Kebs 101
Kebs 101
Kebs 101
Foundations of Business
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Chapter 1
LEARNING OBJECTIVES
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Imran, Manpreet, Joseph and Priyanka have been classmates in Class X. After
their exams are over, they happen to meet at a common friend Ruchita’s house.
Just when they were sharing their experiences of examination days, Ruchika’s
father Raghuraj Chaudhary intervenes and asks about their well-being. He also
enquires about their career plans. But none of them had a definite reply. Raghuraj
who himself is a successful businessman tells them about business as a career
opportunity. Joseph gets excited by the idea and says “yes, business is really good
for making lots of money”. Raghuraj tells them that ‘there is a lot more to business
than merely money’. Business activities lead to growth and development of any
country, he added. He further tells them that the roots of business activities can be
traced back to ancient times and how trading helps in the prosperity of the Indian
subcontinent. Priyanka said that they have read about the Silk Route in their history
textbooks. Raghuraj then gets busy with his day-to-day tasks. However, the four
classmates begin raising questions. The conversation of the four classmates focused
on how trading activities were conducted during ancient times. How far can the
roots of trading activities be traced? Why was the Indian subcontinent referred to
as ‘Swaran Bharat and Swaran Dweep’ by the then travellers to India? What made
Columbus and Vasco da Gama undertake journeys to locate India? They decided
to meet the commerce teacher of their school to find out answers to many such
questions about the development, nature and purpose of business.
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Industry and the remaining activities The goods were traded both
belong to commerce. In a nutshell we internally and to the foreign lands,
call them ‘Business’ which is a wider which generated surplus income. As
term and includes Industry, trade and a result, the people were engaged
commerce. in various economic activities such
as agriculture and domestication
TRANSFER OF GOODS AND SERVICES of animals, weaving cotton, dyeing
I (Monetary versus Barter)
I fabrics, making clay pots, utensils
and handicrafts, sculpting, cottage
C) C)Exchange
Production
or Purchase
industries, masonry, etc. Family
based workshops [karkhanas], for
,_/ manufacturing, were important
components of economic life. This
ECONOMIC
¥
(...__..J
ACTIVITIES
~
money was channelised into further
investment, and led to the dominant
growth of indigenous banking system
to finance the trading activities.
C) Distribution
C)Consumption An example of it is the use of
age old Hundi and Chitties (used in
southern region). These were used
as documents to facilitate transfer of
I II~
DIVISION OF INCOME SATISFACTION
AMONG FACTORS OF OF NEEDS money from one hand to another for
PRODUCTION AND WANTS trading activities. As an instrument
of exchange it involved a contract
1.1.1 Role of Business in the which — (i) warrant the payment of
Development of Economy money, the promise or order which is
Business which includes trade and unconditional (ii) capable of change
commerce have played a vital role through transfer by valid negotiation.
since times memorial. You have Why there was a need to create an
studied in your earlier classes that our intangible form of exchange of money.
country, India, had a golden past and It was so because travelling long
the trading activities had a significant distances either by land or sea involved
contribution to its prosperity and risk of theft and robbery. Hundi which
gains. The archaeological evidences literally means ‘to collect’ was written
have shown that trading activities were in vernacular language and facilitated
the mainstay of the economy in ancient the safe transfer of money between
times which were carried out by both parties and helped promotion of
water and land routes. Silk route and trading activities.
maritime trade were quite prominent The emergence of credit transactions
in transporting goods and commodities and availability of loans and advances
for trading purposes. enhanced commercial operations. The
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Indian subcontinent enjoyed the fruits cotton, parrot, live animals and
of favourable balance of trade, where animal products, etc. Major imports
exports exceeded imports with large were Horses, animal products, Chinese
margins and the indigenous banking silks, linen, wine, gold, silver, copper,
system benefitted the manufacturers, etc. There were all kinds of towns—
traders and merchants with additional port towns, manufacturing towns,
capital funds for expansion and mercantile towns, the sacred centres,
development. Commercial and and pilgrimage towns. Their existence
Industrial banks later evolved to is an index of prosperity of merchant
finance trade and commerce and communities and professional classes.
agricultural banks to provide both Business activities led to the
short and long-term loans to finance growth of different aids to trade such
agriculturists. as transportation, banking, finance
Many leading trade centres were and communication which grew the
developed in ancient times for the import prospects of trading activities. With the
and export of goods, some of them active contribution of Indian traders
being Patliputra, Peshawar, Taxila, and other merchant communities, the
Indraprastha, Mithila, Maduram, Indian sub-continent was popularly
Surat, Ujjain, Kanchi, Mithila. Major called ‘Swaran Bhoomi and Swaran
exports items were Spices, wheat, Deep’ in the writings of many travellers,
sugar, indigo, opium, sesame oil, such as Megasthenes, Faxian (FaHien),
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Xuanzang (Huen Tsang), Al Beruni Between the 1st and the 7th
(11th century), IbnBatuta (11th centuries CE, India is estimated to
century), Frenchman Francois (17th have the largest economy of the ancient
and medieval world, controlling about
century) and others. They repeatedly one-third and one-fourth of the world’s
refer to the prosperity of the country. wealth (timeline).
I
I
/[ 1850 AD: 5–10%
H 1700–1750 AD: 25% of world’s
industrial output
H 24.46%
H
1700 AD: 1600 AD:
24.41% ];'
Source: Angus Maddison (2001 and 2003), The World Economy: A Millennial Perspective, OECD,
Paris; Angus Maddison, The World Economy, Historical Statistics
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7. Mithila: The traders of Mithila crossed the seas by boats, through the Bay of
Bengal to the South China Sea, and traded at ports on the islands of Java,
Sumatra and Borneo. Mithila established trading colonies in South China,
especially in Yunnan.
8. Ujjain: Agate, carnelian, muslin and mallow cloth were exported from Ujjain
to different centres. It also had trade relations through the land route with
Taxila and Peshawar.
9. Surat: It was the emporium of western trade during the Mughal period.
Textiles of Surat were famous for their gold borders (zari). It is noteworthy
that Surat hundi was honoured in far off markets of Egypt and Iran.
10. Kanchi: Today known as Kanchipuram, it was here that the Chinese used
to come in foreign ships to purchase pearls, glass and rare stones and in
return they sold gold and silk.
11. Madura: It was the capital of the Pandayas who controlled the pearl fisheries
of the Gulf of Mannar. It attracted foreign merchants, particularly Romans,
for carrying out overseas trade.
12. Broach: It was the greatest seat of commerce in Western India. It was situated
on the banks of river Narmada and was linked with all important marts by
roadways.
13. Kaveripatta: Also known as Kaveripatnam, it was scientific in its construction
as a city and provided loading, unloading and strong facilities of merchandise.
Foreign traders had their headquarters in this city. It was a convenient place
for trade with Malaysia, Indonesia, China and the Far East. It was the centre
of trade for perfumes, cosmetics, scents, silk, wool, cotton, corals, pearls,
gold and precious stones; and also for ship building.
14. Tamralipti: It was one of the greatest ports connected both by sea and land
with the West and the Far East. It was linked by road to Banaras and Taxila.
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Try it yourself:
State whether each of the following is an economic activity or not. Give
reasons for your answer.
1. Health worker treating her patient.
2. Store owner sympathies with a needy elderly person and gives
D
medicines for his ailment.
D
3. Football coach giving training in football to his daughter for
forthcoming match.
D
4. Services of a housewife doing household chores at home. D
5. Donation made by a business house towards community kitchen
run by an NGO for providing food, medicines to underprivileged D
people and migrant workers of the society during Covid 19
pandemic.
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the best efforts put into the accidents, natural calamities, etc.
business. No business can altogether do
(vii) Element of risk: Risk is the
away with risks.
uncertainty associated with an
1.2.3 Comparison of Business,
exposure to loss. It is caused by
Profession and Employment
some unfavourable or undesirable
event. Risks are related with As has been mentioned earlier,
factors, like changes in consumer economic activities may be divided into
taste and fashion, changes in three major categories viz., Business,
method of production, strike or Profession and Employment. The
lockout at workplace, increased difference between these three terms
competition in market, fire, theft, is given in figure 1.2.
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Secondary Tertiary
Trade Auxiliaries to Trade
Genetic
External
Construction
BI Export II~_E_n_,_,e_p_o_'~
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services. Thus, all activities involving a large scale and it is difficult for
the removal of hindrances in the producers to themselves reach out
process of exchange are included in to individual buyers for selling their
commerce. The hindrances may be in products. Businessmen are engaged
respect of persons, place, time, risk, in trading activities to make the goods
finance, etc. The hindrance of persons available to consumers in different
is removed by trade, thereby, making markets. In the absence of trade, it
goods available to consumers from the would not be possible to undertake
possession or ownership producers. production activities on a large scale.
Transport removes the hindrances of Activities which are meant for
place by moving goods from the place assisting trade are known as auxiliaries
of production to the markets for sale. to trade. These activities are generally
Storage and warehousing activities referred to as services because these
remove the hindrance of time by are in the nature of facilitating the
facilitating holding of stocks of goods activities relating to industry and
to be sold as and when required. trade. Transport, banking, insurance,
Goods held in stock, as well as, goods warehousing, and advertising are
in course of transport are subject regarded as auxiliaries to trade, i.e.,
to a risk of loss or damage due to activities playing a supportive role.
theft, fire, accidents, etc. Protection In fact, these activities support not
against these risks is provided by only trade, but also industry and,
insurance of goods. Capital required hence, the entire business activity.
to undertake the above activities is Auxiliaries are an integral part of
provided by banking and financing commerce in particular and business
institutions. Advertising makes it activity in general. These activities
possible for producers and traders to help in removing various hindrances
inform consumers about the goods which arise in connection with the
and services available in the market. production and distribution of goods.
Hence, commerce is said to consist of Transport facilitates movement of
activities of removing the hindrances of goods from one place to another.
persons, place, time, risk, finance and Banking provides financial assistance
information in the process of exchange to the manufacturer and trader.
of goods and services. Insurance covers various kinds of
business risks. Warehousing creates
1.3.3 Trade and Auxiliaries to Trade time utility by way of storage facilities.
Trade is an essential part of commerce. Advertising provides information to
It refers to sale, transfer or exchange the consumers. In other words, these
of goods either physical or virtual. It activities facilitate movement, storage,
helps in making the goods produced financing, risk coverage and sales
available to the consumers or users. promotion of goods. Auxiliaries to
These days’ goods are produced on trade are briefly discussed below:
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EXERCISES
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Activities
1. Have you ever witnessed any shop or a business getting closed in your
locality? Interact with the owner to find out the reasons for its closure or
losses incurred. Prepare a project report on the factors to be considered for
starting any business.
2. ‘Make in India’ is an initiative launched by the Government of India on 25
September 2014, to encourage national, as well as multinational companies
to manufacture their products in India. The major objectives behind the ‘Make
in India’ initiative are job creation and skill enhancement in 25 sectors of
the economy. Collect information on any five such sectors of the economy
that Make in India focuses on. Find out the amount of investment in these
sectors in the past two years. What were the possible reasons that led to an
interest of investors in these sectors? Present your report in the following
format:
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was frustrated with their answers and pushed himself to think outside the
box. He thought he could make a machine that will automate the process of
weft insertion or buta weaving.
4. One fine day, Dipak and his brother were reminiscing about their childhood.
A good part of their childhood had revolved around creating fun games out
of simple objects and ideas. He remembered his brother trying to make
an electro-magnet by using some wires and nails. Another game involved
placing a safety pin or nail on paper and moved using a magnet below the
paper. Like the proverbial light bulb going on in somebody’s mind, Dipak’s
brain was triggered by this memory.
5. He knew this was the push he needed to create a solution for his dilemma.
Now that he had the idea, he had to create the device. An entrepreneur is
one who succeeds despite failing numerous times. After a mind boggling 80
tries, he developed the ideal device ‘Chaneki’. ‘Chaneki’ is made of recyclable
materials, making not only a useful but an eco-friendly invention. The
device made machine to run 40 times faster than manual weft insertion of
motifs! Several weavers have now mastered Chaneki and increased output
majorly. This difference has allowed productivity and quality to increase,
pleasing both the owners and weavers.
6. It is always easy to walk the path taken by everybody. The ones who carve
their own route and plant flags on unknown territories are the real risk
takers and entrepreneurs. Dipak Bharali well deserve of all he has achieved.
Small things come in big packages. And sometimes the biggest questions
of life are answered in the most simplest of ways. (Based on data at www.
nif.org.in)
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