Welcome dear students! Today we are going to learn about Meaning and Importance of Business Studies from Class 8 Social Science. After studying this chapter you will learn the objectives of business, the meaning and importance of home trade, foreign trade and entrepot trade, the features and problems of cottage and small scale industries, and about business ethics. Business is an important economic activity mainly concerned with production and distribution of goods and services to consumers. Business has two main objectives. The first is economic objectives. We are under the impression that earning profit is the main objective of business, but it is not so. The sole objective of business includes earning reasonable profit that is sufficient to enable the business to cover the costs and the business person to lead a normal comfortable life. Business supplies goods and services to the consumers and thus creates consumers. It uses the available resources to produce goods that are sufficient for consumers. It produces such goods that are required according to the changes that take place from time to time. It brings changes in production by adopting new techniques. It also enables the consumers to know about the changes in products through advertisement.
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The second objective is social objectives. Business produces and supplies the goods that are required for the development of a nation. It provides employment to many and pays them fair wages and salaries and helps them to improve their standard of living. Business contributes its share to the economic development of a nation by paying rates, taxes and duties. Business also contributes a fair share for the social welfare of the nation by starting and running schools, colleges, hospitals, stadiums and also by maintaining public gardens. Now let us move on to trade, industry and services. Trade is a part of business. It is mainly concerned with buying and selling of goods to the consumers. Trade is divided into two types. They are home trade or internal trade, and foreign trade or international trade. Home trade is trade within the country. It is carried through retailers and wholesalers. Let us first understand retail trade. Retailers carry out their trade at places where consumers live. They buy goods from the wholesalers and sell them to the consumers. They render various services to the consumers. They are the last connecting link in the distribution of goods. They supply a variety of goods produced by different producers to the consumers. They store the goods to meet the demand of the consumers.
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Retailers take the risk of loss in business or loss of goods. They grade the goods and supply according to the tastes of the consumers. They provide credit facilities to the consumers, give more information about the newly available goods in the market and suggest alternative goods for the particular goods that are not available. Retail trade is carried out in different ways. The important types are permanent shops and itinerant or mobile traders. Permanent shops are opened at a fixed place and carry out trade. Itinerant or mobile traders do not have a fixed place to carry on their trade. The important among them are hawkers, peddlers, street vendors and market vendors. Hawkers carry goods on their heads, move from door to door and sell their goods. They generally sell only one or two types of goods, for example vegetables, fruits and flowers. Peddlers carry their goods on wheeled carts and sell them to the consumers at their doors. They generally sell more than one type of goods. Street traders or footpath sellers display goods in busy street corners or on pavements and sell them to the consumers. Market sellers, also known as shandy sellers, operate in weekly markets that take place at villages or towns once in a week.
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Different traders take their goods to these weekly markets and sell them to the consumers. Another speciality of these weekly markets is that the surrounding villagers bring the goods which they have grown or produced and sell them, for example vegetables, eggs, butter, agricultural implements and blankets. With the money they get, they buy their requirements. At some places yearly fairs take place and here too the traders gather and sell the products to the consumers. Next, let us learn about wholesale trade. Wholesale traders buy goods in large quantity from producers and sell them to the retailers in small quantities. Generally, they deal with one or two types of goods. They help the retailers in many ways. They supply goods to the retailers in small quantities. They provide credit facility to the retailers whenever required. They advertise for goods on behalf of the retailers. They supply market trends to the retailers. They do not keep high margin of profit. They also render some services to the producers such as providing market trends, prices and taste of the consumers. They advertise on behalf of the producers. They also provide storage facility for goods.
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Now let us turn to foreign trade. The trade between two countries is called foreign trade. Foreign trade can be classified into three types. They are import, export and entrepot trade. Import refers to a country buying goods from other countries for its use. Export refers to a country selling its goods to other countries for their use. Entrepot trade refers to buying of goods from one country with a view to sell it to other countries. Singapore and Middle East countries are the best examples for entrepot trade. Nowadays many countries carry out entrepot trade. Let us think about the need for foreign trade. No country in the world is self sufficient in all the natural resources. Some countries have plenty of natural resources. Using the available natural resources they produce more goods than they require and the excess is exported to other countries. In the same way some countries have deficit of some natural resources and depend on other countries for their requirement and import them. Thus there is a great need for foreign trade. The need for foreign trade is increasing day by day. It also helps to foster friendship among the countries.
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Next, we will study industries. Industry is an economic activity. It is concerned with production of goods, extraction of minerals and also providing some services. Industries may be classified into two main types. They are primary industries and secondary industries. Primary industries produce goods by using the natural resources. Examples include agriculture, fishing, dairy farming and mining. These industries are further divided into genetic industries and extractive industries. Genetic industries are engaged in reproduction of different crops, plants and animals. They help to increase the wealth of a nation. Examples include horticulture, dairy farming and poultry farming. Extractive industries are engaged in extracting different raw materials and ores from the earth. It is also called non-renewable industry. Examples include extraction of ores and drilling of oil wells. Secondary industries are labour oriented industries. They are further divided into manufacturing industries and construction industries. Manufacturing industries are engaged in converting raw materials or semi finished products into finished products. They are mainly labour oriented and supply finished products to consumers. Examples include converting iron ore into steel, and sugar out of sugarcane.
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Construction industries are engaged in construction of roads, canals and bridges. These industries help in the quick development of economic activities like transport and communication. Now let us discuss cottage and small scale industries. Cottage industries are also called household industries. They are carried out by craftsmen in their own houses with the help of family members or apprentices, which are persons who like to learn work. They are mainly concentrated in the villages and produce goods mainly for the local markets. Carpentry, smithy, carpet weaving, pottery, blanket making and stone carving are some examples. Small scale industries are organized on a small scale in a particular place or sheds. They use electric power and some machines. They employ labourers and adopt modern techniques. Chemical industry, manufacture of engineering goods, shoes, bicycles, fans, radios, sewing machines, soaps and garments are some examples for small scale industry. The goods are manufactured both for local and external market. For the smooth conduct of business, the auxiliaries to trade came into existence. They are also called aids to trade or services to trade. There are some hindrances to transport goods from the producers to the consumers.
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The important hindrances are hindrance of place, hindrance of risk of loss, hindrance of time, hindrance of finance, and hindrances of knowledge. To overcome these hindrances, the following aids to trade have come into place. First, hindrance of place is overcome by transportation. To overcome the hindrance of place the services of transportation are used. Road transport, railways, water transport and air transport are different media. These media help to reach the goods from producers to the traders and from traders to the consumers. Second, financial services provided by banks solve the hindrance of finance. In the distribution of goods from the producers to the consumers there is a hindrance or problem of finance. The supply of finance is required at all stages. Money is required as an exchange medium. These problems are solved by banks. Banks provide finance to the traders and serve to conduct the business smoothly. Third, hindrance of loss is overcome by insurance companies. While moving goods from the producers to the consumers or while the goods are stored in warehouses, there is a problem of damage or destruction.
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To overcome this hindrance insurance facilities are available. The insurance companies help the loss incurred by fire or water or that caused by natural calamities and thus help for the smooth conduct of business. Fourth, hindrance of time is overcome by storage. The production of goods and their consumption take place at different times. To supply goods to consumers whenever they require them, they have to be stored. For this purpose there are warehouses. These warehouses are scientifically constructed and many warehouses have cold storage facilities also. Fifth, hindrance of knowledge is overcome by advertisement. While distributing goods to the consumers, the knowledge about the goods has to be given to the consumers. Even when new goods are introduced into the market knowledge about them is also required or knowledge about alternatives is also to be given to the consumers. For all these purposes advertising services are very useful. Let us now understand business ethics. We are under the impression that earning profit is the main objective of business. But it is not so. The objective should be to include reasonable profit and to enable the business to cover the cost.
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Trade and commerce are perhaps the older traditional occupations. Traders supply goods to the consumers. They supply essential commodities. They are supposed to keep marginal profit to cover the cost of business. By doing so ethical principles in the business are followed. But it is unfortunate that greed and profiteering have entered into business. To earn more profits, some antisocial practices are followed, and some of them are adulteration, charging excess or abnormal rates, using false weights and measures, creating artificial scarcity, hoarding the goods and carrying out black marketing. These are unethical business practices. By such acts people suffer untold miseries. Such unethical practices should be avoided. In our country the Government has introduced Public Distribution System to avoid such practices. This means supplying essential commodities through fair price shops. To maintain the standard of goods and essential commodities the government has opened an institution called Bureau of Indian Standards. ISI and AGMARK marks are printed on goods and commodities to certify their quality. Every industrial product must have a seal on its cover pack, the quantity, the date of manufacture, date of expiry, and Maximum retail price. It is a legal mandatory provision.
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Government has also opened Janatha bazaars and consumer co-operative societies to supply essential commodities to the people. Despite these measures, business becomes public cheating, in the absence of business ethics. It cannot be imposed forcefully. It should come from within. Every businessman should inculcate the principle of public welfare in the goal of business. Now let us move to the exercises to test your understanding. I will read each question and provide the complete answer. Question one: Fill in the blank. The best example for Entrepot trade is ______. Answer: The best example for Entrepot trade is Singapore and Middle East countries. Question two: Cottage industries are mainly concentrated in ______. Answer: Cottage industries are mainly concentrated in the villages. Question three: The manufacture of chemicals is carried out in ______ industries. Answer: The manufacture of chemicals is carried out in small scale industries. Question four: The sole objective of business should be earning ______ profit. Answer: The sole objective of business should be earning reasonable profit. Question five: To safeguard the quality of goods ______ institution has been started. Answer: To safeguard the quality of goods Bureau of Indian Standards institution has been started.
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Question six: Which are the different types of mobile shops? Answer: The different types of mobile shops are hawkers, peddlers, street vendors, and market vendors. Question seven: Who are wholesalers? Answer: Wholesale traders are those who buy goods in large quantity from producers and sell them to the retailers in small quantities. Generally, they deal with one or two types of goods. Question eight: Name the three types of foreign trade. Answer: The three types of foreign trade are import, export and entrepot trade. Question nine: Mention the important goods produced by cottage and small scale industries. Answer: Important goods produced by cottage industries include carpentry items, smithy products, carpets, pottery, blankets and stone carvings. Important goods produced by small scale industries include chemicals, engineering goods, shoes, bicycles, fans, radios, sewing machines, soaps and garments. Question ten: Which organizations overcome the hindrance of place and risk? Answer: Transportation overcomes the hindrance of place, and insurance companies overcome the hindrance of risk or loss.
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Question eleven: Mention the antisocial activities of traders to earn more profit. Answer: The antisocial activities are adulteration, charging excess or abnormal rates, using false weights and measures, creating artificial scarcity, hoarding the goods and carrying out black marketing. Question twelve: What are the steps taken by the government to overcome the anti-social practices in business? Answer: The government has introduced the Public Distribution System to supply essential commodities through fair price shops. It has opened the Bureau of Indian Standards to certify quality with ISI and AGMARK marks. It has made it legally mandatory to print a seal, quantity, date of manufacture, date of expiry and Maximum retail price on every product. It has also opened Janatha bazaars and consumer co-operative societies. Question thirteen: What are the economic objectives of business? Answer: The economic objectives of business include earning reasonable profit sufficient to cover costs and enable the business person to lead a normal comfortable life. Business supplies goods and services to consumers and creates consumers. It uses available resources to produce sufficient goods. It produces goods required according to changes over time. It brings changes in production by adopting new techniques. It also enables consumers to know about product changes through advertisement.
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Question fourteen: What are the social objectives of business? Answer: The social objectives of business include producing and supplying goods required for national development. It provides employment to many, pays fair wages and salaries, and helps improve their standard of living. Business contributes to economic development by paying rates, taxes and duties. It also contributes to social welfare by starting and running schools, colleges, hospitals, stadiums and maintaining public gardens. Question fifteen: Mention the services rendered by retail traders. Answer: Retail traders are the last connecting link in distribution. They supply a variety of goods from different producers. They store goods to meet consumer demand. They take the risk of loss in business or goods. They grade goods according to consumer tastes. They provide credit facilities, give information about new goods, and suggest alternatives when specific goods are unavailable. Question sixteen: List out the different retail traders and write two or three sentences on each of them. Answer: The different retail traders are permanent shops and itinerant or mobile traders. Permanent shops are opened at a fixed place and carry out trade. Itinerant or mobile traders do not have a fixed place. Among mobile traders, hawkers carry goods on their heads door to door and usually sell one or two types. Peddlers use wheeled carts to sell at doors and usually sell more than one type. Street traders display goods on busy street corners or pavements. Market sellers operate in weekly or yearly fairs where villagers bring and sell their own produce.
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Question seventeen: Explain briefly the two types of Industries. Answer: The two main types of industries are primary and secondary. Primary industries produce goods using natural resources, like agriculture, fishing, dairy farming and mining. They are divided into genetic industries, which reproduce crops, plants and animals, and extractive industries, which extract raw materials and ores from the earth. Secondary industries are labour oriented and are divided into manufacturing industries, which convert raw materials into finished products like steel or sugar, and construction industries, which build roads, canals and bridges to develop transport and communication. Question eighteen: What is the need of foreign trade to a country? Answer: Foreign trade is needed because no country is self sufficient in all natural resources. Countries with plenty of resources produce excess goods and export them. Countries with deficits depend on others and import what they need. This exchange fulfills resource requirements, supports economic growth, and fosters friendship among nations. The need for foreign trade increases daily. Activity one: Visit weekly market near your place and learn how buying and selling is carried on there and write an essay. For this activity, you should go to a nearby weekly market, observe the traders and villagers, note how goods are displayed, how prices are negotiated, and how villagers sell their own produce like vegetables and eggs. Then write a descriptive essay about your observations, focusing on the exchange process and the community interaction.
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Thank you for listening! Keep revising and practicing. Goodbye! [CHAPTER_COMPLETE]