen: These people act as mediators between the producer and consumers. These include wholesalers, retailers etc. It assists in curbing hindrances of persons.
Objectives of Business
Market standing: For every business, goodwill is the most important aspect to stand out from its competitors. Every business must give quality products at reasonable prices to earn better goodwill.
Innovation: It means developing new products or modification in existing products. Every business in order to survive in a competitive environment should innovate its products or develop new ideas to tackle competition.
Productivity: It is a measure of efficiency. Every business must aim at increasing its productivity through the efficient use of resources.
Earning profit: Every business objective is to earn more and more profit in order to survive and also for growth purposes.
Physical and financial resources: Every business enterprise must acquire physical resources like land,plant and financial resources like funds according to their requirements and use them efficiently.
Social responsibility: Every business must work in a socially desirable manner and contribute some resources for solving social problems.
The risk caused due to inadequate profits or losses as a result of uncertainties or unexpected events is called business risk.
Nature of Business Risks
Risk is an essential part of every business. It can only be reduced but not eliminated in full.
It arises due to uncertainties like natural calamities such as earthquakes, floods etc., which are unavoidable.
The extent of risk depends upon the nature and size of business.
’No risk, no gain’ is applicable to every business. Hence, profit is the reward for risk taking.
Causes of Business Risks
Natural causes: These are due to natural causes such as floods, earthquakes, etc. Every person has little control or no control over these causes.
Human causes: These causes include unexpected events caused by man, such as negligence of employees, power failure, employee’s or customer’s dishonest practices etc.
Economic causes: The economic causes involve the changes and variations taking place in the economy such as uncertainties due change of technology and method of production,political disturbances, change in prices, tax rates etc.
Other causes: All those causes which cannot be considered under the above causes are the other causes, such as exchange rate fluctuations etc.
Factors for Starting a Business:
Selection of type of business: First step is to decide the nature and size of business which person wants to do. It depends upon customer requirements in the market and also the knowledge that person has about the product. A person can enter primary, secondary or tertiary industry, based on the possibility of profit, demand, customer preference etc.
Size of Business: Every person has to decide whether it wants to operate on a large scale or at a medium scale. It depends upon demand for the product and the necessary capital that person has. If a person is optimistic about all the factors, he can open up his business on a large scale, and vice versa.
Location of business enterprise: It's another important factor while starting a business. The location of business is dependent on the easy availability of raw materials and labour, banking services, transportation services nearby etc. Any mistake in this can result in high losses to business.
Financing the proposition: For every business, availability of capital or funds is an important factor while starting a business. Because capital is needed in each activity and aspect of business, such as in investment in fixed assets, stocks, meeting day to day expenses, etc.
Physical facilities: Availability of machines, equipment, building is also considered while starting a business. The extent of physical facilities depends upon the nature and size of business and availability of funds.
Competent and committed workforce: Every business needs competent workforce to run its business operations smoothly. Proper planning and training should be done for hiring employees at the right position and at the right time and cost.
Tax planning: Because of increasing tax laws in the country every business has to do proper tax planning in advance to save itself from any problem in future.
Launching the enterprise: After all these steps, a person can go ahead with starting a business. It can be a partnership firm, a sole proprietorship firm, a company etc.
Business Studies Class 11 Notes Chapter 1 – An Overview of the Chapter
Class 11 Business Studies Ch 1 Notes introduce new concepts to students about business, trade and commerce. Given that students will be reading these for the first time, it becomes imperative that there is a clear understanding of the concepts from the very beginning. It is only then that students will be equipped with adequate knowledge to grasp the advanced topics. One may require reference materials beyond the regular text. To that effect, free PDF material such as notes for Class 11 Business Studies Chapter 1 can be downloaded from Vedantu's official website.
Chapter 1 Class 11 Business Studies Notes Overview
Business Studies Class 11 Ncert Chapter 1 discusses the following topics –
Division of Business Activities
Business activities can be divided primarily into economic activities and non-economic activities. Class 11 Business Studies Chapter 1 Notes focus only on economic activities.
Economic Activities are Further Divided Into
Business – Occupation of selling services or goods having profit objectives
Profession – Paid occupation requiring formal qualification and prolonged training
Employment – Discharging paid work.
Different Features of Business
Chapter 1 Business Studies Class 11 Notes indicate different features of a business to be –
Procurement or production of services and/or goods
Exchange or sale of services and/or goods
Regular dealings in services and/or goods
Uncertain nature of return generated.
Presence of risk
Classification of Business Activities
Chapter 1 class 11 Business Studies Notes explain business activities to be falling under the categories of primary, secondary and tertiary.
Primary activities relate to production or extraction of natural resources;
Secondary activities pertain to processing or raw materials such as manufacturing;
Tertiary activities offer service facilities.
Objectives of Business Studies
Positioning in the market, innovation, output generation, production or supply of goods and services, and making money are a business' primary goals. At first, Chapter 1 of Class 11 Business Studies could seem overly complex, and you might find it challenging to choose which themes to emphasise more. In such a case, taking part in Vedantu's online lessons will greatly aid in the preparation of this chapter. Download the app now to get started!
The Class 11 Notes CBSE Business Studies Chapter 1 - Business, Trade, and Commerce are a valuable resource for students to understand fundamental business concepts. These notes cover topics such as the nature of business, types of economic activities, and the role of trade and commerce. They also emphasize ethical and social aspects of business, promoting responsible practices. With the free PDF download format, students can conveniently access and revise the material. These notes provide a comprehensive overview, helping students develop critical thinking skills and excel in exams by mastering foundational business concepts.
FAQs on Business, Trade and Commerce Class 11 Notes CBSE Business Studies Chapter 1 (Free PDF Download)
1. What are the features of different categories of industry prevalent in India?
Notes of Business Studies Class 11 Chapter 1 mentions different types of industries as various sectors of activities within Indian economy. The major categories are –
(1) primary sector
(2) secondary sector
(3) tertiary sector
The primary sector of the economy is directly related to utilising natural resources such as land, vegetation, water, minerals etc. Therefore, the activities include farming, forestry, fishing, quarrying, mining etc fall under the primary sector. Secondary activities involve a direct transformation of raw materials into marketable products. Construction, manufacturing etc. are included within this sector. On the other hand, the tertiary sector is service-based. People engaged in this sector are known as white-collar workers. Notes of Chapter 1 Business Studies Class 11 mentions the inclusion of another two sectors in the economy. Those are quaternary activities and quinary activities.
2. What are the various important factors which have to be considered while starting a business?
Business Studies Class 11 Notes Chapter 1 elaborate a host of factors that have to be given due consideration before setting up a business. Those are – (1) determination of the line of business, (2) deciding on the magnitude of the operation, (3) form and nature of ownership, (4) business location, (5) capital or financing options, (6) physical facilities necessary for business operation, (7) plan layout, and (8) engagement of the workforce.
While these are the initial factors that have to be figured out before starting a business, Business Studies Class 11 Ncert Chapter 1 Notes also indicates two other aspects that have to be eventually decided upon. These include tax planning and subsequent development of enterprise.
3. What are intermediaries in business?
The various types of intermediaries in business as explained in Class 11th Business Studies Chapter 1 Notes are – (1) brokers and agents, (2) distributors, (3) retailers, (4) wholesalers and resellers. The explanations of these may be found in Business Trade And Commerce Class 11 Notes. Brokers and agents may act as a crucial link between buyers and sellers. Distributors are particularly common in the case of manufacturing companies, positioned between a wholesaler and the company. Retailers are the links between wholesalers and end consumers.
4. What is the name of Chapter 1 Class 11 Business Studies?
Chapter 1 in Class 11 Business Studies is about “Business, Trade, and Commerce”. In this chapter, students will study the different aspects of the business. The business involves the use of raw materials and the production of goods or services. The main aim of doing a business is to earn profit. Chapter 1 Class 11 Business Studies are divided into two parts. It involves teamwork to achieve goals. All the concepts of Chapter 1 of Class 11 Business Studies are explained in brief in Vedantu’s Revision Notes.
5. What is the nature of business Class 11?
Nature of business means the type of business done by an individual. Business is an economic activity because the main aim of doing a business is to earn money. It is done to use the raw materials and produce finished goods and services. A businessman sells goods and services to the people to earn a profit. He invests money in a business but tries his best to earn profit by using different strategies in a business.
6. What is the business purpose?
The most important purpose of doing a business is to earn money. People involved in a business will spend money for buying raw materials and to produce finished products. In some businesses, people offer a wide range of services. But, the main purpose of doing a business is to earn money or profit. People start big or small businesses depending on the amount of money they have. But, any type of business is done to earn money for a living.
7. What is a business in Class 11 commerce?
Business in Class 11 commerce is divided into two parts. The first part is based on the history of commerce and trade in India and the second part is about nature and the concept of business. Therefore, in Class 11 commerce students will study the different features of a business. Many other important topics are taught in Class 11 Commerce. Students should understand the concepts clearly to score high marks.
8. Write the objectives of Business Class 11 Chapter 1?
The most important objective of a business is to establish a position in the market. Business is done to use raw materials to generate output, producing goods, and earning money. The first chapter gives detailed information about business and its features. Students can study the Class 11 Business Studies Chapter 1 from the NCERT book. They can also refer to the Revision Notes for Chapter 1 of Class 11 Business Studies available at the Vedantu app and the Vedantu website at free of cost.