What is business? Explain its features and objectives.
Activity performed by a person with a view to earn profit is called a business activity. A person has to produce and exchange goods and services with money in order to earn profit. For example—production of soaps, shampoos etc. Businessman is a person who performs the activities of the business. It can be started off by any individual or group of -individuals. Business firm is a firm set up for the purpose of carrying a business activity.
Features of Business:
There are five broad features of business:
Dealings in goods and services: Business deals with goods and services. Goods are divided into consumer goods like bread, butter, shoes, shirt etc. and producer goods like machinery, tools, equipment etc. It also deals with services like transport, banking, insurance etc.
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Production and exchange: Business is carried out only when goods and services are produced and exchanged for money. If goods are produced for self-consumption, such an activity is not treated as business. Buyer and seller are the two parties involved in a business activity.
Continuity and regularity in dealings: An activity is said to be a business when it maintains continuity and regularity. For example—if a persons sells his house, it is not said to be a business because continuity is not there in dealings. If he repeatedly buy houses and sell them to others, such activity is treated as business.
Profit motive: The main and the foremost motive of business is to earn profit. Profits are very important so as to enable the business to survive, grow, expand and get recognition.
Element of risk: Risk is said to be the possibility of incurring loss. Risks are of two types—one whose probability can be calculated and insured. E.g.—fire, theft etc. and the other whose probability cannot be calculated and which cannot be insured. e.g.—fall in demand, changing fashions etc.
Objectives of Business:
There are three different objectives of business—
- Earning of profits.
- Exploring new markets and creating more customers.
- Growth and expansion of business operations of the firm.
- Making innovations and improvements in goods and services.
- Supply of quality goods to the community.
- Providing goods at reasonable prices.
- Ensure fair returns to investors.
- Avoidance of profiteering and unfair practices.
- Providing more employment opportunities to the people in the country.
- Fair deal to employees in terms of wages and incentives.
- Provide job satisfaction.
- Providing better working conditions and environment to the employees.
- Provide the employees more growth opportunities.