Concept of Business
Business- Meaning, Definitions and Features
The term ‘business’ literally implies ‘busyness’ or the state of being busy. It denotes economic activities primarily pursued with the objective of earning profits. It is concerned with earning money and acquiring wealth. Wealth is acquired through the production and exchange of goods and services on a regular basis and carries an element of uncertainty and risk. But profit is not the sole criterial of business. The modern concept of business is founded on the goal of “profits through service”.
According to B.O. Wheeler
Business is an institution organized and operated to provide goods and services to society under the incentive of private gain
According to L.R. Dicksee
Business is a form of activity pursued primarily with the object of earning profit for the benefit of those on whose behalf the activity is conducted.
According to Ownes
Business means an enterprise engaged in the production and distribution of goods for sale in the market or the rendering of services for a price.
According to L.H. Haney
Business may be defined as human activity directed towards producing or acquiring wealth through buying and selling of goods.
According to Peterson and Flowman
Business is an activity in which different persons exchange something of value, whether goods or services for mutual gain or loss.
According to Keith and Guletini
A business is nothing more than a person or group of persons properly organized to produce or distribute goods or services.
According to Urwisk and Hunt
Business is an enterprise which makes, distributes or renders service which other members of the community need.
According to F.C. Hooper
Business means the whole complex field of commerce and industry, the basic industries, processing, manufacturing industries and the network of ancillary services, distribution, banking, insurance, transport and so on, which serve and inter-penetrate the world of business a s a whole.
Characteristics/Features of Business
1. Deals in Goods or Services
Every business comes into existence to provide goods or services to society. The goods and services may be procured by an enterprise through production and/or purchase. The goods may be consumer’s goods such as bread, rice, cloth, shoes etc. or producer’s goods like tools, components, machinery, raw materials etc. the consumer’s goods are meant for direct consumption in the original or processed form. producer’s goods or capital goods are used for producing other goods. Services are intangible and invisible like electricity, gas, insurance, transportation, banking etc.
2. Involves production or purchase and transfer or exchange or sale
Another basic characteristic of business activity is that it is concerned, directly or indirectly, with the production and/or exchange of goods and services for value i.e. price. Thus, the production or exchange of goods and services for personal consumption or presenting as gifts will not be considered a business because it does not involve production and/or exchange for price. Thus when a farmer works on his field to produce wheat for his use, he is not engaged in business. In contrast, his agricultural activities a would constitute business if he produced wheat to sell in the market.
3. Entrepreneurial Need
For starting and running a business, there must be someone who takes the initiative and to bear the risk. He is called entrepreneur. The entrepreneur is a key figure in every type of business.
4. Involves continuity and regularity
A single transaction of production and/or exchange cannot be called business. To constitute business, there must be continuity, or at least regularity in transactions. For instance, if a person who has just returned form Singapore sells a few electronic items at a profit, this cannot be called business. But if he does it regularly, his activities will constitute a business.
5. Based on profit motive
The primary objective/motive of every kind of business is to earn private gain, i.e. profits. The incentive of earning profit keeps a person in business always busy and this is also necessary for the business.
6. Involves element of risk and uncertainty
It is said that business is a game of risk which everybody cannot play. Every type of business involves the element of risk and uncertainty over which one has little or no control, such as natural calamities, changes in the consumer tastes, habits and fashion etc. changes in market competition, changes in social-economic and political conditions, shortage of raw materials, power, fuel changes in technology etc. Hence every businessman tries to anticipate the future risk and uncertainties and plans his business accordingly.
7. Legal framework
All human economic activities conducted under the shadow of business should be legal and strictly in accordance with the rules and regulations of the concerned country where it is carried on.
8. Mutual Benefits and Satisfaction
According to the modern approach, business is not done simply for earning profit by the businessman but also for mutual benefit of both businessman and customer.
9. Consumer satisfaction and welfare
An important feature of a business is that it seeks to satisfy consumer’s needs. It’s very existence and growth is based consumer’s satisfaction. The statements like ‘Customer is the king’ or ‘Customer is always right’ fully explain the consumer orientation of today’s business.
10. Social activity
The business does not satisfy the needs of any individual only but should aim at servicing the society at large. It is a socio-economic institution which has to serve goods to public and protect social interest. Since business is done in the society, with the society and for the society, it must satisfy social needs.
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