GOVERNMENT POLICY

Government makes the business policy for the welfare of the people and for healthy business environment. Hence before starting the business the businessman should study and know the formalities and government policy relating to establishment, running and regulation of business. The businessman should compulsorily follow such rules and regulations of the government.

OFFICE EQUIPMENT

An office is a central place where all sorts of clerical work is done to coordinate and control the affairs of the whole business. For the efficient functioning of an office there is a need for adequate and proper equipment and machines. Office activity is an indoor activity and adequate equipment improves the efficiency of the office staff. They play an important role in the efficient, accurate and speedy performance of the office work.

SELECTION OF STAFFS

Staffs are needed to perform the various works of the business. According to the size and nature of business staffs are selected. The success of business generally depends upon those staffs. Hence capable, experienced and honest staffs should be selected. For this, the businessman has to estimate manpower requirements. So another problem of a new business is to secure adequate staff-both skilled and unskilled.

LOCATION OF BUSINESS

Location means selecting a site for business. For starting a business location is also an important factor. It is very difficult to change the location once the business has been set up. For selecting a location of the business, many factors have to be considered. For trading concern nearness to customers is the main consideration. But for industrial concern special precautions should be taken in selecting the site. Hence location is the best in which production and distribution cost per unit is the least, sales are maximum and maximum profit is possible.

PROVISION OF CAPITAL

Capital is the life blood of business. No business can be established and conducted without capital. But the volume of capital varies according to the nature and size of the business. Hence before starting a new business requirement of capital and the source for collecting capital should be determined. Every business needs fixed capital in the form of land, building, machinery, furniture, etc. In addition, working capital is required to purchase raw materials and to meet day-to-day business transactions. Thus, capital requirement is estimated by ascertaining the amount essential for fixed capital and working capital relating to the establishment of business. The business should acquire adequate capital. If the capital is less than the requirement, it becomes difficult to conduct the business whereas excess capital cannot earn sufficient profit, which have adverse effect on the business goodwill.

FORM OF BUSINESS ORGANIZATION

The determination of the form of business organization is another important decision to be taken before starting a business. Sole proprietorship, partnership and joint stock company are the various forms of business organization. Each form of business organization has its own merits and demerits. Which type of business organization is suitable for the business depends upon various factors i.e. nature of the business, size, capital, risk, etc. If the business is risky and requires larger amount of capital then joint Stock Company is most suitable. If business is to be conducted on small scale, sole proprietorship may be ideal. Broadly speaking sole proprietorship for small business, partnership for medium business and the company for the big business is the most suitable form of business organization. All the three forms are more suitable to each other in varying circumstances.

DETAILED iNVESTIGATION

A business cannot be started only by imagination. So after selecting a business detailed investigation should be done to determine the difficulties and possibility of future progress. The profitability of the proposed business can be found out through market survey. Present and future competition about the decided business should be evaluated. Detailed investigation concerning the consumer's interest, income and habit of expenditure must be conducted. Detailed investigation can pinpoint whether or not the proposed business can yield sufficient profit. Though it is difficult to find out what is going to happen in the future, yet with the help of the present study, an outline of the future may be prepared. If it found profitable and feasible to start a business further consideration should be taken in this direction.

SELECTION OF BUSINESS

The first thing to be considered before starting a new business is deciding what type of business to start. This is an important consideration before taking a decision on the establishment of a business. There are many types of business available. The businessman has to select carefully whether to start industry or trade. Once a decision is taken and a business is established it becomes very difficult to introduce basic changes in the nature of the business. While selecting business following factors should be considered:
a. Personal interest of the businessman
b. Possibility of earning more profit
c. Less risk and more profitable business
d. Knowledge and skill of the businessman
e. Estimated size and available resources
f. Prevailing level of competition
g. Chances of expansion in future
h. Rising trend of future demand

CONSIDERATIONS BEFORE STARTING A NEW BUSINESS

To start a business means to engage oneself in business activity and work. Every work performed before starting a new business is a part of its promotional activities. Promotional work begins with the origin of an idea till the business begins to function as a going concern. The aim of every business is to earn profit through service. As scope of competition has become wider, risk in business has increased considerably. The complexities of business have increased manifold. Thus, before starting a new business promoters must consider the following factors in order to survive and earn profits.
(1) Selection of Business
(2) Detailed Investigation
(3) Form of Business Organization
(4) Provision of Capital
(5) Location of Business
(6) Selection of Staffs
(7) Office Equipment
(8) Government Policy

EVOLUTION OF BUSINESS IN NEPAL

As discussed earlier, the evolution of business in Nepal also can be divided into two parts: (1) evolution of industry, and (2) evolution of commerce.

(1) EVOLUTION OF INDUSTRY IN NEPAL
Industrial development is the key to rapid economic progress of a country. Handicrafts and cottage industries have been in Nepal since ancient time,but industrial development is still in its infancy. Historically, the industrial development process began after 1936 with the establishment of Biratnagar Jute Mill. It was the first joint stock company of Nepal established under the Company Act, 1936. This act has been revised in 1957, 1964 and 1997 (2053 Chaitra). Nepal Bank Limited was also established in 1937 for the development and growth of industry and trade.
In between 1936 and 1949 a number of industries, particularly in the fields of cotton textile, sugar, match, hydro power, rice and oil mills, and cigarettes were set up in the south eastern and eastern Terai region. Between 1945 and 1949, the prevailing war-time inflatory conditions and scarcity of goods in the market provided a rare opportunity to these enterprises to make high profits. After the Second World War, the demand for the goods produced in Nepal went into decline along with the profits which resulted fall in confidence in industries and shutdowns.
The total number of public limited companies and proprietorship firms registered before 1950 reached the figures of 59 and 299 respectively.
In Nepal, development plans were implemented only from 1956(2013 B.S.). The First Five-Year Plan was implemented in 1956-61. In order to encourage and assist the development of private industry, an Industrial Development Center was established in 1957 which was converted to Nepal Industrial Development Corporation in 1959. In the same year, Nepal Factory and Factory Workers Act was also passed to allow industrial development. In the plan period Private Firm Registration Act, 1957 and Industrial Policy, 1960 was announced. Balaju Industrial District was also established in the plan period.
In the Second Three Year Plan (1962-65) eleven public enterprises were established i.e. Birgunj Sugar Factory, Janakpur Cigarette Factory, etc. In the private sector sugar, metal, handicraft, hotel, soap, biscuit and sweets industries, etc. were established. Patan and Hetauda Industrial Estates were established in this plan period.
The Third Five Year Plan (1965-70) recognized industrialization as an essential component of economic growth and gave it third priority. In this plan period, Bansbari Leather and Shoe Factory, Agriculture Tools Factory, Himal Cement Company, Nepal Tea Development Corporation, Dairy Development Corporation, etc. were established.
The Fourth, Fifth, Sixth, Seventh and Eighth Five Year Plans also emphasized the need to attract private sector investment i industries.
During Eight plan HMG adopted privatization, economic liberalization and open market policies. Keeping in mind the condition of public enterprises, HMG initiated privatization efforts from the Eighth Plan. The new revised industrial policy (1992) has been greatly liberalized and made transparent. Foreign Investment and Technology Transfer Act (B.S. 2050) was reviewed to attract foreign investment and to emphasize the transfer of advanced technology and efficient management. The Ninth plan (1997-2001) continued to emphasize on privatization and economic liberalization. The core objectives of the Tenth plan (2002-2007) is to accelerate the pace of industrialization through increased participation or private sector and to create additional employment in both rural and urban areas to reduce poverty.

(2) EVOLUTION OF TRADE IN NEPAL
Trade plays an important role in the economic development of a country. In the early stage of economic development, Nepal's trade was limited with India and Tibet alone. During that period the major exports from Nepal comprised rice, timber, herbs and medical plants, and handicrafts, and the major import items were cloth, salt, medicines and kerosene oil.
The year 1923 was a momentous year for the country. A 'Treaty of Peace and Friendship' was concluded between the Government of Nepal and the Government of Great Britain. As per the treaty, Nepal could carry on import trade free of duty via India. Thus, this treaty was a landmark for Nepal to diversify its foreign trade.
India and Tibet, autonomous region of China are the traditional trading partners of Nepal before 1950. With the formation of democratic government, Nepal and India signed a trade treaty in 1950. Nepal's trade with overseas countries started only from 1956 after the implementation of First Plan. As modernization was ushered in the country after democracy development of trade also grew tremendously. In order to promote exports an exporter's exchange entitlement scheme was introduced in 1961. Under this scheme, raw jute was exported to a third country for the first time.
Nepal pursued trade diversification policy since early 1960s, which got momentum from Fourth plan. Nepal has been successful to diversify the trade at least country wise. In fiscal year 1974/75 India's share in total trade of Nepal was 82.2 percent, while that of other countries was mere 17.8 percent. But in fiscal year 1997/98 India's share in total trade was mere 31.o percent while the share of other countries increased to 69.o percent. However, in 2000/2001, India's share in total trade of Nepal came to 41.6 percent while the share of other countries remained to 58.4 percent.
Since Eight plan, Nepal turned to open market economy and then adopted the policy of liberalization of foreign trade. In Nepal, new Trade Policy 1992 has been implemented. It aims to achieve dynamic growth in the trade sector through the creation of more income and employment opportunities, attain favorable balance of payment situation by increasing exports and earning more foreign exchange.
At present Nepal has trade agreement with seventeen countries. However, it is trading with more than 80 countries of the world. The volume of trade has been constantly increasing due to development of transport and communication, participation in international trade fairs, membership of international organizations, liberal policy of third countries towards Nepal.

EVEOLUTION OF BUSINESS

Business consists of industry and commerce. So the evolution of business can be studied by dividing it into two parts: (1) evolution of industry, and (2) evolution of commerce.

(1) Evolution of Industry

Industry is concerned with the production of goods and services. Th3ere was a time in the history of mankind when there were no industrial activities. Our primitive ancestors consumed what they produced. Hunting was the first stage in the evolution of man. The needs of man were limited only to food, clothing and shelter. This was an economy of self-reliance. Gradually man entered into pastoral stage under which he started domesticating animals for milk, meat and skin. He lived near the banks of lakes and rivers because of availability of grass and water. Soon after this, man entered the agriculture stage. He began cultivating land to grow food-grains. The economy of the household remained self-sufficient.

The evolution of industry can be traced from handicraft stage where goods were manufactured for local people.

(a) Handicraft Stage: Human wants increased with the advance of civilization. They could not produce everything they needed. People came to know that man is skillful in producing a few commodities. They can make them quite rapidly in large numbers and in beautiful forms. Hence, under handicraft stage artisans living in village produced products for the local people and got in exchange what they needed. At this stage artisans used simple hand-tools and manual skill for producing the goods. The organization of work was quite simple and there was no division of labor. Family was the unit of industrial organization. This gave stimulus to the development of industry. The money as an exchange medium helped the expansion of industry and trade.

(b) Guild System: A guild may be defined as an organized group of artisans or traders. In the middle age (up to 15th century) working people organized themselves into Guilds. These Guilds were-Merchant Guilds and Artisans Guilds. The merchant guilds were associations of traders. Artisans engaged in the same lime formed artisan or craft guilds. The membership of these guilds was compulsory. The guilds were able to help the growth of industrial development. The interests of members were protected. The members were expected to produce quality goods. Reasonable profitability was ensured to the craftsman.

After a fairly long period of bloom, the guild system suffered from many drawbacks and declined. The important reasons of their decline were (a) rigid outlook of craftsmen, (b) restriction on the entry of new members, (c) the envelopment of new towns without guilds.

(c) The Domestic System: With the fall of guild system,a new system developed which was known as Domestic System. With the increase in population the demand for goods increased considerably. The artisans were not able to procure huge quantities of raw materials. They were also unable to purchase latest tools because of their limited resources. A new class of entrepreneurs came into existence. The entrepreneurs gave work to the artisans who worked in their homes. In many cases the entrepreneurs also provided the means of production. The artisans were paid on piece wage basis. The artisans became only wage earners. This gave birth to capitalistic system. Ultimately the entrepreneur was the owner and manager of the production system and he was responsible for procurement of various inputs and marketing the output.

(d) The Industrial Revolution: The term 'Industrial Revolution' is used to describe a series of changes in the British industry during the later part of the 18th century and the earlier part pf 19th century. A number of inventions took place in England, which changed the entire technique of production. The word 'revolution' means a fundamental change. In this sense industrial revolution was a change in (a industrial method, from handwork to organization, from work at home to work at factories. The consequence of industrial revolution were mass production, mechanization, standardization, growth of capitalism, specialization and improvement in standard of living.

(e) Present Stage: The present age has been termed as an era of large scale production. The twentieth century has witnessed a revolution in technology. The latest technological improvements are automation, computerization and use of atomic energy of peaceful purposes. With automation industrial work can be done faster and better. The machine needs only to be started and everything goes on automatically. All complicated jobs are done with the help of machines. The computer system helps to make adjustment if necessary. With the developments indicated above the world of industry is passing through a crucial period of change.

(2) Evolution of Commerce

Commerce includes all those activities, which are concerned with the distribution of goods and services. It ambiances purchase and sale of every kind as well as various services like transport, banking, insurance, warehousing, etc. Which facilitate trade. Hence, it provides link between producer and consumer. They have been expanding along with the development of society. It has passed through a number of stages to reach the present level. The standard of living is directly influenced by the degree of development of commerce. Following are the stages in the evolution of commerce:

(a) Non-Existence of Commerce and Trade: In the early stages of man there were no surpluses to be exchanged. Our primitive ancestors consumed what they produced. The production of goods was only to satisfy one's own need. Since people did not exchanged goods or services, commerce (and trade) was non-existent.

(b) Barter Economy: Human wants increased with the advance of civilization. They could not produce everything they needed. People came to know that man is skillful in producing a few commodities. He can make them quite rapidly in large numbers and in beautiful forms. So, at this stage people started producing excess of their needs what they could produce. People started searching for persons who could get their surplus products in exchange for those goods, which they required. Commerce made its beginning and barter (exchange of goods for goods) began to be practiced. Means of communication were either absent or wholly primitive and trade was non-existent.

(c) The Rise of Trade: The barter system was not suitable for expansion of trade. The difficulties of barter system compelled people to find out some common medium for exchange. Several commodities like shells, cattle's, oxen, precious stones, metals, etc. have been used for money from time to time. Ultimately coins and paper notes were evolved. With the evolution of money as a medium of exchange removed the defects and limitations of barter economy. The money as a medium of exchange helped the expansion of trade. People started producing goods for sale. A class of traders started helping the producers and consumers for exchange of goods and services. Gradually the traders started selling at particular places, which later on became market places or trade centers. So the introduction of money led to the growth of commerce.

(d) National Economy: The introduction of money followed by several other improvements of commercial activities (transportation, banking, insurance, etc.) greatly helped to develop commerce and trade. The division of work and specialization helped producers to concentrate on few products only. They started producing goods not only for the local markets but also for the national markets. The specialization in different fields helped the growth of industry and commerce. The development of transport facilities, banking system, insurance companies and warehousing increased the trade manifold. All these developments were responsible for developing commerce at national level.

(e) World Economy: The discovery of trade routes between 15th,16th and 17th centuries brought various countries nearer to each other. The element of specialization extended to different countries. They started exporting those products, which they could produce easily and would import those things in which they were deficits or could not produce cheaply. In this way trade extended to world markets in which goods were bought and sold between two countries. This is also known as international trade. The industrial revolution brought drastic change in industrial method and industrial organization, which increased the scale of production immensely and changed the scope of trade. Several middlemen began to operate between the producer and the consumer. Specialized institutions like banks, transport companies, insurance companies and warehousing were set up to help the trader. All these factors facilitated the development of worldwide trade and commerce. This is the globalization of business.

SOCIAL RESPONSIBLITIES OF BUSINESS

Every business organization operates in the society. It uses society's resources and sells its production to the society and earns profit. Business and society are meant and exist for each other. Without the help of society business cannot be operated. Business is required to meet the varied needs of the society. It can exist only if it fulfills its responsibility towards the society in the socially a manner. Hence, fulfilling the responsibility towards society is the social responsibility of business. Every business organization must share his prosperity with those members of the society who have helped the business to prosper.
Social responsibility may be defined as the obligation of an organization to protect and enhance society within which the organization operates. According to Keith Davis and Robert L. Blomstorm, "Social responsibility refers to the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests".
Every business should think that profit is his remuneration but social service is his main duty. Profit through service is the basis of the concept of social responsibility of business. Hence according to social responsibility of business, following services are to be performed towards the various sections of society.
(1) Towards Shareholders or Investors: Shareholders are the owners of business who invest capital and bear risks. Thus, a business owes a special responsibility towards itself. The responsibilities of business/organization towards them are:
a. Provide fair return or dividend regularly to the owners.
b. Maximization of the net present value of the business.
c. Ensuring full participation of owners in the management.
d. Providing accurate and comprehensive reports and financial information.
e. Provide safety to their investment.
f. Business resources should be fully utilized without any wastage.

Owners also have certain responsibilities, which they have to discharge to protect their own interests. They should whole-heartedly support and cooperate in the positive efforts of the organization. At the same time, they should appreciate the responsibility of the business to other sections of society to the employees, consumers' community and the government.
(2) Towards Employees (Workers): Th employees are the greatest assets of a business. The success of an organization depends to a very large extent on the morale and whole hearted cooperation of the employees. The responsibilities to the employees are:
a. Security of job with fair wages, bonus, profit sharing, etc.
b. Fair selection, training and promotion within the organization.
c. Providing good working condition and secured working environment.
d. Encouraging participative management.
e. Encouraging to develop good trade union leadership.
f. Developing an efficient grievance handling system.
g. Proper recognition, appreciation and encouragement of special skills and capabilities of the workers.

(3) Towards Consumers: The organization cannot be successful unless it satisfies the consumers. Consumer satisfaction is the key to satisfying business goals. The main responsibilities towards consumers are:
a. Understanding consumer needs and to take necessary steps to satisfy these needs.
b. Improving the efficiency of the organization so as to:(i) increase productivity and reduce prices, (ii) improve quality, and (iii) make goods easily available in the right quantity and at the right time.
c. Supplying goods of high quality at reasonable prices.
d. Providing after-sales-services.
e. Conducting research and development to improve quality and introduce new products.
f. Avoiding restrictive trade practices and other undesirable methods to exploit the consumers.
g. Handling customers' complaints and inquiries very carefully and analyzing these objectives.

(4) Towards Community (Society): The existence of an organization depends on the well wishes of the whole community. Hence, it has a lot of responsibility to the community. These responsibilities are:
a. Maintaining environmental ecology and adopting antipollution measures.
b. Producing goods and services efficiently and contributing to the economic well-being of the society.
c. Taking steps to conserve scarce resources and developing alternatives, wherever possible.
d. Assisting in the overall development of the locality.
e. Creating employment opportunities in the society.
f. Participating in social welfare programs such as promotion of education, medical facilities, and population control.
g. Encouraging voluntary organizations engaged in improvement of the weaker sections.

(5) Towards Government: Business activities cannot be performed properly without the protection of the government who is also the best protector of social welfare. It should be conducted according to the rules and regulations of the government. The obligations of business organization to the government are:
a. Strictly following the provisions of the various laws and enactment.
b. Paying taxes regularly and honestly to the government.
c. Supporting the government in its efforts to solve national problems such as unemployment, inflation and regional imbalance in economic development.
d. Voluntarily support in Government efforts aimed at improving the quality of life.
e. Helping the government to stop black-marketing.
In fact government has also the responsibility to create adequate business environment. The government has to develop the necessary infrastructure, adequate rules and regulations, provide facilities and encourage genuine entrepreneurs, and attract productive investments for developing healthy business environment.

IMPORTANCE OF BUSINESS

Business is the most important activity of mankind. The progress of any country depends upon the development of business of that country. Therefore countries like Japan, Korea, England, Germany, USA, etc. are developed through business. The following reasons clearly show the importance of business:
(1) Fulfillment of Human Wants: In the modern time human wants are unlimited. Business fulfills such human wants through the production of goods and services.
(2) Creation of Utility: Business creates various types of utilities in goods so that consumer may use them according to their preferences and needs. The utility may be form utility, place utility, time utility, etc.
(3) Utilization of Natural Resources: Every country has certain natural resources. The business makes it possible to utilize natural resources to their maximum extent. As for example mineral resources are extracted by extracted by extractive industries. After wards they are used by other industries to make different types of useful articles.
(4) Employment Opportunity: The field of business is also important from the viewpoint of employment. Today a lot of people are employed by the development of business. So business contributes a lot in solving the unemployment problem of the country.
(5) Economic Development: The economic development of a country depends upon the development of business. Hence by utilizing the raw materials available in the country if we can develop industrialization, country could be developed. The economic prosperity of a country is judged by the number of large scale business existing in it.
(6) Supply of Quality Goods: The supply of quality goods and services to the consumers at reasonable prices is the responsibility of the business. The business should aim at consumer satisfaction. A business cannot flourish in the long run if it ignores consumers.
(7) Earning Foreign Currency: Business is the major source of earning foreign currency. By the development of business (industry, trade) finished goods can be exported to foreign countries and earn maximum foreign currency. Such foreign currency again can be used in importing necessary goods and services for the development of the country.
(8) Self-Sufficiency: Business can play an important role in making the country self-sufficient. It should produce all those goods, which are imported from outside. A self-reliant country has more prestige in international community.
(9) Increase in Government Revenue: The development of business also increase the government revenue. Industrial and business firms pay excise duty, income tax, sales tax, etc. to the government. As the number of business enterprises increase government revenue also increases.
(10) International Relationship: By the development of industry and trade we can export-import goods with other countries. The people of different countries come in contact with each other. It creates cooperation, understanding and relations among various nations.

FUNCTIONS OF BUSINESS

A business has to perform a number of functions in order to achieve its objectives. One of the major functions of business is to produce goods from raw materials. Similarly transporting goods from the place of production to the market is also another function of business. Hence, the major function of business can be identified as follows:
(1) Organizing Function: One of the major functions or business is organizing function. Man, machine, materials, machines and money are essential factors for any business. So organizing function accumulates and coordinates all the necessary factors of business. Proper organizing function is helpful in the smooth running of the business and helps to achieve its objectives.
(2) Financing Function: Finance is the life-blood of any business. The availability of factors of production depends upon the availability of finance. So every business needs finance for its success. Hence under this function required capital is estimated, accumulated and properly utilized. A proper capital structure according to the size and nature of the business is essential for the success of the business.
(3) Production Function: Production function is another important function of business. Converting raw materials into finished products to satisfy human wants by creating utility is known as production. Under this function raw materials and semi-finished products are processed and assembled to create utility. Hence the next important function of business is to create utility for satisfaction of the consumers by production of goods.
(4) Marketing Function: The function of business is not complete with the production of goods and services only. The main goal of production is to satisfy human wants through the consumption of goods and services. Hence marketing function helps to transfer goods and services from the producer to the ultimate consumer. Marketing functions can be divided into concentrating and dispersing which include buying, selling, transportation, storage, risk taking, market information, etc.
(5) Employment Function: The next important function of business is to provide employment opportunities in the country. Every activities. So they are helpful in solving employment opportunities. Business sector is possibly the largest employment generating sector in the world.
(6) Research and Development: The progress in any field is the result of research and development. In business also research and development is essential for the development of new technologies and new products. By research new production techniques, interest of the consumers, needs of the market, new markets, etc. can be identified. Hence through research and development business can be increased.
The success of any business depends upon the satisfaction of the consumers. Hence giving the priority of consumer satisfaction the above functions of business must be conducted efficiently in order to run business successfully.

INTER-RELATIONSHIP BETWEEN INDUSTRY, TRADE AND COMMERCE

Business is divided into two categories: industry and commerce. Commerce is again sub-divided into trade and aids to trade. Practically all of them are closely related to each other. They are inseparable. All of them are parts of the whole business system.
Industry and commerce are closely related to each other. Industry cannot exist without commerce and commerce cannot exist without industry. Because every producer has to find his market for his products to sell. But the producer has no direct connection with the buyers or consumers. Hence, industry needs commerce.
Commerce is concerned with the sale, transfer or exchange of goods and services. Hence commerce needs industry for the production of goods and services. Commerce makes the necessary arrangement for linking between producers and ultimate consumers. It includes all those activities that are involved in buying, selling, transporting, banking, warehousing of goods, and insurance for safeguarding the goods.
Trade includes sale, transfer or exchange of goods. It does not include other functions of commerce like transportation, insurance, banking, warehousing, etc. If there were no trade, the producers would have to find customers for their products. Therefore without trade there would be little need for commerce. Similarly trade without aids to trade is meaningless and they exist for trade.
In conclusion, we can say that industry, trade and commerce are inter-related with each other. Industry is concerned with production of goods and services and commerce arranges its sales; but the actual operation of sales is in the hands of trade. So they cannot work independently.

Advertising and Publicity:

The consumers may not be aware of the availability of various goods in the market. The producer will also like to increase his customers. The advertisement is used to educate customers and to publicize goods and services to promote their sales. Publicity is a method of promoting sales. It is essential for increasing sales and profit. There are several media of publicity like newspaper, radio, T.V., etc.

Warehousing:

Warehouse is a kind of storage. It creates time utility. Some goods are produced seasonally but they are required throughout the year. So there is need to store them, so that they may be supplied according to demand. Hence, warehousing are used to keep the stock of goods when not required for immediate use.

Insurance:

During the movement of goods from place to place or during storage, there are chances of goods being damaged or lost. It protects the traders from the fear of loss of goods. The fear of loss of goods due to any cause acts as an obstacle in the development of industry and trade. The insurance companies provide coverage for all types of losses of goods. It has given a great impetus for the development of business.

Banking and Finance:

Banks and financial institutions provide finance to business units. They are traders of money and credit. They provide capital for the business in shape of loan and they also help them in remitting money from one place to another. They play an important role in international trade where each other do not know trading parties. The documents are sent through banks, which release the documents after collecting the dues.

Communication

The transmission of information from one place to another for various purposes is known as communication. Development of industry and trade is very much dependent on means of communication. Most important communication media are telephone, fax, telegrams, radio, T.V., etc. They are very much helpful in communicating their message with persons at distant places. Communication also gives information of new product to individuals and firms.

Transport

Goods are produced at a few places but are required for use at several different places. It is the function of transport to carry goods from centers of production to centers of consumption. It creates place utility by transferring goods from one place to another. It has linked all parts of the world. Transport helps in assembling the goods and in distribution. It widens market, increases mobility of labor and capital, and facilitates large-scale production. The various modes of transport have helped the growth of industry and trade.

Aids to Trade(Auxiliaries to Trade)

There are various obstacles in the way of smooth running of trade. All the obstacles are overcome with the help of various agencies known as Aids to Trade. Aids to trade are those activities that facilitate buying and selling of goods. In other words, it is the sum total of those processes which are engaged in the removal of hindrance of place (transport and insurance) and time (warehousing) in the exchange (banking) of commodities. So it links the consumers and traders. These aids are essential for the growth of trade and industry. Thus, they are also known as aid to business and auxiliary services. Aids to trade include the following services:
(a) Transport
(b) Communication
(c) Banking and Finance
(d) Insurance
(e) Warehousing
(f) Advertising and Publicity

Foreign Trade:

Foreign trade involves purchase and sale of goods between different countries. For example, trade carried on between kathmandu and Tokyo is foreign trade. Two countries are involved in foreign trade. It may be further subdivided into import, export and entreport trade. Import Trade implies purchase of goods from a foreign country. Export Trade on the other hand, implies sale of goods to other countries. Entreport Trade is only re-export. A country imports something not for own use but to export it to other countries is known as entreport trade.

Home Trade:

Home trade consists of buying and selling goods within the boundaries of a country. Payments for such sale are made in national currency directly or through banks and the internal transportation system is utilized for the movement of goods . It may be further sub-divided into wholesale and retail trade . Wholesale Trade consists in buying in lots from producers and then selling them to the large number of retailers. It serves as a link between the producers and the retailers. Retail Trade on the other hand, involves purchase of goods from the wholesaler or the producer directly and sale those goods to the large number of consumers in small lots. Hence, it is the final stage of distribution.

Trade

Trade refers to the sale, transfer or exchange of goods. It is an activity by which buyers and sellers exchange useful goods and services for mutual advantage. It is the process of by which goods are taken from the source of production to the consumers. The persons engaged in trade are called 'traders' or middlemen'. A trader acts as an intermediary between producers and consumers. Trade may be broadly classified into two parts:
(a) Home Trade
(b) Foreign Trade

meaning and classification of commerce

Commerce is concerned with buying, selling and distribution of goods and services, which are produced by industry. James Stephenson has defined commerce as 'an organized system for the exchange of commodities and distribution of finished productions." It signifies a process of exchange, which is the foundation of modern economic life. It helps in transforming the goods from the place of production to those places where it is scarce. Hence it is concerned with the supply of goods and services to the consumers at the right place, at right time and condition.
Commerce deals with the processes which are engaged in the removal of hindrances of persons (trade), hindrances of exchange (banking and finance), hindrances of place (transport, insurances), hindrances of time (warehousing), and hindrances of information (advertising and salesmanship). In modern era commerce includes all the functions which are required to buy and sell the product. It provides a link between producer and consumer.
According to Evelyn Thomas, "Commercial occupations deal with the buying and selling of goods, the exchange of commodities and distribution of the finished goods".
Commerce is primarily concerned with two main types of activities:
1. Trade
2. Aids to Trade.

Manufacturing Industry

Generally the term 'industry' refers to the manufacturing industry. This industry is mainly concerned with the production of different types of goods by using raw materials or semi-finished goods. It creates form utility in them. Manufacturing industries produces most of the goods that are used by the consumers. Textile, cement, soap, television, petrol, etc. are examples of manufacturing industries. It may be classified as follows:
(a) Analytical Industry: In this industry many types of products are manufactured by analyzing and separating different elements from the same material. For example crude oil is processed and separated into petrol, diesel, kerosene, lubricating oil, etc.
(b) Processing Industry: In this industry raw material is processed through different stages of production resulting in the final product. Textiles, paper and sugar are examples of this type.
(c) Synthetic Industry: In this industry various raw materials are put together in manufacturing process to make a final product. For example combining and mixing concrete, gypsum, coal, etc produces cement.
(d) Assembling Industry: In this industry various instruments or component parts already manufactured are assembled to make new useful product. For example, car, bicycle, radio, television, etc.

Construction Industry:

This industry is concerned with the construction, erection, fabrication or building products. Examples of such industries are road, bridge, dams, canals, building construction, etc. In this type of industry basic materials are manufactured by other industry like cement, iron, etc. The distinctive characteristic is that their products are not carried to the market for sale, they are erected or built at a fixed site. The products of construction industries are immovable.

Extractive Industry:

The Extractive Industry is concerned with the extraction or drawing out products from natural sources. It supplies basic raw materials to other industries. Examples of such industries are farming, mining, hunting, lumbering, fishing, etc. Materials once extracted from earth cannot be replaced. Hence, these industries are also called exhaustive industries because with extraction there is depletion of resources and exhausts.

Genetic Industry:

Genetic Industry is related to the reproducing, breeding, and multiplying certain species of plants and animals with the object of earning profit from their sale. The activities involved are rearing, breeding of animals, birds and growing plants. Nurseries where plants are grown for sale, cattle breeding farms, poultry, etc. come under genetic industry.

Meaning and Types of Industry

"Industry" refers to production of goods by manufacturing or processing. It converts raw materials into finished goods and thus creates form utility. Goods produced by an industry maybe "consumers' goods" or "producers' goods". Consumer goods are in the form in which consumer wants them e.g. clothe, radio, television, foodstuffs, etc. They directly satisfy human wants. Producers' goods are used by other producers for further production e.g. machinery, factory buildings, plants, tools, etc. Industry may be further divided into four different types.
1. Genetic Industry
2. Extractive Industry
3. Construction Industry
4. Manufacturing Industry

Human Objectives

Business activity can be conducted only through the medium of human beings working as individuals or groups in organizations. If the human factor is overlooked, it will be difficult to achieve its objectives. Human objectives of business require that a workable balance should be maintained among the claims of various interested groups like employees, shareholders and consumers. Some to the important human objectives are:
(a) Welfare of Employees: The employees should be looked upon as human beings. The help in increasing the profitability and should be given a due share in profits in form of bonus, increased allowances or spending money on their welfare. The best prerequisite for getting the best out of people is providing a fair wages and other incentives.
(b) Satisfaction of Consumers: The business is meant for consumers and their satisfaction should be the main objectives of business. So goods should be produced according to the needs tastes and purchasing power of the consumers. They should be provided with quality goods at reasonable prices.
(c) Satisfaction of Shareholders: The management should give reasonable return on the money invested by the shareholders. At the same time, the business should grow so that there is capital appreciation also. The shareholder should also feel that the management does not misuse their money.

social Objectives

Since business operates in society it cannot survive and grow unless it meets the needs of the society. For the survival of any business, social objectives are essential. profit should be earned along with service and this concept does minimize the importance of profit. According to Henry Ford. "service first and profit next should be the motto of every businessman." Thus, it is an important part of business objectives to fulfill its obligations to the society whose ethical and moral code of conduct should not be violated. The philosophy of running a business should be in tune with what is considered right by the society. Some of the social objectives of business are as follows:
(a) Providing Goods: The business should provide goods and services for benefit of the society. Goods are used to satisfy physical as well as mental needs. Providing goods are used to satisfy physical as well as mental needs. Providing goods and services for society is the first duty of businessmen.
(b) Supply of Quality Goods: It is the duty of businessmen to study wants and needs of consumers and provide them with quality goods. It is necessary that goods and services should conform to some specified standards. The supply of adulterated goods, low quality, unusable or harmful to health will be against business ethics. A business cannot flourish in the long run if it ignores consumers.
(c) Proper price: Business should supply desirable goods and services at proper prices. Efforts should be made to reduce cost in order to reduce price. When the price is decreased, demand increase and more people are able to satisfy their wants.
(d) Providing Employment: Business activities are the greatest source of employment. The business community should plough back its profit for further expansion of business activities that will ultimately create new job opportunities.
(e) Utilizing the Scarce Resource Properly: The business should put the scarce national resources to the best possible use. A business is not free to damage or cause discriminate depletion of natural resources.
(f) Avoiding Social Nuisances: Business activities generate filth and dirt also and make social environment unhygienic. Constant noise makes living unpeaceful. So, every precaution should be taken to maintain cleanliness, public health and minimum noise.

Economic Objectives

Business is basically an economic activity, its primary objectives are economic. The economic objectives of a business are to earn sufficient profit to give reasonable reward to the investors of capital and to provide funds for expansion and diversification. The main economic objective of business may be described as under:
(a) Earning Profit: Business activity is undertaken for earning profit. Profit is the basic incentive to business pursuits. It is the most important objective of business. A business needs profit not only for the existence but also for expansion and diversification. The profit is also a measuring rod for business efficiency. Therefore the businessman should charge a reasonable profit which will be beneficial to both business and society.
(b) Production of Goods: Business involves sale or exchange of goods and services for earning profit. So the next objective of business is to produce more goods and sell them to satisfy the needs of consumers. A businessman creates form, place and time utilities and meet the requirements of the society.
(c) Creation of Markets: Business activity can be sustained only if there are enough people to buy the products and services offered by the Enterprise. Without customers a business cannot survive. Customers collectively constitute the market. Thus the objective of business is the creation of market for its products and services to meet the needs of the customers.
(d) Technological Improvements: In business there is cut-throat competition in which businessman try to sell their products by offering quality goods at lower prices. This is possible when the latest technology is used for manufacturing goods. The businessman should introduce new designs using new techniques and tools to keep pace with the changing business world. It should aim at increasing efficiency in terms of "cost per unit of production" or "units produced per day by each employee". Otherwise it cannot survive long in the market.

OBJECTIVES OF BUSINESS

Business is a very important economic activity. The success of any activity depends on definite objectives. So, it is necessary to have definite objectives for it, to perform successfully. The objectives are goals where all efforts are concentrated for the fulfillment of the objectives.
The main objective of business is to earn profit. It makes continuity in the business. It also measures the success of business. No business can continue for long if it ignores public service. So earning profit and public service are the main objectives of business. However, the objectives of business may be broadly categorized under the following heads:
1. Economic Objectives
2. Social Objectives
3. Human Objectives

characteristics of business

The important characteristics of business are as follows:
(1) Entrepreneur: There must be someone to take initiative for establishing a business. The person who recognizes the need for a product or service and bears the whole risk is known as entrepreneur. He visualizes a business, combines various factors of production and puts them into a going concern. He is the main figure and promotes business. A business is not possible without an entrepreneur.
(2) Production, Distribution and Exchange: All business activities are directly or indirectly concerned with the production, distribution and exchange of goods and services. Production of goods and services for personal consumption do not constitute business. Hence, if a person cooks his food at home is not business because it does not involve any exchange.
(3) Regular Dealings: Business includes only those transactions which have regularity and continuity. Even if the person earns profit. A person builds a house for himself, but later sells on profit. This is not called business. Hence in business the exchange of goods or services should be undertaken regularly.
(4) Profit Motive: The main objective of business is to earn reasonable profit. It makes continuity in the business. The survival of business depends upon its ability to earn profits. Every businessman wants to earn profits to earn profits. Every businessman wants to earn profits to receive interest on his capital and to reward himself for his services. Any activity undertaken without profit motive is not business. However, service motive is also essential for the progress for the business.
(5) Element of Risk: Risk means the possibility of loss. The business involves some degree of risk. A risk arises due to uncertainties of future. The element of risk exists due to variety of factors, which are outside the control of business enterprise. The risks associated with business are change in technology, change in consumer tastes and fashion, strike by employee, shortage of raw materials, increase in competition, natural calamities, etc. Hence, all business involve some element of risk and uncertainties.
(6) Creation of Utility: Creation of utility is the main feature of the business. Business creates various types of utilities in goods so that consumer may use them. The utilities may be form utility, place utility, time utility, etc. When raw materials are converted into finished goods, it creates form utility. The goods are transported from the place of production to the ultimate consumers, which creates place utility. The process of storing goods when they are not required and supplying them at a time when they are needed is called creation of time utility.j
(7) Satisfying the Consumers: The ultimate aim of business is to supply goods or services to the consumers. The business should try to satisfy the consumers so that the demand for his product is maintained. Hence the business should try to produce goods according to the liking and tastes of consumers. Goods should be made available where and when the consumers require. Without the satisfaction of consumers business cannot exist.
(8) Finance: Business cannot exist without proper financial arrangements. Finance is required for providing fixed and working capital. The availability of other factors of production also depends upon the availability of finance. A proper capital structure is essential for the success of the business.
(9) Organization: Business should be done in a planned way and to execute the plan, an organization is essential. A proper organization is helpful in the smooth running of the business and helps to achieve its objectives.
(10) Human Economic Activities: Business is an activity which can be executed only by human beings. Thus, in business we include human economic activities. Economic activities are engagement in production, distribution, and exchange of goods and services with profit motive. Non-economic activities are not included in the business.
In conclusion, we can say that business is an human economic activity which involves regular exchange of goods and services with the aim of earning profit through the satisfaction of human wants.

meaning of business

The meaning of business is very comprehensive. The word 'Business' literally means 'a state of being busy'. Every person is engaged in some kind of occupation to earn livelihood while doing some work. Hence the term business includes all human activities directed towards producing or acquiring wealth. According to L.H. Haney: "Business may be defined as human activities directed towards providing or acquiring wealth through buying and selling goods".
In the words of W.R. Spriegal: "All of the activities included in the production and sale of goods or services may be classified as business activities". According to Prof. Owen: "A business is an enterprise engaged in production and distribution of goods for sale in market or the rendering of services for a price".
Essentially all socially desired (legal) economic activities pursued for the purpose of earning profit can be defined as 'business'. The main aim of business is to satisfy the unlimited wants of men living in society. So, it becomes necessary to create values and fulfill the needs of ultimate consumers with the help of industry, trade and commercial services. Thus, business may be defined as an activity directed to create values for fulfilling needs of man in society through exchange.
Technically, Business implies an enterprise engaged in the production and distribution of products for sale in a market or rendering services for a price. Functionally, business is a form of activity involving production and purchase of goods and services with the object of selling them at a profit. Wheeler's definition of business also supports these views in a different way. He calls business as "an institution organized and operated to provide goods and services to society under the incentive of private gain."
Every business activity is performed with a view to earning profit. According to C.F. Abbot, "Business without profit is not business". No private entrepreneur will start a business unless he hopes to earn profit.
In conclusion, we can define business in the following way: "Business involves all the activities of production, distribution and exchange performed to provide goods and services to fulfill wants of society with an equitable adjustment of profit and public welfare".