What is a Business and Characteristics of Business and Component of Business
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Answer:
Features of business
Everything that surrounds us is a chain of business, from a laptop to the chair we sit. With every change in technology, human being demand also changes. Giving business persons to grow their business or start a new venture. Let’s study in details about the business and its characteristics.
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.
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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.
Answer:
business-jargons-site-logoBusiness JargonsA Business Encyclopedia
Business
Definition: Business is defined as an organised economic activity, wherein the exchange of goods and services takes place, for adequate consideration. It is nothing but a method of making money, from commercial transactions. It includes all those activities whose sole aim is to make available the desired goods and services to the society, in an effective manner.
Economic Activity: Business is an economic activity, as it is conducted with the primary objective of earning money, i.e. for an economic motive.
Production/purchase of goods and services: Goods and services are produced or procured by business entities, so as to add value and sell them to the consumer. Goods are either manufactured by the company or procured from the supplier, with the aim of selling it further to the consumer, for profit.
Selling of goods and services: Business must involve the transfer of goods to the customer for value, through selling, meaning that if the goods are acquired for personal consumption, then the transaction will not amount to business activity.
Continuity in dealings: Every business requires regularity in transactions, i.e. an isolated transaction of exchange of goods or services will not be considered as business. So, to constitute business, the dealings must be carried out on a regular basis.
Profit earning: The basic purpose of business is to make the profit from its activities. It is the spine of business, which keeps the business going, in the long term.
Element of risk: Risk is the key element of every business, concerned with exposure to loss. Efforts are made to forecast future events and plan the business strategies accordingly. However, the factors that affect business are uncertain and so does the business opportunities, which can be a shift in demand, floods, fall in prices, strikes, lockout, money market fluctuation, etc.
Uncertain return: In business, the return is never predictable and guaranteed, i.e. the amount of money which the business is going to reap is not certain. It may be possible that the business earns a huge profit or suffer heavy losses.
Legal and Lawful: No matter, in which type of business the company is engaged, it should be legal in the eyes of the law, or else it will not be considered as business.
Consumer satisfaction: The aim of business is to supply goods and services to consumers, so as to satisfy their wants, as when the consumer (final user) is satisfied, he/she will purchase the goods or services. But, if they are not, there are chances that they will look for substitutes.
The consumer is regarded as the king, and so all the activities of the business are aligned towards the satisfaction of consumers. This can be done by making available quality-riched goods easily available to them, at reasonable prices.
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