Course

FacilitatorZaid Altaf Khaskheli

Emil Id:
altafhussain@sbbusba.e
du.pk

Introduction to Business
Chapter # 01

Learning Outcomes
After completing of this lecture,

students will be able to:

Recognize the characteristics of

business.
Define the nature of business.
Classify the components of business.
Describe the qualities of a good
businessman.
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Definition
Any activity to earn profit.
The word business is

derived from the term

busyness.

Characteristics of business
1. Capital:
Capital is the lifeblood of every business. It
is the most essential and important
element of business. In case of deficiency,
loans can be taken from various financial
institutions.
2. Creation of Utility:
Utility is an economic term referring to that
characteristic of a certain commodity, which
can satisfy any human need. Business
creates utility, which gives benefit to the
entire society as well as the businessmen. 4

Characteristics of business
(Contd)
3. Dealing in Goods and Services:
Every business deals with sale,
purchase, production and exchange of
goods and services for some
consideration.
4. Employment:
Business is a good source of
employment for its owners as well as for
other people, for example, employees,
agents, transporters etc.
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Characteristics of business
(contd)
5. Islamic Process:
Business is an Islamic way of earning
living. Income from business is known as
profit, which is RizqeHalal. The Holy
Prophet Muhammad himself did
prosperous business.
6. Motive:
The motive of business is to earn profit.
Otherwise it will not be termed as
business.
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Characteristics of business
(contd)
7. Organization:
Every business needs an organization for its
successful working. A proper organization is
helpful in the smooth running of business and
achieving the objectives.
8. Productions or Purchase of Goods:
A businessman deals in production or
purchase of goods. These goods are supplied
to the people. So, it is necessary that more
goods should be produced so that demand of
people may be fulfilled.
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Characteristics of business
(contd)
9. Regular Transaction:
Business has a nature of regular dealings
and series of transactions. So, in business,
only those transactions included which
have regularity and continuity.
10. Risks and Uncertainty:
Business involves a large volume of risk
and
uncertainty. The risk element in
business keeps a person vigilant and he
tries to ward off his risk
by executing
his policies properly.
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Characteristics of business
(contd)
11. Social Welfare:
Business does not only satisfy the
producer, but also
the consumer when
products are offered for sale at
low
prices in markets.

Importance of Business
Business provides a lot of services to the
human
beings
that
highlight
its
significance.
These services are as follows:
Supply of Goods and Services:
Business provides goods and services to the
society. Business produces different products,
which are sold or supplied to the society.

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Importance of Business
Self-employment and Provision of Employment:

Business provides employment to the businessman.

Further, in the production, distribution and services of
business a large number of individuals are employed
by the business organization.

Research, Development and Innovation:

Business continuously makes research on

alternative uses of resources, develops new
products and methods, and makes new
innovations.
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Importance of Business
(contd)
Income Generation:

Business generates income for the individuals.

Business Utilizes factors of production like land,
labor, capital and organization; and generate
incomes like wage, rent, interest and profit to the
factor-owners.
Development of International Relations:

Business imports necessary commodities and

exports new or surplus products to foreign
countries. In this way, a foreign relation develops.
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Natureofbusiness
1.EconomicActivity:

3.SocialProcess:

Businessisaneconomicactivi
ty
asitisconcernedwith
creation
ofwealththroughthe
satisfactionofhuman wants.

Businessisrunbyownersand
employeeswiththehelpof
professionalsandcustomers.

2.HumanActivity:
Businessisaneconomicactivi
ty
andeveryeconomicactivityis
donebyhumanbeings.

4. System:
Businessisasystematic
arrangementofvariouselement
s,
whichleadstotheattainmentof
particularobjective,accordingto

wellestablishedplan.
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Components of business
Industry
Commerce

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Industry
Industryisconnectedwiththeproductio

n
andpreparationofgoodsandservices.
Conversion of raw material into finished

goods.
This is a form utility.

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Types of industry
Two types of industry:
1.Primary Industry
2.Secondary industry

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Types of industry
1. Primary Industry:
It is farther divided into two parts.

Extractive Industry_ Extraction of

underground resources.
Forexample, fishery,extractionofoil,
gasandcoaletc.
Genetics Industry _ People doing
business by changing genes.
Forexample, poultryfarm,fishingfarm,
dairyfarm etc

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Types of industries
2. Secondary Industry:

It includes:
Construction:
Allkindsofconstructionsareincludedinthis
industry.Forexample,buildings,canals,roads,
bridgesetc.

Manufacturing:
Conversion of raw material into final goods.
For example, textilemills,sugarmillsetc

Services: These industries include those industries,

which are engaged in providing services of
professionalssuchas
lawyers,doctors,teacheretc

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Commerce
The term commerce includes all

activities and functions, whichareinvolved

intransferringgoods,producedin various
industries,fromtheirplaceofproductionto
ultimateconsumers.
InthewordsofEvelynThomas:
Commercialoccupationsdealwiththe
buyingandsellingofgoods,theexchangeof
commoditiesanddistributionofthefinished
good.
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Scope of commerce
1. Trade
2. Aid to trade

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1. Trade

Trade means buying and selling.

Thesystemorchannel, whichhelpsthe
exchangeofgoods.

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Types of trade
1. Home trade
2. Foreign trade

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Home trade
Thepurchaseandsaleofgoodsinsidethe

countryiscalledhometrade.Itisalsokno
wnas
domestic,localorinternaltrade.
Home trade has two types:
i. Wholesale trade
ii.Retail trade
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Types of trade
Wholesale trade:

Itinvolvessellingofgoodsinlargequantitiesto
shopkeepers,inordertoresalethemtothe
consumers.
Retail trade:
Retailingmeanssellingthegoodsinsmall
quantitiestotheultimateconsumers.Retaileri
s middleman,whopurchasegoodsfrom
manufacturersorwholesalersandprovide
these goodstotheconsumers.
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Foreign trade
Tradeorexchangeofgoodsandservice

s
betweentwoormoreindependentcountri
es
for theirmutualadvantages.
Itisalsocalledinternationaltrade.
Foreign trade has two types:
i. Import trade
ii.Export trade
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Types of foreign trade

Import trade:

Whengoodsorservicesarepurchasedfro
m
othercountryitiscalledimporttrade.

Export trade:
Whengoodsorservicesaresoldtoanyot
her
countryitiscalledexporttrade.
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2. Aid to trade
Institutions that are meant and build to

assist and support the trading process.

Meansallthosethingswhicharehelpfulin
trade.
Such as:
a) Banking
e) Agents
b)Transportation f) Finance
c) Insurance g) Advertising
d) Warehousing h) Communication
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Aid to trade (contd)

Banking:

Commercialbanksandotherfinancialinstitution
to helpthesellerandthebuyerinreceivingand
makingpayments.
Transportation:
Thegoodswhicharemanufacturedinmillsand
factories,reachtheconsumersbydifferent
meansoftransportationlikeair,roads,rails,sea
Etc.

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Aid to trade (contd)

Insurance:

Thetransferofgoodsfromoneplacetoanother
isnotfreefromriskofloss.Thereisarisk of
lossduetoaccident,fire,theftetc.
Theinsurancecompanieshelpoutthetraders
with thisproblemthroughinsurancepolicy.
Warehousing:

Aneed for warehousesarisesinordertostore

themanufacturedgoods.
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Aid to trade (contd)

Agents:

Theyarethepersonswhoactastheagentsof
eitherbuyerorseller, theyperformthese
activitiesforcommission.
Finance:

Financialinstitutionsprovidelongterm finane
totheproducers.

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Aid to trade (contd)

Advertising:

Advertisementisaneasyway toinformthelarge
numberofcustomersaboutthegoods.Thiscan
bedonethroughTV, newspapers,radioetc.
Communication:
Theproducers,wholesalers,transporters, banks
warehousekeepers,advertisersand
consumersliveatdifferentplace.Thispost
office,telephoneandothersimilarmediais very
usefulforpromotionoftradeandindustry.

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Qualitiesofagoodbusine
ssman
Followingarethebasicpersonal skillsorqualities
whichagoodbusinessmanmustpossess:
1. AbilitytoPlan:
Abusinessman,ifhewantstoshineinbusiness,
musthavetheabilitytoplanandorganizeit.

2. Activator:
Hehadtoactivatehisworkers.Ifheactivateshis
workersthenthisisgoodforbusiness.

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Qualitiesofagoodbusine
ssman
(Contd)

3. BoldorCourage:
Agoodbusinessmanshouldbeacourageous
and boldperson.Maybehissomeangry
decisionsgavehimlossinfuture.

4. Cooperation:
A good businessmanshouldhave to cooperate
with his workers. Withthe help ofcooperation
withhisworkershecanrunhisbusinesswell.
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5. Courtesy:
Businessmanhastowintheheartofeveryone
withhispolitemanners.

6. Evaluator:
Abusinessmanhastocheckhimselfthathow
heisworking. Thisthingcanmakethe
business
goodinprogress.
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7. Foresight:
Hemustkeepintouchwiththe businessworld.
Heshouldmoveaboutandseewhatisgoingon
hehastoestimatenew wantsandnewinventions
forcreatingfreshdemands.

8. Knowledge:
Agoodbusinessmanshouldhaveknowledgeofhis
business.Itshouldbeincreasedby knowledge
oftrade,finance,marketing,incometax etc.
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9. Negotiator:
Ifabusinessmanisagoodnegotiator,thenhe
canrunhisbusinesswell, becausewithoutgood
communicationhecantimpresshisconsumer.
10. Personality:
Abusinessmanshouldhaveagracefulpersonality
becauseitcanimpresshiscustomers.

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The End

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