Concept and Nature of Business
Old Concept of Business
In the old days the business was conceived merely in terms of business. The business of business is business. In those days the sole and exclusive objective of business was maximization of profit at any cost. Business began merely as an institution for the purpose of making money.
So long as a man made money and kept himself out of jail he was considered successful. He felt no particular obligation and acknowledged no responsibility to the community. As he was the owner of the business he thought he had the perfect right to do with it what he pleased.
New Concept of Business
The modern business enterprise is a social and economic institution. It does not live in a vacuum. Business by itself is not an end but a means to achieve an end — i.e., public welfare. Urwick has rightly pointed out that profit can no longer be the main objective of a business than eating is the main objective of living.
According to Peter Drucker the objective of business is to create a customer
The first business of every business is to secure customers. The customer is the master and to serve him well is the only purpose of business. Business cannot survive without customers. Modern business aims at profit through service.
NATURE OF BUSINESS
The nature of business refers to the overall activities of a company in their quest to create, market, and sell a service or a product. Essentially, the main focus for what a company does in a particular sector or industry is known as that company’s nature of business.
There are different ways to understand the nature of business. One could look at a company’s organizational setup, the goods, services the company offers, and even the structural formation that is used. This refers to the nature of how a business is set up, using the common business structures of a sole proprietorship, a partnership, a corporation, a limited liability company (LLC), or even a limited liability partnership (LLP).
(ii) Types of Businesses
The nature of business can be viewed in the types of businesses that operate within a particular sector. There are businesses in the government sector, the military sector, the international sector and the private sector, among others. Today’s technology explosion has probably added a few more business sectors, too. Here are some business examples of the private sector.
(iii) Service business
Public relations firms, law firms, medical practitioners, and software consultants are examples of service businesses. These businesses provide services like advising, counseling, and consulting.
(iv) Merchandising business
Merchandising businesses buy products at bulk, wholesale prices, and sell them to consumers at a higher markup. Many small businesses today are using online exchanges to buy goods from foreign countries, and sell them to American consumers at higher prices.
(v) Manufacturing business
Manufacturing companies buy raw commodity products like nuts, grain, wheat, and more to create new consumer-friendly products. Unlike merchandising companies, which offer products to consumers in the same format that they bought in bulk, manufacturers often create new products from the raw products used.