B.B.A. LL.B. (Five Years) Sem 1 Business Environment 2021 Mar Question Paper with Solutions

For full marks, cover: a short meaning of business; its classification on each main basis: by nature of activity (industry and commerce, with their branches), by sector of the economy (with official shares), by ownership, by form of organisation, by size (the current MSME limits), by area of operation, and by formality; a chart; an example of one business classified on every basis; and a conclusion.

Meaning

Business is any regular economic activity of producing, buying and selling goods and services for profit. Business activities are of many kinds, so they are classified on different bases. Each basis answers a different question: what the business does, who owns it, how it is organised, how large it is and where it operates.

1. By nature of activity

A. Industry covers activities that produce goods or change their form.

1. Primary industry draws on nature.

1. Extractive: mining, fishing, quarrying and forestry.

In 2025-26, at current prices, the tertiary sector formed about 54 per cent of India's gross value added. The secondary sector formed about 26 per cent and the primary sector about 20 per cent, according to the Ministry of Statistics.

3. By ownership

1. Private sector: owned and run by individuals or private companies.
2. Public sector: owned and run by the government. Its forms are departmental undertakings, statutory corporations and Government companies. In a Government company, governments hold at least 51 per cent of the paid-up capital (section 2(45) of the Companies Act, 2013).
3. Joint sector: owned jointly by the government and private investors.
4. Co-operative sector: owned by members who use its services.

4. By form of organisation

1. Sole proprietorship: one owner, unlimited liability.
2. Joint Hindu family business: run by the family under Hindu law, managed by the karta.
3. Partnership: two or more partners under the Indian Partnership Act, 1932.

7. By formality

1. Organised (formal): registered, follows labour and tax laws, keeps regular accounts.
2. Unorganised (informal): small, often unregistered units, such as street vendors and home workshops.

Why classification matters

1. Policy: the government gives different support to different classes, for example credit and incentives to micro and small enterprises.
2. Law: the form of organisation decides the law that applies and the liability of the owners.
3. Statistics: national income is measured sector by sector.
4. Planning: a firm that knows its class can compare itself with similar firms and plan its growth.

Chart of classification

Conclusion. Business can be classified in many ways. By activity it divides into industry and commerce, and by sector into primary, secondary and tertiary. By ownership it is private, public, joint or co-operative, and by form a sole proprietorship, family business, partnership, LLP, company or co-operative. By size it is micro, small, medium or large; by area local to multinational; and by formality organised or unorganised. Each basis helps in studying a different side of business and in making policy for it.