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    F.B.O-I

    B.B.A-1

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    Growth: Now the last step of undefined ornatural objective is how to achieve growth anddevelopment. No business remains stagnant after

    entering in to the market. So next objective is tofind the opportunities for the growth anddevelopment. To accept the opportunities andmarch towards the growth of the business. Thus

    the behavior of every business is natural likehuman being first to seek for survival and aftersurviving to achieve growth along with stability.

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    ECONOMIC OBJECTIVES

    Profit: Business activities are done mainly forearning profit. A privately owned businessearns profit to maximize wealth or for the

    growth According to Peter F. Drucker the problem of

    any business is not the maximization of profitbut to earn or achieve profits to that extentthat it covers the risk of economic activityundertaken by the firm and finally avoid loss.

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    Create Customers: Business activities mainlyconsist of transfer, sale or exchange of goods andservices to satisfy the needs of customers. Thus it

    means that for the business to sustain it is verynecessary that these goods and services shouldbe bought by the people which is offered by thebusiness.

    Thus creation of customers is one of theeconomic objectives for the existence of thebusiness.

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    Customers Satisfaction: Only creation of thegroup or body of customers is not enough. Oncethe body customers are created it is veryessential to hold them towards our goods and

    services. The satisfaction obtained from the goods and

    services in terms of quantity, quality and priceshould be given at most important for holding the

    customers towards our products. Along with itthe after sales service e.g. free repairing, freeservices, replacement up to certain period etc

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    Maximum Utilization of Resources: Every business hasscarce resource, so it becomes important for everybusiness to check the use of resources and try to makebest and maximum utilization of it.

    Resources should not remain unutilized and at thesame time there should not be shortage or scarcity ofrequired resource.

    Thus by taking these measures the cost of product can

    be maintained to the minimum possible level and alsothe resources available will be utilized at their best.

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    Maximization of Wealth: As every person

    faces the financial crisis and also face the

    contingences at any stage of life. Business also

    faces financial crisis and also has to face the

    contingences during its life cycle. So one of

    the objectives is to keep business

    economically sound by retaining the part ofprofit in to the business.

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    SOCIAL OBJECTIVES

    Supply of desired goods: If the business fails

    to maintain a continuous and sufficient supply

    of unadulterated goods and articles of

    standard quantity, it will be failing in fulfilling

    its social objectives and is likely to incur the

    rage of the society.

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    Avoiding anti social practice: In the modern

    concept of the business it is necessary that

    business should work with the objective of

    minimum profit or reasonable profit. It is

    necessary that it does not charge the higher

    profit from the customers and aim at

    profiteering activity.

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    Employment generation: Being the part of the

    society its the business that has to create the

    employment opportunities. Sometimes it

    seems quite conflicting with another objective

    of business i.e. to curb the cost or reduce the

    cost.

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    HUMAN OBJECTIVES

    Justice to Employees: The first and basic

    requirement for getting the best output from

    the people is to give justice to them at all the

    different levels especially in the form of fair

    wages and other incentives. This part has to

    be taken care because it directly affects the

    efficiency and also the productivity of thebusiness.

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    Human Resource Development: The core

    objective of business is to innovate and create

    customers and these objectives can be

    fulfilled only when the employees are given

    appropriate opportunities for the

    development of their skills and abilities. The

    working atmosphere should be provided suchthat they grow and develop as mature and

    productive resource for the business.

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    Job Satisfaction: Employees are always in

    search of job satisfactory environment.

    Business has to take care that it provides

    interesting and challenging job to theemployees that will create interest of

    employees towards their work, which will

    finally create the pleasant workingatmosphere and satisfaction towards the work

    undertaken by them.

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    Participation in Management: The business

    enterprise will get the best consideration form

    their employees when they are given the

    chance to participate in some of themanagement decisions. It doesnt mean that

    participation in all the managerial decisions

    but in some of the decisions where it feelsappropriate.

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    Industry

    Industry includes all types of human efforts

    leading to generation of products to satisfy

    human wants -L. Dicksee

    Industry transforms the raw-materials

    obtained from nature in to such form which

    may satisfy human needs -R.L Stanton

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    FEATURES OR CHARACTERISTICS OF

    INDUSTRY

    Featuresof

    industry

    Utility:

    Employment

    Opportunities:

    Mass

    Production:

    Human and

    Mechanical

    Labour:

    Economic

    Activity:

    Natural

    Resources:

    Conversion:

    Economic

    Development

    Production ofVarious

    Commodities:

    Development

    of Trade and

    Commerce:

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    Conversion: Industries basically convert the naturaland other resources which directly cannot satisfyhuman wants into products and goods which satisfythe human wants. Thus conversion of materials into

    goods and services for the human satisfaction is thebasic feature of the industry.

    Natural Resources: Natural resources are gift of god tomankind. But some of the natural resources can be

    directly utilized by human beings e.g. air, but there aremany natural resources which human beings cannotuse directly e.g. crude oil, minerals, etc.

    Features of an industry

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    Economic Activity: The activity which is carried outwith the intention of earning profit is economicactivity. Thus industries also have the same intentionor concept behind carrying production and

    manufacturing activities. Human and Mechanical Labour: Industries makes the

    utilization of human and mechanical labour forproduction. For e.g. carpenter makes furniture,handicrafts, etc. Thus utilization of human labour for

    production along with mechanical labour is one of thedistinct features of industry. For e.g. use of machines,cars, lifts etc.

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    Mass Production: As the demand for the goodsand services are increasing it has become verynecessary that production process should begiven impetus. Industries help in bulk or mass

    production which will help to meet the increasingdemand.

    Employment Opportunities: Industry being oneof the important parts of the economy helps to

    stabilize it by creating and providing employmentopportunities. and also too many other numberof people.

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    Utility: Industry increases the utility of variousresources by changing their forms, e.g. furniturefrom woods, shoes from leather etc. Thus

    industry increases the utility of various materials.Thus industries increase the form, time, andplace utility of the goods and services.

    Development of Trade and Commerce: Industrial

    development results into the development oftrade and commerce. Development of industry israpid development of trade and commerce

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    Production of Various Commodities: Production ofvariety of commodities has been possible with the helpof industry, and they can be used by the consumers.These industries undertake research activities with the

    help of it they innovate and improve the existingproducts

    Economic Development: Industries give a boost to theeconomy. With establishment of new industries, there

    is an increase in production, trade and commerce,development. There is reduction in unemployment sothere is an increase in national income.

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    Commerce

    Commerce

    Trade Ancillary services

    Internal Trade External Trade

    Retail trade

    Wholesaletrade

    Export

    ImportRe-export

    Transportation

    Warehousing

    Insurance

    Financing

    Banking

    Advertising

    Agent

    communication

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    Definition of commerce

    Commerce includes all those activities which

    are connected with exchange of goods and

    services -Palekar

    Trade and its ancillary services mean

    commerce. -Prof. Savarkar

    Commerce means the process of distribution

    of goods and services. -Prof. G.K. Buknole

    COMMERCE = TRADE+ANCILLARY SERVICES

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    Features of Commerce

    Exchange: Trade is a precondition of commerce.Commerce starts with exchange of goods and services.This exchange should be continuous and regular.

    Economic Activity: Commerce is an economic activity.

    Commercial activities are carried out with idea ofgaining financial returns or profit,

    Continuity of Services: Development of commercedepends upon trade, the various auxiliary services liketransportation, insurance, banking, means of

    communication brokerage (agency) etc. Economicactivities will develop these services & remain regularand continuous.

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    Increase in Utility: Industry increases the formutility of a product while commerce increases theplace and time utility of the product. Commercialactivities are required to reduce the obstacles

    between producer and the consumers. Consumer-oriented: Various commercial senders

    are carried out with the aim of satisfying theconsumers and the numerous needs of the

    consumers. Thus trade and auxiliary servicesshould be according to the expectation of theconsumer's wishes

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    Importance of Commerce

    Exchange: Exchange becomes easy and speedy due tocommerce. Product of one country ofthe world can "reachthe other countries of the world through commercialactivities, commerce provides a boost to the economicdevelopment with the help of auxiliary services like

    banking, insurance, warehousing, means ofcommunication, etc.

    Ancillary Services: These Ancillary services make theexchange easy, fast and continuous. The economicdevelopment of a nation is made possible by the various

    ancillary services of commerce. Development of Bankingand means of transportation in a country are the measuresof the country's development. In absence of ancillaryservices, the exchange would be less speedy and difficult.

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    Time Utility: Warehousing facilities increase the

    time utility of various products. Commercial

    brokers solve the difficulties of traders.

    Economic Development: All the nations of theworld are ready to, attain economic

    development. Commerce helps the nations in

    attaining economic progress. Importance ofcommerce is increasing day by day throughout

    the world.

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    Availability: The certainty of availability of the

    various commodities depends upon the

    auxiliary services. Human needs constantly

    multiply. We satisfy our needs by exchange ofmoney, but little do we realize that how many

    efforts were made to provide as the various

    commodities.

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    Trade

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    Economic system

    The term Economic System refers to an

    organization consisting of certain institutions,

    which are developed with a view to utilize

    productive resources for the purpose ofsatisfying human wants.

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    The economic system of any nation is essentially,man-made and influenced by the philosophy,ideals, desires and attitudes of its people and themethods they want to pursue to fulfill theirchosen ideals and goals.

    The economic system helps human wants, suchas earning, spending and saving.

    The economy of a country in terms ofconsumption, production and should be strong.

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    Types of economic system

    Capitalist Economic System of U.S.A & Japan,

    Communist Economic System of China,

    Yugoslavia, Poland and Cuba

    Mixed Economic System of Britain, India,

    France, Sweden and Holland.

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    CAPITALIST ECONOMY (introduction)

    Capitalism is an economic system in which individuals arerelatively free to determine how goods and services shallbe produced and allocated.

    In this system capital is owned and invested by individualsand private-owned institutions to earn profit.

    The most fundamental feature of capitalism is the right ofthe individuals to own tangible and intangible privateproperty. This right is expected to provide the incentive toinitiate and continue the economic activity. The system ismarked by little or no interference by the Government inbusiness run by private individuals or institutions.

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    Definitions

    Capitalism is that system of economic organization in

    which free enterprise, competition and private

    ownership of property generally prevails.Prof. R.T. Bye

    Capitalism is a system of economic organization

    featured by the private ownership and the use forprivate profit of the man-made and nature-made

    capital. - William Loucks and Hoot

    Capitalism is a system in which property is privately

    owned and economic decisions are privately made. Ferguson & Kreps

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    Features of capitalism

    The Right of Private Property

    Productive factors such as land, factories, machinery,mines, etc are under private ownership. The owners ofthese factors are free to use them in the manner they

    like. However, the govt. may put some restrictions forthe benefit of the society.

    Price Mechanism

    It is regulating mechanism in capitalist society. Herethe forces of demand and supply in capitalist societybring equilibrium between different economicactivities.

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    Freedom of Enterprise

    Everybody can be engaged in any economic activity, he likes. He is free toset up any firm to produce goods. Thus there is full freedom as to choiceof work, occupation and enterprise. Everybody is free to take economicdecisions.

    Freedom of consumers

    People are free to spend their income as the like. Producers produce onlythose goods which consumers wish to buy so, consumers can have awide range of choice. We can say that economy is dictated by the wish andpreference of the consumer. He is free to choose his goods and services.

    Profit Motive

    People are forced or induced to work and produce for getting more andmore profits. It is the basic motivating force in a capitalist economy.

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    Competition

    Competition among sellers to sell their goods and amongbuyers to obtain goods to satisfy their wants.

    Advertisements, discount, price cutting, etc. Thuscompetition is another main feature in product market orfactor market. They face it to excel.

    Inequalities of Incomes

    This economy creates the inequalities in the society as it

    contains two major classes of laborer and capitalist. Widegap of income between the rich and the poor is createdand thus results in conflicts. Unequal distribution ofproperty is also observed in this economy.

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    Merits

    Economic Freedom: There is no interference in economic matters.Every individual is free to take the decisions regarding the economicactivities undertaken by them thus there is freedom in theeconomic field keeping in view the self interest of individuals.

    Efficient Use of Resources: In a competitive market only thoseproducers can survive who can produce maximum with minimumcost and uses resources efficiently and economically. Thus thewastage of resources will be reduced and all this will give rise tobetter and efficient and maximum utilization of resources.

    Flexibility and automatic equilibrium: This system can be changed

    according to the needs and circumstances of the economy. It hasinbuilt flexibility. An automatic equilibrium is brought about by theoperation of price mechanism and market forces.

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    Encourages development: It increases savings,investment and capital formation in the economy,encourages entrepreneurship and individualinitiative and provides ample opportunities for

    technical progress. Diversification and increase in production: Every

    producer tries to earn as much as possible byincreasing his output. To earn maximum profit,

    every producer tries to attract consumers bybringing newer commodities in the market.

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    Demerits of capitalism

    Erosion of human values: in a capitalisticeconomy wealth enjoys the prestige in thesociety. Hence, to acquire more wealth, peoplegenerally disregard the human and moral values.

    Economic and social inequalities: In capitalisticsystem owners of the means of productions canearn more as compared to those who do notpossess much means of productions. This brings

    wide inequalities in the distribution of incomeand wealth. Law of inheritance makesinequalities permanent.

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    Too much wastage : There is a large scalewastage of resources due to unnecessarycompetition. A commodity is produced by anumber of producers and every one tries to sellas much as possible to earn the maximumcreating the problem of over-production.

    Problem of unemployment: This system creates

    problem of unemployment also. Since laborersare not paid fully their purchasing powerbecomes low.

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    SOCIALIST ECONOMY

    Socialism is the philosophy of the Government

    and economic system based on the belief in

    the worth of each individual. The basic

    philosophy of socialism is the provision ofcertain goods and services to all individuals in

    the nation.

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    Socialist economic system

    A socialist economy is one in which materialinstruments of production are owned by a publicauthority and operated for the direct service of

    those whom the authority represents.Prof.Pigou

    The only essential feature of socialism is thatinstruments of production are not owned byindividuals and that they should not be organized

    for the purpose of obtaining private profit. -Mr.& Mrs. Webb

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    Feature of socialism

    Collective ownership Collective ownership of all means of production except small farms, workshops

    and trading firms which may remain in private hands. Profit motive and selfinterest are not driving force. Use of resources for socio-economic objectives

    Central authority

    -Central authority to set and accomplish socio-economic goals- so called CentralPlanned Economy. Major economic decision such as what to produce, when toproduce, how to produce etc. are taken by the central authority

    Limited range of choice

    -Consumers may not enjoy wide range of choice due to selective production.However, with that range an individual is free to choose what he likes most.

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    Equality of income-No competitive market- no interference of private capital

    -Govt. will be aware of distribution of income- so, will planas per requirement- Balanced growth

    Limited economic freedom

    -Public ownership and central economic planning

    - Freedom of consumption is limited - Freedom ofoccupation is also limited

    -Consumers may not enjoy a variety of choice due toselective production

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    Absence of profit motive

    -Resources are owned by the state and areutilized for the benefit of the society as a whole

    Relatively equal distribution of income

    Perfect equality of income is not possible.Private property & profit motive is absent. So, thevery important source of inequality is removed.

    Wage differences are reduced. Equal opportunitiesof education, training and skill formation are madeavailable to individual

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    Merits

    Reduction in economic and social inequalities:All people get income for their labour as salary orwages. Wage structure is designed so that thereare no wide inequalities in it.

    Rapid economic development: It is said throughplanning system socialistic economy providesbetter opportunity for rapid development.

    Proper allocation of resources: The resources in

    different lines of production are allocated by thecentral authority keeping in view public interestsare the best possible use of all.

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    End of exploitation: Since socialistic economy

    does not have social difference so there is no

    exploitation. Everybody gets his due share in

    the national product.

    End of unemployment: Generally socialist

    economy provides the job to each and every

    members of the society.

    D i f S i li

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    Demerits of Socialism

    Centralization of economic and political powersin state: In socialistic economy state becomespowerful. It commands not only potential powerbut also the economic power.

    Lack of incentives and initiatives: One of themost important drawback of the socialisticsystem is the lack of incentives and initiatives in

    the country. Since, there is no right to haveproperty, people are not motivated for work andsavings.

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    Reduction of efficiency and production: In

    this system all economic affairs are managed

    by government servants . These salaried

    persons are more interested in their salariesthan the productivity.

    MIXED ECONOMY

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    MIXED ECONOMY

    Mixed economy is the outcome of thecompromise between two oppositeideologies- Capitalism & Socialism i.e.

    Individualism & Collectivism It tries to achieve the advantages of both the

    systems and to remove the defects of both thesystems.

    It allows both private sectors and publicsectors.

    FEATURES

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    FEATURES

    Co-Existence of Both- Private and Public Enterprise

    A) Private Sector:

    Production and distribution are managed and controlled by private individuals andgroups.

    Base is self- interest and profit motive

    System of private property exists

    Govt. control is direct or indirect by policy instruments

    B) Public Sector:

    Industries are not primarily profit oriented- but set up by the state for the welfareof the society/community.

    Heavy and basic industries- Ex: Iron-steel, production of defense equipments

    (atomic energy), transport and communication

    C) Combined Sector:

    Both the govt. and private enterprise join hands to produce a commodity.

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    Planned Economy:

    Govt. has a clear and definite economic plan

    to bring co-operation and co-ordination

    between the two sectors.

    Public sector- direct planning; Private sector-

    regulations and guidance through indirect

    measures like economic policy, EXIM policy,

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    Price system:

    Public sector- economic decision relating toinvestment, production, employment, etc. aretaken by planning commission.

    Private sector- by entrepreneurs with theobjective of profit but price system is not allowedto function freely.

    The govt. regulates price system to protect social

    interest. Ex: In India, price of cement, iron-steel,scooters, papers, agricultural products, sugar,wheat, kerosene-are controlled.

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    Balanced regional development:

    Public sector enterprises may be located in

    the backward regions so as to ensure its

    development.

    Merits of Mixed Economy

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    Merits of Mixed Economy

    It is a system in which both the system work together.

    A rapid economic growth takes placed in this system ofeconomy.

    Both private sector and public sector work for thewelfare of people.

    In such a system both the sectors have a goodcompetition in the process of increasing production.

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    Demerits of Mixed Economy

    It is always short-lived because the process of socializationis limited.

    There is lack of freedom to private sector. Government triesto put control over the functioning of free enterprise bymeans of license and other checks.

    The compromise of the system theoretically seems correctbut in practice it does not prove to be a healthy one.

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    Profession

    Profession is the systematized body of knowledge,which is studied in specialized institutions andpracticed in the real situation of life.- L stanton

    Profession is an occupation for which specializedknowledge, skills and training are required and the useof these skills is not meant for self-satisfaction butthese are used for larger interest of the society and the

    success of these skills is measured not in terms ofmoney alone.

    -L.M.Prasad

    Characteristics of Profession

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    Characteristics of Profession

    Service to Society:

    Identified Area:

    Association:

    Own applied knowledge:

    Social Accountability:

    Special Training:

    Public Trust:

    Life time Commitment:

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    EMPLOYMENT

    When the person works under an agreement

    or rules or contract of service and performs

    the work allotted to him by the employer

    (who gives job or service) and will be paid forit at regular interval is called employment.

    Characteristics of Employment

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    Characteristics of Employment

    Work:

    Qualification:

    Investment:

    Risk Factor:

    Return:

    Responsibility:

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    VOCATION

    Thus since than vocation means the use of

    inbuilt talent and skill used by the individuals

    for earning their livelihood is the last

    extension to the meaning of vocation.