Concept of Market

This page contains the CBSE entrepreneurship class 11 chapter Entrepreneurship as Concept of Market notes. You can find the questions/answers/solutions for the chapter 5 of CBSE class 11 entrepreneurship in this page.
This page covers the section, Concept of Market, Links for other sections are provided below.

  1. Analysing the Market Environment
  2. Researching the Market

What is the process used by the enterprises to communicate with each others?
E-Commerce is used by the enterprises to communicate among themselves and also with

  1. commercial partners
  2. customers
  3. Financial institutions
  4. Government organizations
  5. Suppliers

using internet. The primary purpose of this interaction will be to conduct commercial transactions i.e. purchase and sale of good and services.

What is your understanding of the term Market?
A market involves

  1. Buying and selling of the products or commodities or services
  2. The buyers and sellers meet either in person or through any other means of communication like email, fax or phone etc.
  3. The buyers and sellers may be involved during the transaction. However in case of e-commerce the buyer and seller need not be involved.
  4. The demand and supply reach an equilibrium state and the prices are competitive

The concept of market is very solid and dynamic and has gone through a lot of change from the olden days to till date. They have a very strong influence on the economy. Markets can make the economy very powerful and protect it from fluctuations.

How were the markets organized in the olden days?

In the olden days, traditional markets were in place. They existed when the economy was driven completely by farming and handicrafts. Due to lack of sophisticated distribution channels, the market was confined only to the surrounding areas.
AMA (American Market Association) defined the traditional market as “The place where a particular commodity is concentrated for sale”

As per this definition, a market comprises of
Place: The commodities are accumulated at a specific place. The buyers and sellers gather at this place to conduct the transactions.
Different markets for different commodities: A particular place was used for buying or selling a commodity and a different place was used for a different commodity. Thus livestock had a market place, clothes were available in a different market place and handicrafts were sold in a different market place.

As the time passed by, what are the various areas in which the industries started to focus on to improve their business operations?

As the industries started to grow up with time, they started to focus on improving various activities in terms of

  1. Study of consumer awareness
  2. Study of competitors
  3. Quantity of products through mass production
  4. Quality of products or services
  5. Range of products offered to meet the demand
  6. Understand the emerging new legal policies, introduced to protect the consumer rights, and act accordingly.

Which activities are performed as part of a business?

The activities performed by a business can be majorly segregated into the following two categories.

  1. Industrial activities: Industrial activities include
    1. Accounting
    2. Administration
    3. Design and development of the product
    4. e-commerce
    5. Finance
    6. Human Resources
    7. Inventory management
    8. Management
    9. Production
    10. Quality Inspection
  2. Commercial activities: The commercial activities primarily primarily include the trade and trade related activities. They primarily include purchase and sale of products and services offered by the organization.

How advanced are the modern markets as compared to the traditional markets.

The modern markets much sophisticated as compared to the traditional markets in the following ways.

Traditional Markets Modern Markets
Majorly driven by agriculture, horticulture, farming and handicrafts. Majorly driven by agricultural and industrial sectors.
Traditional markets are confined to a particular place. Market is not confined to a place or region. It is considered as any means of communication which brings the buyers and sellers together.
Gaps existed between demand and supply. Buyers and sellers compete and ensure that an equilibrium state is established between demand and supply. It also ensures that the prices are competitive.
It didn’t have good channels of distribution. Distribution of products or services is not a constraint. Efficient distribution channels are available.
It was necessary that the buyers and sellers meet in person. Is is not essential for the buyers and sellers to meet in person. They can hold a meeting through any other means of communication to complete the transaction.

How is e-business playing a critical role in to help the organizations to prosper?

e-business is playing a critical role in the following ways and thus helping the organizations to prosper. Due to this reason it became a key component in the business.

  1. Direct and instantaneous support to the customers to resolve their queries.
  2. Making up-to-date information about their products or services through website
  3. Globalization and reaching out to the customer in the remote/rural areas
  4. Elimination of unnecessary distribution channels to increase the delivery speed while reducing the costs
  5. Due to their online presence and online sales, the cost, energy and time are saved.
  6. Monetary transactions are done electronically. This increases security and reduces the risk.
  7. Easier to launch new products and/or services as their reachability to the end user is improved through websites, newsletters, emails etc.
  8. The computerization reduces the manpower and there by increases the efficiency and reduces the cost. This results in more competitive prices and increased sales.

Is e-business and e-commerce one and the same?

No. e-business and e-commerce represent different areas of business. They can be distinguished as follows.

Point of view e-business e-commerce
Definition e-business refers to the running of the business operations using internet. They can be applied in industrial as well as commercial and trade related activities. e-commerce refers to the electronic communication between different enterprises. Thus the communication can take place between an enterprise and

  1. associated enterprises
  2. business partners
  3. financial investors and institutions
  4. Government bodies
  5. suppliers
  6. customers
Scope e-business is very wide in scope and comprises the business functions or operations like

  1. Accounting
  2. Administration
  3. Design and development of a product
  4. e-commerce
  5. Finance
  6. Human resources
  7. Inventory management
  8. Management
  9. Production
  10. Quality Inspection
e-commerce is limited in scope and comprise of electronic transactions related to purpose and sales between the business and its customers and suppliers.

Which factors govern the micro environment?
Micro environment refers to the elements or factors internal to the organization that can directly influence its ability to provide service to the customers.
The following are the elements or factors or forces that are part of the micro environment.

  1. Suppliers
  2. Producers
  3. Marketing intermediaries (or middlemen like agents or brokers or retailers or wholesalers)
  4. Competitors
  5. Customers

Tabulate the contrasting factors between micro and macro environments.

Micro Environment Macro Environment
These are the primary factors These are the secondary factors
Micro economic factors are internal to the organization. Macro economic factors are external to the organization and part of the larger society.
These factors can be controlled to vary their impact on the performance of the organization. These factors can not be directly controlled to vary their impact on the performance of the organization. The micro economic factors should be adjusted in accordance with the variation in the macro economic factors.
It comprises of the following factors

  1. Suppliers
  2. Producers
  3. Marketing intermediaries (or middlemen like agents or brokers or retailers or wholesalers)
  4. Competitors
  5. Customers
It comprises of the following factors

  1. Cultural
  2. Demographic
  3. Economic
  4. Natural
  5. Political
  6. Technological

What did you understand by the term market research?

Marketing research is a function where in the marketer gathers the information systematically. This information is used to link the marketer with the consumer or customer or the end user.

The gathered information is used for

  1. Generate marketing actions, refine them and then evaluate .
  2. Identifying marketing opportunities and problems and then define them.
  3. Monitoring the marketing performance
  4. Understanding the marketing process in a much better way.

You might also want to refer the following pages.

Books & Other Material

  1. Entrepreneurship: Concept and Functions
  2. An Entrepreneur
  3. Entrepreneurial Journey
  4. Entrepreneurship as Innovation and Problem Solving
  5. Business Finance and Arithmetic
  6. Resource Mobilization