BO/U1 Topic 1 Meaning and definition of business essentials
Business denotes busi-ness, that is the state of being busy – any activity in which one keeps himself busy. But the economic term of business refers to work, efforts, and acts of people or human busy in connection with the production of wealth. Business is the sum of total activities which are connected with the production or purchase and sale of goods and services with the main objective to earn profit.
According to Urwick and Hunt, “Business is any enterprise which makes, distributes or provides any service which other members of the community need and are willing to pay for it”.
Nature of Business
Man always wants and wants more. Infact he is a wanting being having insatiable innumerous wants. For satisfying his wants he works and works harder so as to make use of scarce resources available. Making use of scarce resources to the best advantage for the satisfaction of human wants is termed as economic activity. Economic activities, thus deal with the activities of living and making a living. For this purpose everyone of use follow an occupation according to our inkling, capacity, knowledge and training. One therefore, may either follow a profession (rendering specialized expert and personal service), or seek employment (under taking to work for others according to terms and conditions set for the purpose), or set up a business engaging in production of wealth.
Business is an economic activity having some feature and characteristics. Following are some important characteristics of Business
- Production or Acquisition of Goods
Every business whether small or large scale deals with goods and services. The goods may produce, manufacture or procure. Business is either to produce, manufacture or procure and then to supply for a price to those who are in need of the goods so produced, manufactured or procured.
- Profit – The basic motive of business
Profit is an essential part of business, infact profit is the motivation factor behind a business one carries on. Profit is stimulus and a guarantee to continue the business. Profit is the factor which ensures the survival of the business. Profit is the reward of all those individuals engaged in a particular business. The efficiency of a businessman depends on the profit which he is able to make during the business operation. He renders singular service to the continuity by satisfying the needs of the people. He expected a reward for such a service rendered and if he gets the double and redoubles his efforts and plans his future in such manner so as to render best possible service to the community.
- Risk – Uncertainty of future
Every business involves risk and uncertainty while carrying on its operations. Future is uncertain and business activity focuses on future. This focus on future and uncertainty of future naturally entails risk. It is risk which every businessman takes when he embarks upon a business activity.
- Dealing in Goods and Services
Business refers to goods and services dealt with a view to supply to those who need them and are ready to make payment for the same. Dealing in goods and services is business. The goods may either be consumers’ goods (Cloth, books, electronics appliances, medicine etc) or Producer goods (machinery, tools etc) or services (courier or transport services etc).
- Regular Dealings
One of important characteristics of business is regularity and recurrences. Business is not a single operation. A single operation would never constitute a business. It should a regular and continuous entity. Recurrence of dealing is a must to constitute a business. On selling furniture of his household with a view to replace it with new one is not business. But if the same person procures a variety of furniture, keeps the stock and sells them to the consumers, he carries on a business dealing in furniture.