Chapter-2 | Evolution, and Foundation of Business
Evolution of business:
The business consists of two measures activities i.e industries and commerce. Both activities were not developed in a day. They had to go through different stages to come in the present stage. The evolution of business can be studied as the evolution of industries and the evolution of commerce.
Evolution of industries:
Evolution of industries consists of the following stages:-
a. Handicraft stage:
It is the primary stage of the development of the industry. Mostly family members involved in the production of goods in this stage. They used to produce goods by using local resources with their hands. There was no use of scientific tools, equipment, and machinery in the production process. The goods used to be quite simple.
b. Age of guild:
The guild system marked the beginning of an organized activity. The guilds are the association. In this stage, two guilds were formed. That is crafted, guild and merchant guild. Crafted guilds were the association of workers who joints together to protect the business and develop business relationships. This guild tried to maintain the quality and quantity of products. Similarly, the merchant guild was the association of the trader who tried to regulate the business and standardize the product.
c. Domestic stage:
After the failure of the age of the guild, the domestic stage emerged. In this system, new entrepreneurs were seen in the market. They invested money in the business, operate it, employed workers, produced goods, sold them in the market and gained profit. Workers were paid according to their production and selling of products was taken by then. This system also developed the system of division of labor.
d. Industrial revolution:
The remarkable changes that took place in Britain during the second half of the 18th century and 1st half of the 19th century are known as the industrial revolution. It was initiated from Britain and gradually spread over Europe. Many inventions of scientific technologies and industries machinery, tools and equipment were drawn during this revolution. It brought changes in the production system of industries by converting handwork into machine work.
e. Present stage:
It is the stage of industrialization and globalization. This stage completely adopts scientific technologies and inventions in the production process. It covers scientific knowledge of data-based systems, computerization, and information-based decision making. The adaptation of computerization and mechanical approaches leads to high production.
Evolution of commerce:
Commerce is the activity of exchanging goods and service including auxiliaries of trade. Since the early period of commercials have been started. It has past many stages to come to the present stage. The various stages of evolution of commerce can be discussed below:-
a. Self-sufficient economy:
It is the ancient stage of commerce. In this stage, people fulfill their basic needs through hunting, fishing, farming, etc. they were independent. They produce the product themselves by using local resources. There was no practice of buying and selling of goods. Mostly family members were involved in the business activities.
b. Primitive barter economy:
The exchange of goods and products is known as the barter system. As time passed, the number of people increased and they started to produce more than their necessities. Their wants and desire also increased. They faced the scarcity of some products whereas some were surplus to them. They started to fulfill their needs by exchanging the surplus product with a scarce product. This developed a practice of the trade.
c. Money economy:
Barter system was not suitable for all the time. It creates difficulties to exchange the product. So, the money system was introduced to remove the difficulties of the barter system. The system of measuring units was also introduced along with money. It made easy to measure the quantity of product for the money. It creates formal trade and the local market.
d. Town economy:
Local markets developed as the large towns started to grow people started living in those places where their needs could be fulfilled. Gradually, the division of labor and job specialization started due to the introduction of money. People involved in production and distribution for the exchange of goods. Due to the advancement of transportation and communication, wholesales and retail markets developed.
e. National economy:
Town economy extended in various parts of the country due to the advancement of transportation, communication, insurance, banking, etc. businessman started to demand and supply the products from different parts of the country. many commercial sectors were developed in the country.
f. International economy:
The growth and expansion of the national economy led top international economy. The international economy has held to distribute the product throughout the world. At present, no country can fulfill its needs without international support. The countries have started to specialized the production. They are following the various business policies such as open economy, privatization, and liberalization. Many international business associations have been formed and many international business treaties have been conducted. Now commerce is developing as e-commerce, e-banking, e-shopping, etc.
Consideration before starting a new business:
Selection of business:
A businessman has to select the right business in which he/she is going to start. He/she should identify whether to start industry, commerce or trade. While selecting the business, factors such as personal interest knowledge and skill, availability of resources, market position, competitors, etc should be brought into consideration.
After the selection of business, the person has to go through a detail investigation about it. He/she should investigate the demand of customers, government policies, resource availability, market competition, etc about the business.
Form of business:
The businessman has to be sure about the form of business, he/she is going to start. The form of business may be sole trading concerned, partnership form. And a joint-stock company. The selection of a form of business depends on its investment, size, and function.
Provision of capital:
Capital is an essential factor in business. It is required to purchase business property and to conduct business functions smoothly. The businessman has to manage sufficient capital to run a business smoothly. He/she has to determine the source of capital weather banking, personal property or issue of share to visa.
Location of business:
Location plays a vital role in the existence and operation of the business. It the location is not fit as for the nature of the business, the business cannot get its proper market. Once the location is fixed, it is difficult and expensive to change it again. So the businessman has to select the right location for the business considering factors such as transportation facility, storage facility, electricity, availability of manpower, raw materials, etc.
Selection of staffs:
Employees are an important factor to run business activities. So, the businessman has to select capable and skilled employees in the business the selected employees should be hardworking, honest and sincere at their job.
Legal requirements and government policy:
A business has to run under the legal provision and policy of the government. So, the businessman has to study law, act, rules, and regulations about the business. He/she is going to start. There are different acts as private form registration act 2014 for sole trading business, partnership act, 2020, for partnership business and company act 2063 for a joint-stock company in Nepal which provides various information about registration and formulation of business.
Official equipment is essential for the smooth conduct of the regular activities of the business. Office furniture such as a table, chair, sofa, cupboard, etc and office machinery such as a computer, calculator, printer, typewriter, etc are essential for the smooth function of business activities. So, the business has to manage all these requirements while starting a new business.
Essentials, requirements/ requisites of business success:
a. The personality of a businessman:
The success and failure of a business depend on the personality of the businessman. The businessman should be smart, hardworking, creative, sincere and innovative. He/she should have conceptual and technical knowledge about business.
b. Clearly defined goal:
Every business organization has a certain objective the objective should be clear to the employees to know exactly about the job. The objective may be short term or long term. It provides direction and guidelines to run business activities.
c. Proper planning:
Planning determines what to do when to do, how to do, where to do and by whom to do the job. It makes easy for formulating programs an activities of organization planning makes a guideline of business activities that helps to run business.
d. Efficient management:
A business comprises various resources these resources should be properly mobilized to get success in the business. The mobilization of resources is possible only through efficient management. Efficient management helps to reduce the wastages and misuse of resources.
e. Sufficient capital:
Capital is essential in the business. It helps to purchase business property and operate business activity properly. So, there should be sufficient capital in the business for its success.
f. Proper location:
The location of the business is important for its success. There should be good facilities for transportation, warehouse, communication, electricity, raw materials, etc. for the smooth operation and success of the business. The business location should comprise of all these facilities for its success.
g. Modern technology:
Technology increases efficiency productivity and decreases wastage and misuse of resources. The businessman has to adopt new technology in the business to run its activities effectivity and efficiently.
h. The motivation for employees:
Employees are important to perform the business activities they work day and night and converts inputs into outputs for business success. So, they should be treated positively and motivated at their job financially or non-financially.
i. Satisfaction to costumers:
Costumers are the people who consume the product of the business. The business should produce the product as per the demand of customers. It should ensure the satisfaction of costumers by providing a quality product on time at a reasonable price.