Introduction To Business | Meaning And Chracterstics


Meaning Of Business

In the restricted sense of term,business will be treated as the purchase and sale of things.But in the broader sense of the term,business is the sum total of all activities which start right from the production of goods and services down to the task of taking them to the consumers.Here services mean those activities which are connected with the carrying of goods from the place of production an taking them to place of consumption.For example they include transport and communication,insurance,storage,banking etc.

"All of the activities included in the production and sale of goods or services may be classified as business activities."

Chracterstics Of Business 

(1) An Economic Activity:Business includes only economic activities.Economic activities mean the exchange of goods and services with the purpose of earning money.It is therefore,essential to see that any activity performed by an individual should be economic in nature in order to be called business.e.g.,the purchase sale of goods by shopkeeper.

(2) Exchange of Goods and Services:For business the exchange of goods or services is essential.It means that if an individual purchases a thing or a service for his personal use,this activity will not be called business.For example,if a shopkeeper purchases some material for his domestic use,this activity will not be called business.

(3) Regularity In Dealing:In reality business is that economic activity which is done regularly,i.e,purchase-sale should be regularly done.But if the activiy is not reg of place,form,time and ownershipular,it will not called business.

(4) Profit Motive:In order to consider any purchase-sale as business,it is essential that the purpose of the person concerned is to earn profit.But sometimes efforts can result in some loss.It cannot be said that in case of loss it will not considered business.The essential condition is that the code of conduct of the individual should be propelled by a desire to earn profit.

(5) Element Of Risk:Business should not be considered a bed of roses.There are throns at every step.It means that there are problems and can be the source of loss .A liitle mistake or helplessness in finding a solution to a problem can destroy the whole business.Hence,profit and loss go hand in hand in business like the ups and downs of life.

(6) Creation of Utility:In order to make things more useful for society their utility is enhanced by the efforts of the businessman.From the economic point of view utility is created in various way-like the utility of place,form,time and ownership.Utility of place is created by carrying goods from the place of production to the place of consumption,utility of time is created by storing them in godowns,utility of form is created by changing their size or form and utility of ownership is created by purchase and sale of goods.

(7) Consumer Satisfaction:The aim of businessshould be earning profit but at the same time that the consumer's satisfaction is equally important.It is useless to think of profit without consumer's satisfaction.Even the expansion of business also depend on it.

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