2.1 Business evolution

Self sufficient economy

In the past people were not depending on others as they fulfilled their needs & wants by themselves.

Hence, DIRECT PRODUCTION activities were witnessed as the people directly produced whatever is required to satisfy the needs & wants

Direct production

Specialaization

Individuals turn out to be experts that directly lead to specialize production/ excess pro

Sectors that specialization can be seen

• Individual specialization

• Jobs specializaton

• Organizational specialization

• Regional specialization (Like Galle is specialized in tourism and stuff)

• National specializaion (Ceylon tea, Coconut)

BARTAR SYSTEM

BARTAR SYSTEM is a medium in which goods or services are directly exchanged for other goods and/ or services, without the use of money.

Emerged with bartar system (HIGHLY TESTED)

Trade and indirect production emerged with bartar system

Failure of bartar system

• Lack of double co incedence of wants

  -The needs & wants of a particular individual didn’t always match with another

• Perishability of commodities & difficulty in storing (leading to high wastage)

  -If it was not exchanged it resulted in wastage

• Difficulties in valuing the product

  - Disputes among the people related to product’s valuation

• Difficulty in dividing the product into small quantities

  - Some products could not be split nor divided in to small quantities

✶ Lack of double co incidence of wants

✶ Storing (wastage)

✶ Valuation/ Valuing

✶ Dividing

MONEY

✶ Solution to the problem BARTAR SYSTEM

✶ Anything that is commonly accepted

✶ As a medium of exchange/ Mean of payment

DEFINITION - Money is anything that is commonly accepted as a medium of exchange/ payment

Money as a SOLUTION

Problem : BARTAR system	Solution : Money
1) Lack of double co incidence of wants	Medium of exchange
2) Storing (wastage)	Store of value
3) Valuation/ Valuing	Measure of value/ standard
4) Dividing	Standard of different payment

Explain

Characteristics of money

• Acceptability

• Portability

• Durability

• Uniformity ( Having a general recognition)

• Easy identifiability

• Difficulty in imitation

Evolution of money (different phases)

Changes occured in business due to industrial revolution

1. Changes in the PRODUCTION

2. Changes in the COMMERCE

3. Changes in the SOCIETY

Changes in production

1. Changes in the PRODUCTION (Small scale ➜ Large scale production)

   • Small scale businesses have been converted into large scale organizations

   • New machinery and technologies have been introduced

   • The output quantity and quality has also increased

   • New management techniques have been introduced & implemented

   • Division of labour and specialization has been implemented

Changes in commerce

Changes in COMMERCE (Trade & supporting services)

• New businesses set up in the field of EXPORTS

• New BANKS established

• New business INSURANCE BUSINESSES have been established

• Usage of MONEY became popular

• Improvements in COMMUNICATION and TRANSPORTATION

Changes in the society

Changes in the SOCIETY (people & city)

• Increse in migration rate to UK

• Introduction of two new social groups known as “The Rich” & “The Poor”

• Increase in LIVING STANDARD of people

• Increase in ENVIRONMENT POLLUTION (due to large scale production)

• Development of NEW CITIES (urban vs Rural)

Division of Labour

This is a process of separation of a work into numer of tasks,with each task performed by a separate person or group of persons

Advantages & disadvantages of division of labours

ADVANTAGES	DISADVANTAGES
Generates individual/ personal specialization	Absence of one worker could halt the entire production process
Increase efficiency leading to an increasing productivity	Workers may suffer from boredom
Reduction in wastages	There is no personal growth related to employees job careers
Improvement in the team	Could limit empoyee’s potential as they focus only on one single setof task.

Explanation of all in brief