Evolution of Business

 

Evolution of Business The gradual development of economic activities from the very beginning of human civilization to present environment is termed as evolution of business. The historical development of business and its processes of development up to now is called evolution of business. Business was not evolved in one or two days. It can be studied in two ways.

Content:

1. Evolution of Industry and Commerce
2. Evolution of Business in Nepal
3. Considerations before starting a business
4. Requisites of Business Success

Evolution of industry

It is dated with the evolution of human beings. It is as old as human civilization. It was developed through various stages.

1. Hunting stage: In ancient times people lived in caves and fulfilled their basic needs of food and clothes through hunting the wild animals in forest. They were not civilized and hovered here and there. Their needs were also limited.
2. Pastoral stage: The stage of further development of human from barbarism is called pastoral stage. This stage is basically called the age of keeping animals. Animals were used for milk, meat, wool, skin and so on beyond food and clothes. The wants went on increasing and development also started.
3. Agriculture stage: Slowly, human beings became a little bit civilized and got idea about farming and keeping cattle. This stage was the major stage of development of industry. In this stage people started to do agriculture and live in river banks. They started to cultivate crops and domesticate the animals. Development of agriculture is divided into 5 stages they are
4. Handicraft stage: It is the beginning of industrial era. It is the stage of development of industry. Simple hands made tools were also developed. Local resources were the major source of raw materials. In the beginning of this stage people were only limited to their own needs but later own surplus products were used to exchange the goods with the roods basically called barter system. Products were exchanged with product and market was starting to develop. Capital invested was minimized.
5. Guild stage: It was the beginning of organized activities. Organized groups of traders, craftsmen, artisans used to collect various resources from the local areas and produced goods using them.
6. Age of domestic system: After the stage of guild the age of domestic system was initiated. Crafts men were not able to fulfill the unlimited and increasing wants of people by using the limited resource. So, use of hands and tools for producing quality goods was introduced. 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.
7. Industrial revolution: It began with the replacement of old system. It is the turning point of modern industrialization. Domestic system of production was replaced by large scale factory system. There was invention, innovation .development of scientific techniques which encouraged mass production and distribution. There were numerous job opportunities. Salary was increased and quality was maintained.
8. Present age: Today’s modern era with industrialization, use of technology, computerization, and modernization robotizing is the most developed stage of industries. Goods are being produced meeting the demand of large number of people. There are huge number of industries producing large number of goods to meet large amount of needs and wants by providing many jobs and salaries.

Evolution of commerce:

It is related with the distribution and exchange of goods and services. It is related with transportation, communication, Banking, warehousing import export, trade and so on. It links between producer and consumer. It gradually develops along with the development of human and society. There are many stages of evolution of commerce

1. Self sufficiency stage: It is the initial stage of commercial evolution. The wants are very limited. In this stage people produced goods themselves to satisfy their own basic needs. They survived through hunting and gathering foods. There was no market. There was thus no exchange of goods. They were independent.
2. Barter system: The wants of people increased with development of society. There was both advancement and civilization of market. Self sufficiency stage didn’t remain with advancement. They started to exchange the goods they produced with goods that other people produced to fulfill other requirements. This is called barter system. There was exchange of goods and services with goods and services.
3. Origin of money: From the beginning of barter, people felt that there was difficulty in deferred payment, commerce, divisibility and place of exchange .That’s why money was originated. People developed coins but there was difficulty in large payment. So paper money was introduced. Money was used as medium of exchange, Measurement of value, deferred payment, redistribution of income and wealth, credit system and many more. After the origin of money, national and international trade started.
4. National economy: In this stage, buying and selling of goods and services was done within the country. The local market converted into regional and city market. There was division of work and specialization. Then goods were produce not only for local people but also for national market. There was also development in banking, advertising, insurance, warehouse and other auxiliaries,
5. International economy: International economy s called global economy. The globalization of trade introduced to speed up the activities of trade in the 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. Slowly, import and export was introduced in all counties. Trade started to extend in world market. WTO (world trade organization) was also established to control the level of import, export and evils associated with them.

Evolution of Business in Nepal

The History of Nepal is very old and respectful in different events and time but Nepal could not develop is business level parallel to other countries. Nepal is surrounded by two business point from ancient time. China is famous for business since the starting days of business similarly India is famous for traditional business. Still, the technique of most of the business in Nepal is traditional. We can classify the evolution of business in Nepal as follows:

1. Evolution of Industry:
   • Pre-unification stage
   • Unification Stage
   • Pre-Five year plan stage
   • Five-year plan stage
2. Evolution of Commerce:
   • Pre-unification Stage
   • Unification Stage
   • Nepal-China Trade Treaties
   • Nepal-India Trade Treaties
   • Trade Diversification Stage

Evolution of Industry (in Nepal):

1. Pre-unification stage: there was lacking of organised industry before unification stage of Nepal. Before Prithvi Narayan Shah unified Nepal, there was some small scale of business running within a small state or within the nearer state. Some cities were specialised in some kind of production like Palpa was famous for Dhaka. Before unification handicraft industry was more popular in Nepal.
2. Unification Stage: The unification of various scattered regime contributed to the institutional development of the industry. The unification stage created more areas for business operation and as a result the development in industrial productivity also increases.
3. Pre-five years plan (Post unification stage – Rana’s Ruling Time): This is the age of modern industrialisation in Nepal. ‘Udhyog Parisad’ was established in 1935 AD for the development of industries and to produce goods under medium and large scale industry. In 1936, Just after the government enacted the first company act  1936, First Joint-stock company Janakpur Jut Mill was established. Government establish the very first financial institution Nepal Bank limited in 1937 with the motto to help industry and commerce of Nepal. Nepalese government established 63 industrial unite by investing Rs72 million during 15 years of time.
4. Five-year plan: After the formation of democratic government in 2007, the government focused on the development of Industry in Nepal. Nepalese government introduce 5 years plan in 2013 for the uniform development of Industry and Commerce. Between 2013-2047, government establish various industry and commerce in a different region. Nepal implemented the policy of open market in 2047 which create an environment for the private business (industry and commerce).

Evolution of Commerce (in Nepal): 

• Pre-unification stage: This was the beginning stage of commerce in Nepal. There were a certain number of cities which had trade relation outside of Kathmandu, Bhaktapur & Lalitpur. They had traditional trade relation with Tibet and Northern state of India. At that time, merchants performed their trading operation on a traditional hand made products like tools, ornaments, weapons and other locally made products.
• Unification Stage: This period was the beginning stage of institutional development of commercial activities. Essential commodities were exchanged throughout the nation without any disturbance. The unification of the kingdom provided more scope for expansion of trade relation with Tibet and Northern Part of India. Unification Stage was the golden era for small and cottage industry.
• Nepal China Trades Treaties: Nepal China had a really good relationship from the centuries. The merchants of both countries had traditional trade relations with each other. Here are some date of treaties:
  • 1775 – First Treaties: Nepalese merchants were authorised of doing the commercial transaction in Tibet.
  • 1856 – Second Treaties: Free Trade and Tax-immunity to Nepalese merchants in Tibet.
  • 1974 – First formal agreement for trade and Payment between China and Nepal.
  • 1981 – Agreement to strengthen economic and trade relations between two countries. etc.
• Nepal India Trade Treaties: Nepal and Indian territory had traditional trade relation from the civilisation time. However, Nepal India comes to sit for the first formal agreement of business between two countries only after 1923 with British Government of India. Treaties between Nepal & India are:
  •  1923 – First Trade Treaty – Nepal & British Government in India which helps to expand business between two countries.
  • 1950 – Second treaties for 10 years (Between Nepal and Democratic government of India)
  • 1960 – Transit Treaty for 10 years
  • 1971 – Treaties for Expansion and diversion of the mutual trade relationship between two countries
  • 1978 – the treaty of trade, the agreement of checking unauthorised trade and the treaty of transit.
  • 1991 –
    • agreement in cooperation in controlling unauthorised trade
    • trade and transit
  • 2002 – treaty sign to minimize imbalance trade.
• Trade Diversification Period: Government which was formed after the democratic movement has taken liberal and market-oriented economic policy. liberal policy of the government has contributed more to the development of productivity in private sectors. This minimises financial over-burden to the government because of the policy of privatisation of public enterprises.

Consideration Before Starting Business

Business means the art of being busy. The aim of business is to earn profit. The higher number of industries has increased competition among investors. Before starting the business, promoters must consider the following factor in order to survive and expand the business.

In a competitive market, it is more difficult to survive, expand and diversify business activities. Therefore it is essential to make a study about business environments before the establishment of any business.

1. Identification of business: The first factor that businessman must consider before starting a business is the identification of business. He has to decide about what type of business he wants to start. Identification and selection of particular business are very important for proper involvement and profit. It helps to give personal knowledge, interest, reduced level of risk, size and other values. It helps in the expansion of business and earning the maximum profit
2. Detailed investigation and research: Business cannot be started only by imagination. Proper and detailed study about the scope of business is very vital. It must consider present and future risks and competition. Market survey must be maintained. Investigation and study about raw material, finance, customer, market, employees and interest must be done.
3. Forms of business organization: There are different natures of business. The types of business vary with the differences in the capital, interest, merits, demerits, risk sizes size and so on. It must be chosen from various different forms of organization like a sole proprietorship, partnership firm, and joint-stock and so on.
4. Provision of capital: Capital means finance. Finance is the blood of business. Business cannot be established without sufficient capital. Volume of capital to be invested is dependent upon the size of a business firm. Source of capital must be properly taken into consideration. Capital is categorized into two groups.
   • Fixed capital i.e. Land, building, furniture etc.
   • Working capital i.e. raw material, transactions etc.
5. Location of business: Location means a place where the business establishes. It is very difficult to migrate from location of business after it has been set up. Location of business where it has been established must have better transportation, communication, water, electricity and other utilities. Production and distribution must have low cost and sales must be high to minimize the profit. Selection of location must be perfect.
6. Selection of staff: Business deals with human activities. It is related to the utilization of people to perform different activities. It is also called the staffing function. It helps in the management of human resources. Human activities are the major source to determine the efficiency of the business. Staff should be selected according to the nature of the business. Success of a business depends upon the selection of staff. Capable, skilled, experienced and honest employees must be selected.
7. Office equipment: Office is the place where all administrative work of business has to be done. Therefore, the office needs proper types of equipment, machines and resources. For accurate, speedy performance office setup must be good.
8. Government policy: Government makes business policy for the welfare of people. It must follow the policy of the government. It must know all the legal rules and regulation formulated by the government.

Requisites of Business Success

1. Establishment of objectives: There must be proper establishment of objectives. Objectives are the aim of business. It determines the scope of future work. Objectives must be clearly defined. It provides guidelines for doing work. Objectives are defined for long term and short term
2. Proper planning and policy: Proper planning classifies the works done. Planning and policy formation should be done in efficient way. There must be clear set of policies and programs to complete the work. It helps in minimizing risk and maximizing profit.
3. Proper location layout and size of business: Proper location layout and size of business is needed for progress of business. Layout means planting the business in such a way that production work can be carried out with efficiency and true manner. It helps in determination of proper size of business. Location also should be suitable. It must attract the market.
4. Sound organization: There must be division of work among employees. There must be effective use of human skills and knowledge. Organization should help to answer various business problems. It ensures team work. It must ensure best communication channels for proper decision making.
5. Separate finance: Finance is the blood of business. Business can’t be established without sufficient capital. Volume of capital to be invested is dependent upon size of business firm. Source of capital must be properly taken into consideration. It must be flexible. It should be suitable for both long term and short term business.
6. Efficient management: Its main objective is to manage all activities of human and other resources. It must perform right job at right time in right place. It must use effective management technique.
7. Employee’s morale: The success of business depends upon employee’s morale. The business should be used with intensity of employees. Employee should be encouraged, motivate. They could complete their work heartedly,
8. Modern technology: It brings/ uses modern technology. It provides new idea and methods in production process. There should be proper labor and capital adjustment.
9. Research: It helps in improvement of product. It works under the taste, desire and preference of the customers. In it various marketing, strategies, skills, knowledge and experts are used. Research and development is the main way to achieve profit with customer satisfaction