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MPPSC
DAILY
CLASS NOTES
Management
Lecture – 05
Business- Concept and significance,
Scope, Administration and Management
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Business- Concept and significance, Scope,
Administration and Management
Human Activities:
❖ Human activities encompass all actions and behaviours undertaken by individuals or
groups to fulfil needs, wants, or desires. These include economic activities for
livelihood and non-economic activities driven by personal, social, or recreational
motivations. They are integral to societal function, shaped by cultural, economic, and
environmental influences.
❖ Human activities can be broadly classified into two categories: Economic Activities
and Non-Economic Activities.
Economic Activities
Economic activities are those activities that are performed to earn a livelihood. They
contribute to the wealth of the economy and include production, distribution, and
consumption of goods and services. The primary goal of economic activities is to generate
income.
Examples:
❖ Mining: Extracting minerals from the earth for economic gain.
❖ Manufacturing: Converting raw materials into finished goods.
❖ Trading: Buying and selling goods and services.
❖ Banking: Providing financial services such as loans, deposits, and investments.
❖ Insurance: Providing risk management services and protection against potential
future losses.
Non-Economic Activities
❖ Non-economic activities are performed out of love, sympathy, passion, or patriotism.
These activities do not have any monetary compensation or economic purpose.
Examples:
❖ Charity: Donating money or goods to help others.
❖ Volunteering: Offering services for free to support a cause.
❖ Household chores: Activities done at home like cooking, cleaning, etc., without any
monetary gain.
Types of Economic Activities
Business
❖ Business activities involve the production and sale of goods and services to earn
profits.
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Examples:
❖ Mining: Extracting minerals like coal, iron ore, gold.
❖ Manufacturing: Producing automobiles, electronics, and clothing.
❖ Trading: Retailing and wholesaling goods.
❖ Banking: Providing loans, and accepting deposits.
❖ Insurance: Offering life, health, and property insurance.
Profession
❖ A profession involves specialized knowledge and skills, often certified by a formal
qualification, and adheres to ethical standards.
Examples:
❖ Doctors: Medical professionals providing health care.
❖ Lawyers: Legal professionals offering legal advice and representation.
❖ Accountants: Financial professionals managing accounts and auditing.
Employment
❖ Employment refers to working for someone else in exchange for wages or salary.
Examples:
❖ Teachers: Educators working in schools or colleges.
❖ Engineers: Working in companies designing and developing products.
❖ Clerks: Administrative staff in offices.
Difference between Business, Profession, and Employment
Basis Business Profession Employment
Nature Producing/selling Providing expert Working for
goods/services services wages/salary
Qualification No specific qualification is Specialized Skills and qualifications
required qualification required required
Risk High risk Moderate risk Low risk
Return Profit Professional fee Salary or wages
Investment Requires capital Low to moderate No investment
investment investment
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Meaning of Business
❖ Business refers to an organization or enterprising entity engaged in commercial,
industrial, or professional activities. Businesses can be for-profit entities or non-profit
organizations that operate to fulfil a charitable mission or further a social cause.
Characteristics of Business
❖ Deals in Goods and Services: Businesses produce or trade goods (tangible products)
and services (intangible products).
❖ Sale or Exchange of Goods and Services: Business involves the transfer of goods or
services from one person or entity to another, typically in exchange for money.
❖ Regular Exchange of Goods and Services: Business activities occur regularly, not as a
one-time activity.
❖ Requires Investment: Starting and running a business requires capital investment for
equipment, inventory, and other resources.
❖ Aims at Earning Profit: The primary objective is to generate profit from business
operations.
❖ Involves Risk and Uncertainty: Business involves risks such as market risk, financial
risk, and operational risk, with no guaranteed returns.
Economic Objectives of Business
❖ Earning Profit: The fundamental goal of any business is to earn profit.
❖ Creating Customers: Businesses aim to attract and retain customers by offering
products and services that meet their needs.
❖ Continuous Innovation: Businesses must innovate continually to stay competitive and
meet changing market demands.
❖ Best Possible Use of Available Resources: Efficient use of resources (capital, labor,
materials) to maximize output and minimize costs.
Examples:
❖ Profit: A retail store earning revenue from sales.
❖ Creating Customers: A tech company developing user-friendly software.
❖ Innovation: A car manufacturer introducing electric vehicles.
❖ Resource Utilization: A factory implementing lean manufacturing techniques.
Social Objectives of Business
❖ Achieving Objectives for the Benefit of Society: Businesses should operate in a way
that benefits society, such as providing employment and contributing to community
development.
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❖ Business Should Not Trouble Society: Ensuring business activities do not harm society
or the environment.
❖ Adoption of Free Trade Practices: Promoting fair trade practices and avoiding
exploitation.
❖ Contribution to General Welfare of Society: Engaging in corporate social responsibility
(CSR) activities like education, healthcare, and environmental conservation.
Examples:
❖ Benefit to Society: A company providing jobs in a local community.
❖ No Harm: A business adopting eco-friendly practices.
❖ Fair Trade: A company adhering to ethical sourcing.
❖ Welfare Contribution: A business supporting local schools and hospitals.
Nature of Business
❖ Deals in Goods and Services: Business involves the production and distribution of
goods and services.
❖ Sale or Exchange of Goods and Services: Regular transactions for mutual benefit.
❖ Regular Exchange of Goods and Services: Continuous and repetitive transactions.
❖ Requires Investment: Capital is essential for operations and growth.
❖ Aims at Earning Profit: Profit generation is a key motive.
❖ Involves Risk and Uncertainty: Unpredictable outcomes and exposure to various risks.
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