Evolution of Business

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 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 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:

1. Handicraft Stage
2. Guild System
3. Domestic system
4. Industrial revolution
5. Present stage

1. 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 the handicraft products. At that time family was the unit of industrial organization. At 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.

2. Guild system

The origin of 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.

3. Domestic system

The concept of guilds was gradually declined and the industrial system is being started. At this stage, a smart person with an ability to take a risk (called entrepreneur) collected artisan and craftsmen and allowed to 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.

4. Industrial revolution

The industrial revolution is 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 stream engine, wave machine, textile machine, coalmining, energy development and transportation system. This had made large-scale production easier. The cost of output were minimized.

5. 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 following points:

1. Self-sufficient Economy
2. Primitive Barter system
3. Money economy
4. Town economy
5. National economy
6. International economy

1. 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 was no system of exchange, people of that period didn't exchange their goods with others. Actually, there was not a concept of commerce.

2. Primitive barter system

This is the real beginning stage of commerce. At this stage, people started to exchanged their surplus (extra) product with other product that they do not have. In batter economy, people were not self-dependent in every product. At barter economy products were exchange against the product. It is the age of commercial starting. The development of barter system was the first practice of commerce.

3. 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 development change in commerce emerged.

4. Town economy

The reproduction of money as the medium of exchange has played the significant role in the development of a business. At this stage, people used to purchase the product from different place and brought them to 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 a promotion of business. The town became the center of commercial activity.

5. National economy

The gradual development of production and distribution lead to expansion 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 and insurance etc. had made commerce easier. The product produced at one location is distributed throughout the country.

6. International economy

The mass development of industry has led to the development of commerce at 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 means 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.