Evolution of Business
Subject: Business Studies
Overview
Business is an economic activity consisting of production, distribution, exchange and auxiliary functions to satisfy the changing needs and demand of the customers to meet the economic goal of business.The business of present stage has been developed from the very beginning of human civilization.It has been evolved from self-sufficiency stage of modern technological stage.Industry and commerce is the two major components of business which is related to earning the profit and generating wealth.
Evolution of Business
Business is an economic activity consisting of production, distribution, exchange and auxiliary functions to satisfy the changing needs and demand of customers to meet the economic goal of business. The business of present stage has been developed from the very beginning of human civilization. It has been evolved from self-sufficiency stage of a modern technological stage. Industry and commerce are the two major components of business which is related to earning the profit and generating wealth. The evolution of business can be studied into two parts:
- Evolution of Industry
- Evolution of Commerce
Evolution of Industry
As we know that, Industry includes all those activities that produce goods or services by the use of human and mechanical power. Agriculture development contributed a lot to develop the industry up to the present stage. The development of industry can be explained through the following five stages:
- Handicraft Stage
- Guild System
- Domestic system
- Industrial revolution
- Present stage
- Handicraft stage
This is the beginning stage of the evolution of the industry. The process of production was simple and many machines were not used. They used local materials to produce handicraft products. At that time the only family was the unit of industrial organization. In the beginning, people were engaged in production only for the fulfillment of their requirement but later they started to produce excess products for the purpose of exchange with foods and other articles.
- Guild system
The origin of the guild system marked the beginning of the organized activities. These organized groups were the groups of craftsmen or assistance or traders. Guilds may be classified into merchant guilds and craft guilds. Merchant guilds emerged as the association of merchants. It tries to regulate their business and standardize their products. Similarly, craft guilds emerged as the association of skilled workmen or artisans. It tries to maintain quantity and the quality of production. The main objective of craft and merchant guilds is to provide equal production to their members and protect their business interest by avoiding unhealthy competition among themselves.
- Domestic system
After the concept of guild system was gradually declining, the domestic system started. At this stage, a smart person with an ability to take a risk (called entrepreneur) collected artisan and craftsmen and begin a job of production. They took responsibility for collecting resources and selling output to the market. He sells the product at the profit for his risk factor and investment. This is the beginning stage of the factory system of production.
- Industrial revolution
The industrial revolution started in the 18th century from England. This revolution replaces the domestic system of production by large-scale factory system. The major inventions and discoveries of this stage were a steam engine, the wave machine, the textile machine, coal mining, energy development, and transportation system. This had made large-scale production easier. The cost of output was minimized.
- Present stage
The present stage of industrial revolution is categorized by industrialization and globalization. The industrial revolution of the 18th century has brought massive change in production. The present stage is categorized by an introduction of automatic machine, computer, automatic powers, space communication, wire, and the internet and much more. The scientific invention and discoveries have brought many changes in industrial production distribution. At this stage, products produce in one corner of the world is available in all countries.
Evolution of Commerce
In the earlier stage, people were self-dependent. They used to produce goods and service they need by themselves. The concept of commerce was developed gradually when people started to live in the river bank and engaged in agriculture farming. Those who were skilled in one activity and have resources produce certain products. The evolution of commerce and the stage of economic development is explained with the help of the following points:
- Self-sufficient Economy
- Primitive Barter System
- Money Economy
- Town Economy
- National Economy
- International Economy
- Self-sufficient economy
At the beginning stage of commerce, people were self-dependent. Their needs were limited, people fulfilled their own needs by hunting and agriculture farming. At this stage of commercial development, there ware no system of exchange, people of that period didn't exchange their goods with others. Actually, there was not a concept of commerce.
- Primitive barter system
This is the real beginning stage of commerce. At this stage, people started to exchange their surplus (extra) product with other product that they do not have. In the barter economy, people were not self-dependent in every product. At barter economy products were exchanged against the product. It is the age of commercial starting. The development of the barter system was the first practice of commerce.
- Money economy
In this third stage of commerce evolution, money was introduced as a medium of exchange. People who have the surplus product used to sell the product in the market for money. In the beginning currency of shale, metal and other valuable materials were introduced. But later paper money was used for exchange. Those people who need the product used to buy the product by paying money. As the result, the rapid change in commerce emerged.
- Town economy
The reproduction of money as the medium of exchange has played a significant role in the development of a business. At this stage, people used to purchase the product from the different place and bring them to a specific place call row. Here traders from various locality came together to form the local market. The development of communication and strain deportation facilities has brought many changes in the promotion of business. The town became the center of commercial activity.
- National economy
The gradual development of production and distribution lead to expansion and growth of a business. In this stage, people were concerned with the specific location for production. The development of supporting activities of a trade like communication, transportation, banking, insurance etc. had made commerce easier. The product produced at one location is distributed throughout the country.
- International economy
The mass development of industry has led to the development of commerce at an international level. This is the current stage of commercial development. At present, no individual country is self-sufficient in every product. A country having resources in one product is engaged in the production of that product and imports other product from other countries. The development of a modern system of communication, net facilities, and modern transportation facilities like road, seas, air transportation has played an important role in the development of an international economy.
References:
Khanal, Soma Raj, Surendra Thapa Aslami and Sitaram Dhakal. Business Studies. Kathmandu: Taleju Prakashan, 2067.
Pant, Prem R., et al. Business Studies. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd., 2010.
Things to remember
- Industry includes all those activities that produce goods or services by the use of human and mechanical power.
- Handicraft stage is the beginning stage of the evolution of the industry.
- The present stage of industrial revolution is categorized by industrialization and globalization.
- The gradual development of production and distribution lead to expansion to expansion and growth of business.
- It includes every relationship which established among the people.
- There can be more than one community in a society. Community smaller than society.
- It is a network of social relationships which cannot see or touched.
- common interests and common objectives are not necessary for society.
Questions and Answers
describe the evolution of industry.
The evolution of business can be described as:
- Handicraft Stage
- Guild System
- Domestic system
- Industrial revolution
- Present stage
Handicraft stage
The handicraft stage was the beginning stage of industrial evolution. In this stage, manufacturing was limited to the human efforts to transform raw materials into finished goods. Local resources were the major source of raw materials. Products were exchanged with product and market was starting to develop. Capital invested was minimized.
Guild System
It was the beginning of organized activities. There were two guilds, namely: merchant guild and craft guild. Merchant guildswas the association of merchants. It tries to regulate their business and standardize their products. Likewise, the craft guild was the association of skilled craftsmen who tried to maintain the quality and quantity of production. Organized groups of traders, craftsmen, artisans used to collect various resources from the local areas and produced goods using them.
Domestic System
The concept of guilds was gradually declined and the industrial system is being started. Crafts men were not able to fulfill the unlimited and increasing wants of people by using the limited resource. People were employed and were paid according to the units of goods produced. However, salary was very low because the value of money was much higher at that time.
Industrial Revolution
Industrial revolution refers to the drastic changes made in the field of production and began with the replacement of the old system. The major inventions and discoveries of this stage were stream engine, wave the machine, textile the machine, standardization of products, development of capitalism etc. There were numerous job opportunities. Salary was increased and quality was maintained.
Present Stage
Today's modern age with industrialization, use of technology, computerization, modernization and automation have resulted in standardization, quality control, searching market and etc. The scientific invention and discoveries have brought many changes in industrial production distribution. There are a huge number of industries producing a large number of goods to meet a large amount of needs and wants by providing many jobs and salaries.
Explain about the evolution of commerce.
Commerce includes all those activities, which are concerned with the distribution of goods and services. The concept of commerce was developed gradually when people started to live in the river, bank and engaged in agriculture farming. It has passed through a number of stages to reach the present level. Following are the stages in the evolution of commerce:
- Self-sufficient Economy;
- Primitive Barter system
- Money economy
- Town economy
- National economy
- International economy
1. Self-sufficient economy
At the beginning stage of commerce, people were self-dependent and there were no surplus to be exchanged. The production of goods was only to satisfy one’s need.
2. Primitive Barter system
Primitive barter system is the real beginning of commerce. People came to know that man is skillful in producing a few commodities. So, at this stage people started producing an excess of their needs what they could produce. Those people who need the product used to buy the product by paying money. As the result of this rapid development change in commerce has come.
3. Money economy
Money as the medium of exchange has played the significant role in the development of a business. That’s why money was originated. People developed coins but there was difficulty in large payment. So paper money was introduced. Those people who need the product used to buy the product by paying money. After the origin of money, national and international trade started.
4. Town economy
Money as the medium of exchange has played the significant role in the development of a business. At this stage, people were used to purchasing the product from different produce and brought them to specific place call row..The development of communication strain deportation facilities has brought many changes in a promotion of business. The town became the center of commercial activity.5. National Economy
In this stage, buying and selling of goods and services were done within the country. The gradual development of production and distribution lead to expansion to expansion and growth of a business. The division of work and specialization helped producers to concentrate on few products only. There was also development in banking, advertising, insurance, warehouse, and other auxiliaries,
6. International economy
The mass development of industry has led to the development of commerce at international level. It is not possible for a country to produce all demanded goods according to needs and wants. Therefore the countries started to import the goods and other countries exported. Communication, net facilities, and modern transportation mean like road, seas, air transportation has played an important role in the development of an international economy.
Describe evolution of industry and commerce briefly.
Evolution of Industry
The historical development of business and its processes of development up to now is called the evolution of business. The development of Industry can be started through five stages such as handicraft, an age of guild, domestic system, the industrial revolution and present stage. The evolution of business can be described as:
- Handicraft Stage
- Guild System
- Domestic system
- Industrial revolution
- Present stage
Handicraft stage
The handicraft stage was the beginning stage of industrial evolution. In this stage, manufacturing was limited to the human efforts to transform raw materials into finished goods. Local resources were the major source of raw materials. Products were exchanged with product and market was starting to develop. Capital invested was minimized.
Guild System
It was the beginning of organized activities. There were two guilds, namely: merchant guild and craft guild. Merchantguildswas the association of merchants. It tries to regulate their business and standardize their products. Likewise, the craft guild was the association of skilled craftsmen who tried to maintain the quality and quantity of production. Organized groups of traders, craftsmen, artisans used to collect various resources from the local areas and produced goods using them.
Domestic System
The concept of guilds was gradually declined and the industrial system is being started. Crafts men were not able to fulfill the unlimited and increasing wants of people by using the limited resource. People were employed and were paid according to the units of goods produced. However, the salary was very low because the value of money was much higher at that time.
Industrial Revolution
Industrial revolution refers to the drastic changes made in the field of production and began with the replacement of the old system. The major inventions and discoveries of this stage were stream engine, wave the machine, textile the machine, standardization of products, development of capitalism etc. There were numerous job opportunities. Salary was increased and quality was maintained.
Present Stage
Today's modern age with industrialization, use of technology, computerization, modernization and automation have resulted in standardization, quality control, searching market and etc. The scientific invention and discoveries have brought many changes in industrial production distribution. There are a huge number of industries producing a large number of goods to meet a large amount of needs and wants by providing many jobs and salaries.
Evolution of commerce
It is related to the distribution and exchange of goods and services. It is related with transportation, communication, Banking, warehousing port export, trade and so on.
The concept of commerce was developed gradually when people started to live in the river, bank and engaged in agriculture farming. It has passed through a number of stages to reach the present level. Following are the stages in the evolution of commerce:
- Self-sufficient Economy;
- Primitive Barter system
- Money economy
- Town economy
- National economy
- International economy
1. Self-sufficient economy
At the beginning stage of commerce, people were self-dependent and there were no surplus to be exchanged. The production of goods was only to satisfy one’s need.
2. Primitive Barter system
Primitive barter system is the real beginning of commerce. People came to know that man is skillful in producing a few commodities. So, at this stage people started producing an excess of their needs what they could produce. Those people who need the product used to buy the product by paying money. As the result of this rapid development change in commerce has come.
3. Money economy
Money as the medium of exchange has played the significant role in the development of a business. That’s why money was originated. People developed coins but there was difficulty in large payment. So paper money was introduced. Those people who need the product used to buy the product by paying money. After the origin of money, national and international trade started.
4. Town economy
Money as the medium of exchange has played the significant role in the development of a business. At this stage, people were used to purchasing the product from different produce and brought them to specific place call row..The development of communication strain deportation facilities has brought many changes in a promotion of business. The town became the center of commercial activity.5. National Economy
In this stage, buying and selling of goods and services were done within the country. The gradual development of production and distribution lead to expansion to expansion and growth of a business. The division of work and specialization helped producers to concentrate on few products only. There was also development in banking, advertising, insurance, warehouse, and other auxiliaries,
6. International economy
The mass development of industry has led to the development of commerce at international level. It is not possible for a country to produce all demanded goods according to needs and wants. Therefore the countries started to import the goods and other countries exported. Communication, net facilities, and modern transportation mean like road, seas, air transportation has played an important role in the development of an international economy.
Write the stages of evolution of industry and commerce.
The stages of evolution of industry are:
- Handicraft Stage
- Guild System
- Domestic system
- Industrial revolution
- Present stage
The stages of evolution of commerce are:
- Self-sufficient Economy;
- Primitive Barter system
- Money economy
- Town economy
- National economy
- International economy
Quiz
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