Business includes all those economic activities which are concerned with production and exchange of goods and services with the motive of earning profits. Business is an economic activities because it is undertaken for earning money and producing wealth.
2.1 MEANING AND DEFINITION OF BUSINESS
Business is an economic activity. It involves sale, transfer or exchange of goods and services with the purpose of earning money. Goods and services are provided to satisfy human wants rather than for personal use. Business is an occupation and it comprises a wide range of activities. It is the sum total of all those activities by which desirable things are extracted from nature, transformed and processed by man and machine, carried from place to place, stored through times and placed in the hands of those who are wiling to pay for them.
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Business is different from other economic activities which are professions and employment. An profession is a occupation requiring formal education and training. It involves rendering personal and expert services in exchange of some fee. Chartered accountants, doctors, architects, lawyers carry on professions. Employment is an occupation where in a person works under an employer to earn wages or salary.
Some popular definitions of business are given below :
1. L.H. HANEY : “ Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods. Business consists of those processes by which desirable things are extracted from earth, fashioned and transformed by man and machine, carried from place to place and stored through time an placed in the hands of those who are ready to pay for them.”
2. B.O. Wheeler : “Business is an institution organized and and operated to provide goods and services to society under the incentive of private gain.”
3. L.R. Dick see : “Business is a form of activity pursued primarily with the object of earning profits for the benefit of those on whose behalf the activity I conducted.”
4. Ur wick and Hunt : “Business is any enterprise which makes, distributes or provides any article or services which the other members of the community need and are able and willing to pay for.”
5. R.N. Ownes : “Business is any enterprise engaged in the production and distribution of goods for sale in market or rendering services for a price.”
6. A.Keith and Carlo: “Business is a sum of all activities involved in production and distribution of goods and services for private profits.”
7. James Stephenson : “Economic activities performed for earning profits are termed as ‘Business’.”
8. W.R. Spriegal : “All the activities involved in the production and sale of goods or services may be classified as business activities.”
9. Koontz and O’Donnell : “Business is any activity concerned with the production or purchase of scarce goods and services.”
10. Peterson and Plowman : “Business may be defined as an activity in which different persons exchange, something of value,whether goods or services for mutual gain or profit.”
Thus, business may be defined as an economic or commercial activity concerned with production and distribution of goods and services with the purpose of earning profits. A person engaged in business is known as businessman. The unit formed for the purpose of carrying on some business Is called as business firm or enterprise.
2.1 CHARACTERISTICS (NATURE, FEATURES) OF BUSINESS ACTIVITIES
The salient features of business activities are given below :
1) Sale, Transfer or Exchange : All business activities involve sale or exchange of goods and services for some consideration. Buying and selling of goods and services for a price are the essence of business.If there is no sale, transfer or exchange for price, it will not be a business activity. For instance, cooking food for personal consumption does not constitute business. But cooking food and selling it to others for a price becomes business.
2) Dealings in good and services : Every business enterprise produces or buys goods and services for selling them to others.Goods may be consumer goods or producer goods. Consumer goods are meant for direct use by the ultimate consumers, e.g. bread, cloth, shoes, etc.Producer goods are goods used for the production of consumer goods,e.g. materials, machinery, etc. Services are intangibles such as electricity, insurance, banking, etc.
3) Regular Dealings : Business involves a series of dealings. A single transaction cannot be called a business. Re curing purchase and sale is the hallmark of business. For instance, if a person sells his old scooter, it is not business. But if he sells scooters on a regular basis, it will become business.
4) Profit Motive : A business is not charity. The primary objective of business is to earn money and acquire wealth. A business that does not earn profits cannot survive for long. Profits are also essential for the growth and expansion of business. Business must, however, earn profits by serving the society.
5) Creation of Utilities : A business makes goods more useful to satisfy human wants. It adds time, place, form and possession utilities to various types of goods. In the words of Roger, “A business exists to create and deliver satisfaction to customers at a profit.”
6) Economic Activity : Business is primarily an economic activity as it involves production and distribution of goods and services for the satisfaction of human wants. However, business I a part of society and it reflects the aspirations, values and beliefs of people. Therefore, business may be described as a socio-economic function.
7) Risk : Risk is an essential part of business. It implies the uncertainty of profits or the possibility of loss. In business, risk arises due to several factors, (e.g., changes in demand, theft, fire natural calamities, bad debts, etc., ) some of these risks can be insured while other risks(e.g., due to change in demand, change in fashion, etc) cannot be insured.
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