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Business Studies
Class XI
2.
The term business risks refers to the possibility of inadequate profits or even losses due to
uncertainties or unexpected events. For example, demand for a particular product may
decline due to change in tastes and preferences of consumers or due to increased
competition from other producers.
3.
The written agreement which specifies the terms and conditions that govern the partnership
is called the partnership deed.
4.
E-banking or internet banking means any user with a PC and a browser can get connected to
the banks website to perform any of the virtual banking functions and avail of any of the
banks services. There is no human operator to respond to the needs of the customer.
5.
Literally, outsourcing means to source from outside. Many companies have started
outsourcing these activities, i.e., they have entrusted outside agencies to perform these
activities for their organisations on a contractual basis.
6.
Land pollution: Dumping of toxic wastes on land causes land pollution. This damages the
quality of land making it unfit for agriculture or plantation. Restoring the quality of the land
that has already been damaged is a big problem.
7.
Obtaining funds through factoring is cheaper than financing through other means such as
bank credit.
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Buying and selling of goods and services within the boundaries of a nation are referred to as
internal trade.
9.
Tertiary industries: These are concerned with providing support services to primary and
secondary industries as well as activities relating to trade. These industries provide service
facilities. As business activities, these may be considered part of commerce because as
auxiliaries to trade these activities assist trade. Included in this category are transport,
banking, insurance, warehousing, communication, packaging and advertising.
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Utmost good faith: A contract of insurance is a contract of uberrimae fidei i.e., a contract
found on utmost good faith. Both the insurer and the insured should display good faith
towards each other in regard to the contract. It is the duty of the insured to voluntarily make
full, accurate disclosure of all facts, material to the risk being proposed and the insurer to
make clear all the terms and conditions in the insurance contract. Thus, it is binding on the
proposer to disclose all material facts about the subject matter of the proposed insurance.
Any fact, which is likely to affect the mind of a prudent insurer in deciding to accept the
proposal of insurance or in fixing the rate of premium is material for this purpose. Failure to
make disclosure of material facts by the insured makes the contract of insurance voidable at
the discretion of the insurer.
13.
(i) Low personal touch: High-tech it may be, e-business, however, lacks warmth of
interpersonal interactions. To this extent, it is relatively less suitable mode of business in
respect of product categories requiring high personal touch such as garments, toiletries, etc.
(ii) Incongruence between order taking/giving and order fulfilment speed: Information
can flow at the click of a mouse, but the physical delivery of the product takes time. This
incongruence may play on the patience of the customers. At times, due to technical reasons,
web sites take unusually long time to open. This may further frustrate the user.
14.
Ethical responsibility: This includes the behaviour of the firm that is expected by society
but not codified in law. For example, respecting the religious sentiments and dignity of
people while advertising for a product. There is an element of voluntary action in performing
this responsibility.
Discretionary responsibility: This refers to purely voluntary obligation that an enterprise
assumes, for instance, providing charitable contributions to educational institutions or
helping the affected people during floods or earthquakes. It is the responsibility of the
company management to safeguard the capital investment by avoiding speculative activity
and undertaking only healthy business ventures which give good returns on investment.
15.
Transaction risks: Online transactions are vulnerable to the following types of transaction
risks:
Seller denies that the customer ever placed the order or the customer denies that he ever
placed the order. This may be referred to as default on order taking/giving.
The intended delivery does not take place, goods are delivered at wrong address, or goods
other than ordered may be delivered. This may be regarded as default on delivery.
Seller does not get the payment for the goods supplied whereas the customer claims that
the payment was made. This may be referred to as default on payment.
16.
Documents required :
1. A declaration that shares payable in cash have been subscribed for and allotted up to the
minimum subscription mentioned in the prospectus;
2. A declaration that every director has paid in cash, the application and allotment money on
his shares in the same proportion as others;
3. A declaration that no money is payable or liable to become payable to the applicants
because of the failure of the company to either apply for or obtain permission to deal in its
securities on a stock exchange.
4. A statutory declaration that the above requirements have been complied with. This
declaration can be signed by a director or secretary of the company.
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International Business: The fundamental reason behind international business is that the
countries cannot produce equally well or cheaply all that they need. This is because of the
unequal distribution of natural resources among them or differences in their productivity
levels. Availability of various factors of production such as labour, capital and raw materials
that are required for producing different goods and services differ among nations. Moreover,
labour productivity and production costs differ among nations due to various socioeconomic, geographical and political reasons. Due to these differences, it is not uncommon to
find one particular country being in a better position to produce better quality products and/
or at lower costs than what other nations can do. In other words, we can say that some
countries are in an advantageous position in producing select goods and services which
other countries cannot produce that effectively and efficiently, and viceversa. As a result,
each country finds it advantageous to produce those select goods and services that it can
produce more effectively and efficiently at home, and procuring the rest through trade with
other countries which the other countries can produce at lower costs. This is precisely the
reason as to why countries trade with others and engage in what is known as international
business.
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pricing policy for all the departments; rather they have to occasionally offer discounts on
certain products and varieties to clear their stock.
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25.
Small Business: Government of India has described small industries on the basis of the
investment in plant and machinery. This measure seeks to keep in view the socio-economic
environment in India where capital is scarce and labour is abundant. One more important
point to note is that a definition exists only for small and tiny units but not for large and
medium units.
Small business units can fall in any of the following categories:
(i) Small scale industry: A small scale industrial undertaking is defined as one in which the
investment in fixed assets of plant and machinery does not exceed rupees one crore.
However, to cater to the needs of small industries whose thrust is on export promotion and
modernisation, investment ceiling in plant and machinery is rupees five crores.
(ii) Ancillary small industrial unit: The small scale industry can enjoy the status of an
ancillary small industry if it supplies not less than 50 per cent of its production to another
industry, referred to as the parent unit. The ancillary small industry can manufacture parts,
components, subassemblies, tools or intermediate products for the parent unit. Apart from
catering to the needs of the parent unit, it can do business on its own. Ancillary units have the
advantage of assured demand from parent units. Normally, the parent unit assists the
ancillary unit by giving technical guidance as well as financial help.
(iii) Export oriented units: The small scale industry can enjoy the status of an export
oriented unit if it exports more than 50 per cent of its production. It can avail the incentives
like export subsidies and other concessions offered by the government for exporting units.
(iv) Small scale industries owned and managed by women entrepreneurs: An
enterprise promoted by women entrepreneurs is a small scale industrial unit in which
she/they individually or jointly have share capital of not less than 51 per cent. Such units can
avail the special concessions offered by the government, like low interest rates on loans, etc.
(v) Tiny industrial units: A tiny unit is defined as an industrial or business enterprise
whose investment in plant and machinery is not more than Rs. 25 lakhs.
26.
(iv) Life insurance contract is not a contract of indemnity. The life of a human being cannot
be compensated and only a specified sum of money is paid. That is why the amount payable
in life insurance on the happening of the event is fixed in advance. The sum of money payable
is fixed, at the time of entering into the contract. A contract of life insurance, therefore, is not
a contract of indemnity.
Values: (i) awareness (ii) Care (iii) Help and Support (iv) Faith and Trust
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