Tag: Traditional

  • Advantages and Disadvantages of Traditional Economy

    Advantages and Disadvantages of Traditional Economy

    Explore the advantages and disadvantages of traditional economy: from subsistence-level production to sustainable resource management. Learn the key differences between cultural customs and modern economies with this blog post.

    Advantages and Disadvantages of Traditional Economy: A Comprehensive Guide

    A traditional economy is an economic system that relies on customs, traditions, and cultural beliefs to determine the production, consumption, and distribution of goods and services. In a traditional economy, economic decisions guide by long-standing customs and practices that have stood passed down from generation to generation. This type of economy often found in rural and indigenous communities. Where the way of life deeply rooted in traditional practices and where self-sufficiency and sustainability are prioritized.

    In a traditional economy, people often engage in subsistence agriculture and hunting, rely on barter for trade, and have limited access to modern technology. While traditional economies may face challenges in the face of globalization and modernization. Also, They have advantages in promoting social cohesion, preserving cultural heritage, and sustainable resource management.

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    Introduction to Traditional Economy

    A traditional economy is an economic system that relies on customs, traditions, and cultural beliefs to determine the production, consumption, and distribution of goods and services. This type of economy primarily found in rural and indigenous communities. Where the way of life deeply rooted in traditional practices and customs. Also, Traditional economies have existed for centuries, enabling communities to sustain themselves and preserve their cultural heritage. Study of Advantages and Disadvantages of Traditional Economy below are;

    Characteristics of Traditional Economy

    1. Barter System: In a traditional economy, the barter system is often used for trade. Goods and services are exchanged directly, without the use of currency. Also, This mutual exchange allows for the satisfaction of diverse needs within the community.
    2. Subsistence Agriculture and Hunting: Agriculture and hunting are the primary means of sustenance in traditional economies. People grow crops and raise livestock for their consumption rather than for commercial purposes. Also, This self-sufficiency helps communities meet their basic needs without excessive reliance on external markets.
    3. Close-knit Community: Traditional economies are typically characterized by close-knit communities where cooperation and communal sharing are highly valued. Each member of the community contributes to the well-being of the whole, fostering a sense of social cohesion and collective responsibility.
    4. Limited Technological Advancements: Traditional economies often have limited access to modern technology and rely on traditional tools and techniques for production. While this may limit productivity compared to technologically advanced economies, it also ensures the preservation of traditional skills and practices.
    5. Custom and Tradition: Economic decisions in traditional economies stand guided by customs, traditions, and societal norms, which pass down from generation to generation. These customs help maintain social order and provide a sense of continuity and identity within the community.
    6. Limited Division of Labor: There is a limited division of labor in traditional economies. With most individuals performing a wide range of tasks necessary for survival. This fosters a sense of self-sufficiency and interdependence among community members.
    7. Sustainability and Resource Management: Traditional economies emphasize sustainable practices and resource management to ensure the long-term well-being of the community. They often have intricate knowledge of local ecosystems and implement strategies for preserving natural resources and maintaining environmental balance.

    Advantages of Traditional Economy

    1. Social Cohesion and Community Identity: Traditional economies emphasize strong social ties and community cooperation. The reliance on communal resources and interdependence fosters a sense of unity and collective responsibility. Traditional economic activities often involve shared labor, mutual support, and reciprocal relationships. Leading to a tightly-knit community where cultural traditions and values are preserved.
    2. Sustainable Resource Management: Traditional economies have historically developed sustainable practices for managing natural resources. They often have a deep understanding of local ecosystems and employ techniques that prioritize long-term resource preservation. Also, This focus on sustainability helps prevent overexploitation and ensures the continued availability of resources for future generations.
    3. Reduced Dependence on Cash Economy: Traditional economies often rely less on cash-based transactions and instead favor bartering or non-monetary exchanges. This can be advantageous in regions where cash is scarce or inaccessible. Bartering allows communities to meet their needs by exchanging goods and services directly. Enabling resource distribution without the need for extensive monetary transactions.
    4. Preserving Cultural Heritage: Traditional economies are intimately tied to cultural values, rituals, and practices. These economies often provide a platform for the preservation and transmission of cultural heritage from one generation to the next. By engaging in traditional economic activities, communities can maintain their unique identity, protect traditional knowledge systems, and pass on essential skills and crafts.

    Disadvantages of Traditional Economy

    1. Limited Economic Growth: Traditional economies often experience limited economic growth and development. This is due to their focus on subsistence and the absence of market-oriented activities. Without a formal market structure, it becomes difficult to accumulate capital and invest in productivity-enhancing technologies. As a result, traditional economies may struggle to generate substantial wealth and expand their economic opportunities.
    2. Technological Disadvantage: Traditional economies face challenges in keeping up with technological advancements. The lack of access to modern tools, machinery, and knowledge can hinder productivity and competitiveness. Without the means to adopt new technologies, traditional economies may find it difficult to increase production or engage in value-added activities. This technological gap can further isolate these economies from the benefits of globalization.
    3. Dependency on Natural Resources: Traditional economies heavily rely on natural resources for sustenance. This can be sustainable when resources are managed properly. It also makes these economies vulnerable to environmental changes and the depletion of resources. Factors such as climate change, deforestation, and overfishing present significant challenges to traditional livelihoods and the overall well-being of the community. This dependency can hinder long-term economic stability.
    4. Limited Access to Infrastructure and Services: Traditional economies often have limited access to modern infrastructure, healthcare, education, and other essential services. The lack of access to these services can perpetuate inequalities between traditional and urban communities. It can also hamper the socioeconomic development of traditional economies. Making it difficult for them to compete with more developed regions. This limited access to infrastructure and services can hinder the overall progress and well-being of the community.

    Challenges of Traditional Economy

    1. Limited Economic Growth: Due to the focus on subsistence and lack of market-oriented activities. Traditional economies may experience limited economic growth and development. The absence of a formal market structure can hinder the accumulation of capital and investment in productivity-enhancing technologies.
    2. Technological Disadvantage: Traditional economies often struggle to keep up with technological advancements, which can hinder productivity and competitiveness. The lack of access to modern tools, machinery, and knowledge may limit their ability to increase production or engage in value-added activities.
    3. Dependency on Natural Resources: Traditional economies heavily rely on natural resources for sustenance. Making them vulnerable to environmental changes and depletion of resources. Factors such as climate change, deforestation, and overfishing can have detrimental effects on traditional livelihoods and the overall well-being of the community.
    4. Limited Access to Infrastructure and Services: Traditional economies may have limited access to modern infrastructure, healthcare, education, and other essential services. This lack of access can hinder socioeconomic development and perpetuate inequalities between traditional and urban communities.

    Conclusion

    Traditional economies play a significant role in preserving cultural heritage and sustainable practices. While they face challenges in a rapidly changing world, their emphasis on communal values, resource management, and adaptability continues to contribute to the resilience of many indigenous communities. Preserving and valuing traditional economies is crucial for maintaining cultural diversity, and environmental sustainability, and fostering inclusive development. What are the Advantages and Disadvantages of Traditional Economy? As we navigate toward a more interconnected global society, recognizing and respecting the contributions of traditional economies can help us strike a balance between progress and the preservation of ancient wisdom.

  • How to use an accounting information system?

    How to use an accounting information system?

    The Influence of Accounting Information System on Financial Accounting Function. Today’s society is a society with the rapid development of the economy and technology. At this time, the development of informatization is very fast.

    Here are the articles to explain, What is an accounting information system? on Financial Accounting Function!

    The accounting information system, which is the basis of national economic informatization and the core of enterprise informatization, has also existed widely used. However, accounting informatization is not simulating the previous accounting functions. It is more to provide decision-makers with the required data. Because accounting informatization has its uniqueness, it has a certain impact on the previous accounting functions.

    Traditional accounting functions and the characteristics of accounting

    In the past accounting work, there are two main functions, namely reflection and supervision. The so-called reflection function, specifically, means that the accounting workers are comprehensive. Accurately reflect the accounting information according to the accounting regulations and with the help of specific measures. The supervision function mainly refers to supervising whether various economic matters carry out by relevant laws and regulations.

    At the same time, it has other functions, such as controlling economic activities, forecasting the company’s development prospects, etc. However, due to the current accounting measures and the defects of related auxiliary tools, many functions cannot perform. Under the background of accounting and accounting in the past, whether it is a manual mode or computerized mode. The task of workers is to set up various types of accounts according to accounting elements. Carry out accounting records according to work activities, and then obtain relevant vouchers and accounting. account information.

    The difference between them is that the manual mode mainly relies on the abacus and other equipment to carry out work. But during the computerization period, most of the tools used are computers. The processing of information does not require manpower. The advantage is that it saves time and manpower. In other words, we rely on computers to perform tasks that were previously done manually. Such as keeping accounts and so on.

    The characteristics of accounting under the environment of accounting information

    After the implementation of information management, the financial and accounting information system at this time is a very comprehensive system with a relatively fast processing speed. It can stand reasonably connected with the business process and can ensure that the information stands processed the first time.

    (1) Integration of information systems inside and outside the enterprise organization

    With the help of information technology and current advanced communication technology, the management system combines accounting and production systems. The accounting information system, through the close connection of sales and production systems, has significantly broadened the work area of ​​accounting. Internal and external accounting information, including suppliers and customers, organize organically in real-time.

    (2) Business processing high automate

    For a unit, after its business organization has reviewed and recorded the department documents, the system will generate the vouchers by itself according to the characteristics of the business, and transmit them to the general system as soon as possible. After auditing, the accounting workers can use the system’s auditing function to check the information again, and the system will process accounts from time to time, generate different types of accounts, process business with the help of templates, and automatically generate reports.

    (3) Real-time reporting of accounting information

    Under the background of informatization, various accounting data can process by the system. At this time, as an accountant, you can reasonably process accounting information according to the needs of the unit, and provide managers with various required materials, so that they can better To ensure that managers can know the operation mode of the unit the first time and better provide the real materials and data needed for the unit leaders to make decisions.

    The impact of accounting informatization on traditional accounting functions

    After the implementation of informatization, the accounting work has ushered in a new development situation. In this period of its formation and development, it has had a significant impact on traditional accounting work. At this time, the accounting function has changed, and various business activities have also begun to change. Traditional accounting, when formulating the system, stands mainly determined by combining the characteristics of accounting matters.

    The information-based accounting work, when formulating the system, stands mainly determined by combining various types of data. Through informatization, we can reasonably disperse or comprehensively process information. At this time, we can ensure a high degree of information sharing and can provide financial and accounting data. At any time to ensure that the entire stage of information from acquisition to use can adapt to current control regulations.

    (1) Influence Response Functions

    Under the background of the current era, the response function of accounting is embodied in the use of information systems to reasonably optimize the content of information, such as information clarification and accounting, etc. It also covers. With the help of the automatic screening function of information, the incorrect information removes and the correct information saves. Which ensures the high accuracy of the information data, which invisibly lays a solid foundation for the information optimization work;

    At the same time, the system can obtain the required vouchers by itself, and after the voucher verification and bookkeeping. It can generate the various account data we need by itself. Its response function and accounting function are not the same. Under the current background, information confirmation is the most critical content in the entire work task.

    (2) Impact management functions

    In the information age, because the collection and processing of financial and accounting information are highly automated, and its real-time characteristics are very obvious, then accounting workers can get away from tedious work and pay more attention to and Put their energy into other management activities, you don’t need to put a lot of energy and physical strength into tedious transactional activities as in the past.

    For example, at this time, accounting workers can devote more energy to participating in the structural innovation work of the unit, and can also assist managers to formulate a control system and conduct performance evaluations. In addition, accountants can also focus on analyzing the information needs of users, and formulate rules for information recording and storage based on this.

    The accounting information system processes the information according to predetermined procedures and rules and can transmit the data to the corresponding users. Combined with the specific situation of the user’s response, further determine the user’s demand for information. Then better carry out the next information processing work. Therefore, the management function of accounting begins to show at this time.

    (3) Impact on the accounting control function

    Under the current information system, because the feedback ability of accounting has been significantly improved, its control function has also begun to attract people’s attention at this time, reflecting an increasingly important existence value, and it can more effectively strengthen the enterprise’s Internal management and participation in business decision-making, thereby strengthening the overall competitiveness of the unit.

    The basis of accounting control has gone beyond the scope of financial accounting theory and management accounting theory, and the basis of its control has been extended to modern economic control theory, such as system theory, information theory, cybernetics, decision theory, and so on. Focusing on business management and decision-making, it should also be clear in giving full play to the role of accounting control: “effective control must be scientific and systematic control; systematic control must be the control of grasping and optimizing information; optimized information must control through scientific and systematic methods.” Obtained.”

    At the same time, the guiding ideology of modern accounting control is to implement comprehensive control, that is to say, when controlling, the past, present, and future should link together, and the state of things before they happened, the state of things in progress and the follow-up state, and the micro-mesh and macro-control are to link together.

    Conclusion

    In current years, our country’s economy has grown rapidly. At this time, various industries have also ushered in a new development situation. This invisibly promotes the innovation of accounting work. Under the background of this rapid development, the significance of accounting work has been more clearly reflected. And the related functions have also been significantly expanded compared with the past. The implementation of the informatization system in the accounting system has a lot of influence on traditional accounting work.

    As accounting workers, we must look at accounting theory from a new perspective, and actively explore new theoretical knowledge. And change our understanding of the development of the times. Only in this way can we ensure the smooth development of financial and accounting work. Give full play to its due value and significance, and make better contributions to the development of the country.

    The Influence of Accounting Information System on Financial Accounting Functions Image
    The Influence of Accounting Information System on Financial Accounting Functions; Photo by Philip Strong on Unsplash.
  • How to define the Consideration in Contract Law?

    How to define the Consideration in Contract Law?

    Essay on the Consideration in Contract Law; What does mean consideration? They have many different meanings; some will tell you it means calculations while some say it signifies affability. But in the law of contract, there will be only one definition that exists. What do the Means of Racial Profiling? Somewhat of worthy changes hands between the parties at the time of the contractual undertake is what ‘consideration’ only means in the law of contract.

    Here is the article to explain, It is define the Consideration in Contract Law!

    Consideration plays an essential role to create a contract binding. It is also a part of a must element to a successful contract formation, followed by the offer and the acceptance. For example, it could be the payment of cash when there is an exchange for goods or services, or else the goods or services themselves in the case of a trade deal. The main point is consideration is it ought to be related to something valuable, something one party would not normally have but merely for the agreement.

    ‘Although consideration has withstood direct assault from both the bench and from law reformers over the years; its Holdworthian image as an anachronistic doctrine tried to the law of actions long since dispensed with, has proved impossible to entirely shake off. However, the function of consideration as an arbiter of agreements to vary long-standing arrangements has also existed challenged by the development of alternative doctrines such as duress and promissory estoppels. In overturning almost two hundred years of legal history, the Court of Appeal held that an agreement to vary a contract is enforceable without consideration.

    What are the types of consideration approaches?

    The following consideration approach is two types Traditional and Modern below are;

    Traditional approach;

    Two rules existed under the word ‘consideration’ in the law. There are the traditional approach and the modern approach. The traditional approach is an ‘existing duty’ which is a very direct rule; as it stands concerned merely with the completion of a duty that exists stated on a contract. Dealing with the “existing duty” rule, if a party is already under a duty to perform an act, according to an existing contract, to promise to perform this act on behalf of the same person will not support a new contract between them. The above rule existed found in the case of Stilk v Myrick. The mentioned case is about a seaman named Stilk who wanted to sue his ship’s captain for not recovering his additional wages which existed promised at an earlier stage.

    The promises stood taken when two sailors had deserted in a foreign port and the captain wanted his remaining crew to work the ship back to London. Unfortunately, Stilk’s claim stood unsuccessful under the ‘existing duty’ rule; as it existed argued that Stilk had not done anything further according to his original stated contract. While in the case of Hartley v Ponsonby which is related to the ‘existing duty rule; it stood about a seaman named Hartley who sued his master for reneging his promise of paying him 40 pounds added to his wages. The promise stood made to induce those remaining crews to sail when seventeen out of thirty-six workers refused to work and ended up in prison. Hartley’s claim was successful as he did do things extra beyond his original contract which didn’t mention.

    Modern approach;

    For the modern approach as a ‘commercial realistic’ rule; it existed known as a duty which consider logically; concerned about the additional risk, beyond what exists already stated in the original contract. In the case of William v Roffey Bros & Nicholls, the facts stood the carpenter worked on a series of flat renovations; which stood subcontracted by the plaintiff and existed agreed to exist paid 20000 pounds for the workmanship. And, with an additional of 575 pounds for completion of each unit of the flat; when the carpenter got into financial difficulty then intended to stop the renovations.

    It stood held that the plaintiff has the right to own the additional wages due to the ‘commercial realistic’ rule. ‘Practical benefit’ became a good role on consideration as the defendant had avoided both obstacles; which were the penalty of late completion and troublesome in engaging another carpenter to continue the renovations.

    Other things;

    Thus, it can seem that both parties did contribute and received practical benefits. Next, comes the case of Musumeci v Wendell, in this case, a landlord named Winadell who operates a shopping center leased a fruit shop to Musumeci, on the other hand, leased another part of the shopping center to a large fruit retailer.

    This had caused Musumeci to face a strong competence hence Winadell agreed as a ‘concession’ to reduce their rent by a third. But at a later stage, Wendell intended to evict the Musumeci. Hence, turn up to bring up the case to the court to determine if the reduction rent was contractually binding. After the dispute, it stood judged that the promise was binding by applying the ‘practical benefit’ test from the case of Williams v Roffey Bros & Nicholls. This can see as Winadell received ‘practical benefit’ by having a maintained fully let shopping center in exchange for reducing Musumeci’s rental fees. In a nutshell, the main component of this rule is when there are practical benefits and contribution exists between parties, a contract follows to exist.

    History of modern approach;

    In the case of William v Roffey Bros & Nicholls, ‘commercial realistic’ existed involved. The decision made in this case existed driven by a pragmatic approach to consider but universal approval has not existed greeted. It was first designed to gain what the court regarded as the commercially acceptable solution. The fact, in this case, was Glidewell LJ was the knowledge that in return for the additional payment the main contractors intended to avoid those obstacles. Therefore, ‘practical benefit’ did exist criticized for hopelessly compromising the doctrine of consideration’. Nevertheless, this rule was more to the public’s support; as it concerns more on an individual’s benefits logically compare to the ‘existing duty rule.

    To have a better description of the above rule, I would take an example of the case mentioned in the ‘existing duty rule in addition to the promoters working overtime to reach the target of selling off at least 50 stocks without being entitled to paid extra wages during their extra working period.

    More to know;

    Due to the ‘commercial realistic’ rule, the promoters have the right to sue the dealer as it stood précised that both parties did contribute and gain benefits. On the promisor side, the dealer could avoid remaining an enormous amount of old stock; which may be an obstacle from ordering new stocks and earning more profit in the way of selling off large amounts of old stocks.

    While the promoter did give up their precious time spent on selling off the stocks; which they can choose to use the period doing other things. Hence, they won in the above case in getting the extra benefit of having a trip to Europe due to the word of ‘practical benefit’. Followed by the development of the world, the rule changed over time from ‘existing duty to ‘commercial realistic’; when limitations existed found in the rule through the days. The decision made in the case which mainly influenced the development of the rule was Musumeci v Wendell. In conclusion, the ‘existing duty rule existed created to please where the promise confers a benefit on the promisor without suffering any loss just like the case of Stilk v Myrick.

    History and Criticism of traditional approach;

    According to the researches, the ‘existing duty rule existed trenchantly criticized, avoided during its two hundred years history. It was noted that the court wasn’t focused on the presence of the consideration; but, on the need on public policy grounds to prevent extortive and fraud agreements existing between parties. This issue existed focused to solve especially in the nonexistence of an expanded concept of the duress. Besides, this rule leads to a few effects which include when a new promise exists; the court cannot use the existing duty of contract as a consideration while judging those cases.

    Next, the rule affected a promisor facing a not legally bound to a new promise. In addition, whenever the promisor was not able to fulfill the new promise; a promisee would not have the right to sue a promisor. The above rule has strongly supported the side of a promisor and may lead a promise to a loss.

    Different History and Criticism;

    Hence, this rule wasn’t fully supported by an amount of public led to the development of several avoidances of techniques. To provide a better explanation, an example of mine in the ‘existing duty’ rule is when a dealer intends to sell off all the remaining old stocks, the dealer orally provided a promise of a trip to Europe for promoters who successfully sold above 50 stocks.

    The above oral promise existed not written in black and white beyond the original contract. The dealer reneged his promise by refusing to commit the expenses for the trip to Europe. Hence, those promoters who reached the target sued the dealer for not admitting the promise. By using the ‘existing duty rule, the promoter’s claim will be unsuccessful; as it stood not written as a statement in the original contract. It stood also to argue that selling off the number of goods is not an additional act being a promoter. This is because the responsibility of a promoter is to promote a product, convincing customers to purchase it. Hence this is the responsibility but not an additional act of being a promoter.

    Strength and Weakness of the rules;

    Referring to the new ’commercial realistic’ rule from William v Roffey Bros & Nicholls and Musumeci v Wendell; its puzzle is that one party can threaten another party in extracting more payment or benefit additional provided under the original terms in the contract. While the ‘existing duty rule existed used in Stilk v Myrick, had overlooked; the additional risk in the terms of the original contract. Within these two rules, pros and cons existed found in them.

    The ‘existing duty’ rule has protection against threat which requires something exceeds; unformulated can easily fulfill practical benefit as it’s a good motivation for a requirement of consideration. But, it does not protect when a new agreement stands substituted while the parties terminate an existing one. A situation where additional payment promises compromise if a bona fide dispute does not exclude too.

    Additional rules;

    ‘Bona file is a Latin word which means ‘good faith’, it indicates sincerity; the fact in the case of a party claiming the title as ‘bona file buyer or possessor, innocence or lack of understanding of any fact that would occur doubt on the right to hold title is also what it signifies. Even a promise which undertakes additional risk, act, and forbearance wasn’t protected by the ‘existing duty’ rule too.

    The “Commercial realistic” rule views its strength in the way of benefiting parties; that facing additional risk, act, or forbearance under the original terms in the contract as these will undertook. It merely had difficulty in defining the word ‘practical benefit’ as it has many different meanings. For example, ‘practical benefit’ can act as an effective doctrine of consideration that protects parties against casual promises; it could also be the advantage of obtaining the actual contract performance that is already due. Last but not least, it fails in meeting the expectation of parties to a renegotiated contract; and, ignores any actual benefits received by the promisor as a result of the contractual variation.

    Summary;

    In conclusion, the development of the rule existed influenced by the changing of ‘existing duty to ‘commercial realistic’; and eventually lack of precision in the traditional definition in Stilk v Myrick. The rule and its development have existed perceived through the situation of ‘commercial realistic’ in Musumeci v Winadell; and the modern law of ‘economic duress’ by legal experts. It should focus on the good faith of the contracting parties to decide the existence; and relevance of any supposed practical benefit in the development of contract law. Both doctrines of consideration and the more basic underlying basis of the law; themselves stood harmed by the introduction of practical benefit in the consideration.

    How to define the Consideration in Contract Law Image
    How to define the Consideration in Contract Law?
  • Difference between Traditional and Modern Concept in Business

    Difference between Traditional and Modern Concept in Business

    Difference between Traditional and Modern Concept of Business: Business is concerned with producing and distributing goods and services to make a profit. These are two Concepts: The traditional concept of business and the Modern concept of business. A regular process of exchange of goods and services that involves risk and also uncertainty. Business is an economic activity aimed at meeting needs through the supply of goods and services to customers and their satisfaction.

    What is the Difference between Traditional and Modern Concepts in Business?

    They are two types:

    1] Traditional Concept:

    The traditional concept states that the business aims to make a profit through the production and marketing of products. Also, Products can be of various types. Furthermore, The traditional concept states that the objective of the business is to earn profit through the production and marketing of products. For example, the main objective of the business of material goods, services, ideas, information, etc. is to get maximum profit according to the traditional concept.

    Meaning of Traditional Concept:

    Business is the production and distribution of products for personal gain. The profit-oriented concept stands also known as the traditional concept of business. Any human activity directed towards the acquisition of wealth or earning profit through the production or exchange of goods was treated to be a business.

    2] Modern concept:

    Consumer satisfaction is the focal point of the modern concept of business. The modern concept states that a business earns profit through customer satisfaction. Business without consumers is not business. Also, It develops long-term relations with customers. The business should earn profit with social responsibility. It should care about the welfare of society and consumers. it must work within the law. Furthermore, Profits can exist made by maintaining social accountability. It attempts to incorporate every aspect of human civilization. It sees modern business as a socio-economic institution that is always responsible to society.

    Meaning of Modern Concept:

    The business organization should determine the needs of the customers and also deliver them the desired products. The business organization began to think that businesses should earn profits through the service and also the satisfaction of the customers. Do you like to play online casino games?

    Traditional and Modern Concept – Table:

    Difference between Traditional and Modern Concept in Business
    Difference between Traditional and Modern Concept in Business.
  • What is the different Concept of Business? Discussion

    What is the different Concept of Business? Discussion

    Concept of Business: Business activity has been conceptualized by many business persons, business managers and academicians in the field of business management, ever since business emerged as an organized activity. Therefore the concept of business has changed over the years of history of the business. Traditional and Modern Concept of Business, Business is an economic activity aimed to fulfill the need and wants of customers through the supply of goods and services for their satisfaction.

    What is the different Concept of Business? Discussion with Definition and Assumptions.

    The term “business” refers to all the economic activities carried out by people and organization for generating incomes. It is concerned with producing and distributing goods and services for earning a profit. It is a regular process of exchanging goods and services which involve risk and uncertainty.

    Definition of Business:

    The following definitions below are;

    According to L.H Haney,

    “Business may define as a human activity directed towards producing or acquiring wealth through buying and selling of goods.”

    According to James Stephenson,

    “Economic activities performed for earning profits are termed as the business.”

    From the above definitions, it is clear that the business is the economic activity of individuals and organizations aimed to earn profit through the production and distribution of goods and services.

    Generally, there are two concepts of the business:

    • Traditional Concept: The traditional concept explains that the purpose of business is to earn profit through production and marketing of products. Products may be different types. For example physical goods, services, ideas, and information, etc. The main motto of business is to maximize profit only as per the traditional concept.
    • Modern Concept: Consumer satisfaction is the central point of the modern concept of business. Profit can earn by maintaining social responsibility. It strives to include every aspect of human civilization. It views the modern business as a socio-economic institution which is always responsible towards society.

    What is the different Concept of Business Discussion
    What is the different Concept of Business? Discussion.

    The different Concept of Business:

    So far, the following concept of business has emerged:

    1. Profit Oriented or Traditional Concept, and.
    2. Customer Oriented or Modern Concept.

    Now, explain each;

    Profit Oriented or Traditional Concept of Business:

    In the early age of the business, it was conceiving to be a profit-making economic activity. Any human activity directed towards the acquisition of wealth or earning profit through production or exchange of goods was treated to be a business. The profit-oriented concept also knows as the traditional concept of business.

    When people start doing business by forming organizations, the business was conceiving as an organization, organize and operate to produce and provide goods and services to society under the motive of private gain or profit. The traditional concept states that the objective of the business is to earn profit through production and marketing of products.

    Products can be:

    • Goods: They are physical goods. They can own. They are tangible and can touch. Examples are books, computer, clothes, etc.
    • Ideas: They are ideas based on knowledge. Examples are environment protection, human rights, consumer welfare, etc.
    • Services: They cannot own. They are intangible and cannot touch. Examples are a class lecture, banking service, etc.
    • Places: They are specific places such as the USA, London, Delhi, etc.
    • Persons: They are celebrities, such as politicians, movie stars, sportspersons, etc.
    • Information: They are data-related activities. Examples are research, newspapers, internet, etc.

    Assumptions:

    • The sole objective of the business is to earn profit by production and distribution of goods.
    • Customers will buy the products that are available in the market at the most competitive rates.
    • There is hardly any need to think for customer service and satisfaction for running a business.
    Customer Oriented or Modern Concept of Business:

    This concepts came into existence around the 1950s and gained momentum during the 1960s and 1970s. The business organization began to think that business should earn profits through service and satisfaction of the customers. The organization was forced to regard customer as the king of the market.

    The modern concept states that business earns profit through customers satisfaction. Business without consumers is not business. It develops long term relations with customers. The business should earn profit with social responsibility.

    It should care about the welfare of society and consumers. it must work within the law. Business encompasses all economic activities involving production and marketing of products to earn profit and wealth through satisfaction of human needs.

    The main points in the concept of business are as follows:

    • Business money-Oriente organizes economic activity.
    • The business produces and markets products.
    • The business makes a profit to acquire wealth.
    • Business satisfies customers needs by creating utilities.
    • Business behaves legally with social responsibility, and.
    • The business works within the law.

    Assumptions:

    • Business organizations should produce and provide the goods and services that are need by customers.
    • The products and services provided by the business should satisfy the needs of the customers.
    • The business should earn profits through the service and satisfaction of the customer.