Question

Explain the features of the business.

Answer 1

Features of the business :-

1. Creation of utilities:

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 value satisfaction to customers at a profit".

2. Dealings in goods and services:

Every business enterprise produces and/or buys goods and services for selling them to others. Goods may be consumer goods or producer goods.

3. Continuity in dealings:

Dealings in goods and services become business only if undertaken on a regular basis. According to Peterson and Plowman, "a single isolated transaction of purchase and sale will not constitute business recurring or repeated transaction of purchase and sale alone mean business.

4. Sale, transfer or exchange:

All business activities involve transfer or exchange of goods and services for some consideration. The consideration called price is usually expressed in terms of money. Business delivers goods and services to those who need them and are able and willing to pay for them.

5. Profit motive:

The primary aim of business is to earn profits. Profits are essential for the survival as well as growth of business. Profits must, however, be earned through legal and fair means. Business should never exploit society to make money.

6. Element of risk:

Profit is the reward for assuming risk. Risk implies the uncertainty of profit or the possibility of loss. Risk is a part and parcel of business. Business enterprises function in uncertain and uncontrollable environment.


7. Economic activity:

Only economic activities are included in business. Non-eco­nomic activities do not form a part of business.

8. Art as well as science:

Business is an art because it requires personal skills and experi­ence. It is also a science because it is based on certain principles and laws.


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Answer 2

Answer:

By investing capital, taking risk, those economic activities which are recognized by the country and society, and are done according to the rules and laws, are called business.

What are the features of the business

1. Transaction of goods and services - In business, people are involved in the production and distribution of goods or services. These goods can be consumer goods like bread, butter, milk, tea etc. and also capital goods like plant, machinery, equipment etc. Services can be in the form of transportation, banking, insurance, advertisement etc.

2. Sale or exchange of goods and services - If a person buys or produces any article for his own use or for giving a gift to any person. But when he produces or buys any article to sell to another person, he is engaged in business. Thus, in business, the exchange of money or goods (in barter system) is necessary in the production or purchase of goods or services between the buyer and the seller. Any activity without sale or exchange cannot be termed as business.

3. Regular exchange of goods or services - It is necessary to have regular production or buying and selling of goods. Generally, a stand-alone transaction cannot be termed as a business. For example, if Raju sells his used car to Hari then it will not be called a business, unless he is regularly engaged in buying and selling of cars

4. Requirement of Investment - Every business requires some investment in the form of land, labor or capital. These resources are used for the production, distribution and consumption of a wide variety of goods or services. 5. Purpose of making profit – The primary objective of business activities is to earn income by way of profit. Making a profit is also essential for the growth and expansion of the business.

6. Income uncertainty and risk – The objective of every business is to make profit. When a businessman invests various resources, he wants to get some income in return. But despite his best efforts, the income uncertainty in the business remains. Sometimes he gains a lot, and sometimes there comes a time when he has to bear huge losses. This happens because the future is uncertain. The businessman has no control over the factors affecting the income.

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