Essay Type Questions: (7 to 8 Marks)
Discuss the meaning and features of business.
Answers
Answer:
Business Definition
Business is an economic activity that involves the exchange, purchase, sale or production of goods and services with a motive to earn profits and satisfy the needs of customers. Businesses can be both profit or non-profit organizations that function to gain profits or achieve a social cause respectively.
Quick link: Types of Entrepreneurship
Characteristics of Business
Following are the characteristics or features of business
(1) An Economic Activity
A business is an economic activity which includes the purchase & sale of goods or rendering of services to earn money.
It is not concerned with the achievement of social and emotional objectives.
Example: Wholesaler sell goods to the retailers and retailers sell goods to the customers.
(2)Manufacturing or Procurement of Services and Goods
Before offering goods to the consumer for consumption it should be manufactured or procured by businesses.
Business enterprise converts the raw material into finished goods.
Organisations also procure finished goods& services from the producers to meet the needs of the customers in the market.
Goods can be a Consumer good like sugar, pen, ghee, etc. capital goods include machinery, furniture, services like transportation, banking, etc.
Example: Individual retailer buys the toffees from wholesalers in a specific quantity and sells it to the ultimate consumer.
(3)Exchange or Sale of Goods and Services for the Satisfaction of Human Needs
Every business activity includes an exchange or transfer of services and goods to earn value.
Producing goods for the goal of personal consumption is not included in business activity.
So, there should be the process of sale or exchange of goods or services exits among the seller and the buyer.
Example: A lady who bakes pastries and cakes at home and sells it to the pastry shop is a business activity.
(4) Dealings With Goods and Services on a Daily Basis
Every business, rendering either services or goods should deal on a daily basis.
A one-time sale is not considered a business activity.
Example: If a person sells his old car through OLX even at a profit will not be considered as a business activity. But if he is engaged in regularly trading of cars at his showroom will be considered as business activity.
(5) Profit Earning
No business can last for long, without making a profit.
The purpose to conduct the business is to earn profits and minimise the cost.
Example: A business house tries to reduce the cost of production and the cost of raw material to earn high profits.
(6) Uncertainty of Return
The possibility of earning profit or loss is very uncertain and can’t be anticipated by the entrepreneur.
Hence, no business can totally do away with risks.