Business studies

• Competency 1.0


  Inquires the basis of business and the environment in which it operates
• Competency level 1.1


  Analyses the concept of business
• Guidelines to explain subject matters

  1. All the activities related to the production, distribution, selling of goods and services with a profit motive in order to satisfy human needs and wants can generally be defined as business

  2. There are businesses which fulfil the needs and wants without a profit motive

  3. Accordingly a business is any economic activity which fulfils human needs and wants

  4. The physical and mental conditions which are compulsory to be fulfilled by humans are known as needs

  5. Wants are the different ways of fulfilling the needs

  6. Essential for survival, common to all, limited are some of the characteristics of needs

  7. Unlimited, varies from person to person, can be created by businesses, subjective are some of the characteristics of wants

  8. Anything offered to the market which fulfils human needs and wants are known as "Products"

  9. Products can be categorized mainly as goods and services

  10. Human needs and wants are fulfilled by products

  11. Market is any situation where buyers and sellers meet or connect

  12. Goods and services are obtained from the market to fulfil human needs and wants

  13. Characteristics of a business

  14. There are two main activities of a business

  15. Value addition is the increment of the value of resources which happens when the nature of the resource is changed during the production of goods and services

  16. There can be various goals for a business
• Self sufficient economy


  An economy where people produced the things they needed on their own
• Instructions for lesson planning

  1. Conduct a discussion with the students that there was a self sufficient economic system in the past

  2. Ensure that during the self sufficient system they produced the things which they needed on their own. This is known as "Direct production"
• Direct production


  Producing the things they needed on their own
• Indirect production


  Producing things to exchange for other things they need
• Past and current forms of trade

  Compared
• Commerce


  The exchange of goods and services
• Trade


  The exchange of goods and services for money or other goods and services
• Electronic commerce


  Buying and selling of goods and services through electronic systems such as the internet and other computer networks
• Reasons for the current popularity of electronic commerce
• Current trends in the business world and the changes in the businesses due to those trends
• Self-sufficient economy


  An economic system in the past where people produced their own requirements
• Direct production


  Producing one's own requirements by oneself
• Specialization


  • Individuals and groups produced special products exclusively for themselves
• Specialization led to surplus production
• Barter system


  Exchanging one's surplus production with others' surplus production
• Barter system had various drawbacks
• Trade


  Emerged due to the barter system
• Indirect production


  Producing for the market
• Evolution of money


  1. Use of materials

  2. Use of metals

  3. Use of metal money

  4. Use of coins & notes

  5. Use of bank money

  6. Use of electronic money
• Usage of money is the second stage of the evolution of business
• Industrial revolution led to the conversion of cottage industries into large scale industries and expansion of trade
• Auxiliary services developed due to industrial revolution

  • Banking
  • Transport
  • Insurance
  • Communication
  • Warehousing
• Commerce


  Combination of trade and support services
• Types of commerce


  • Local trade
  • Foreign trade
  • Retail trade
  • Wholesale trade
  • Import trade
  • Export trade
• Electronic commerce


  Buying and selling activities conducted through the internet
• Electronic business


  All business activities conducted using the internet
• Reasons for popularity of electronic commerce

  • Business information exchange without documents
  • Speeding up of business activities
  • Minimizing operational and inventory costs
  • Emergence of global market space
  • Increase in quality of goods and services
  • Saving customers' time and energy
  • Increasing computer literacy
  • Improvement of infrastructure facilities
• Stages of business evolution

  • Barter system
  • Use of money
  • Industrial revolution
  • Information era
• Current trends in business

  • Expansion of globalization
  • Emergence of electronic businesses
  • Use of electronic money
  • Concern on environment
  • Concern on business social responsibilities
• The same business can be classified under various criteria
• Criteria for classifying businesses

  • Nature of production
  • Ownership
  • Goals
  • Scale
  • Production sector
• Classification by nature of production

  • Primary sector (agriculture, mining, etc.)
  • Secondary sector (manufacturing, construction)
  • Tertiary sector (services)
• Classification by ownership


  • Private sector
  • Public (government) sector
• Classification by goals


  • Profit-oriented
  • Non-profit oriented
• Classification by scale


  • Small and medium scale
  • Large scale
• Classification by production sector

  • Agriculture
  • Industry
  • Services
• The sectorial composition of GDP in Sri Lanka is published in the Central Bank's annual report