As per James Stephenson, “Economic activities performed for earning profits are termed as Business”. Also, business does not include goods used for personal consumption by a businessman. An activity can be considered as business, if it involves production, exchanged and distribution of goods and services with some economic objectives. The hope of making a good profit attracts men of ability to business. Business is a human activity directed towards the acquisition of wealth. Business in today’s competitive environment can survive and succeed only when it has goodwill within the eyes of its stockholders i.e., the owners, the public, the government, the customers and creditors. Wide Scope – A wide variety of activities come within the scope of Business. It is through risk-taking that any businessman earns his profit. In order to assure a regular sale and supply of goods, they must be either manufactured or procured. Production, if done with a profit and economic motive is business. (c) Requires use of scarce economic resources like land, labour, capital and machinery. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. Profit motive is not only the prime objective but also an essential condition for survival of a business enterprise. Risk and uncertainty are a part of any business activity. Sale, Transfer or Exchange 2. The primary objective of business is to earn money and acquire wealth. Systems are designed and implemented so that there is co-ordination between the various activities. Though profit making is an important objective of any business, it should not be the sole objective of business. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. 9. to earn profit. This makes business a social institution. It does not live in a vacuum. There is even a possibility of losses being incurred even after the best efforts. Therefore, business is essentially an economic activity as it is undertaken to make profits and not merely to satisfy one’s emotion needs like that of charity sympathy etc. Though business aims at profits, losses are quite possible and common. The basic objective of undertaking a business is to earn profit. machines, tools etc.) The element of risk is present in almost all economic activities but it is more significant in business. Goods are graded, stored, and put in warehouse or cold storage plant, to save them from getting perished, to make things available for consumption throughout the year. To be a good businessman, one needs to have good business qualities and skills. Thus, even if one product does not yield sufficient profits, the company can recover the reduction in profit by selling other products. Continuity of Operations – Business pre supposes continuity of operations. Dicksee defines Business as “a form of activity pursued primarily with the object of earning profits for the benefit of those on whose behalf the activity is conducted. Every business is carried on with the purpose of earning money and acquiring wealth. (e) Profits as Reward for Service Rendered: Business is an activity by which men make their living, or earn profit. (g) Fire, theft or natural causes (these can be shifted to insurers). Whereas, if a dealer of second-hand cars is involved in sale and purchase of used cars in order to earn profits, it may be termed as business. Any organisation in which marketing is either absent or incidental is not a business”. The second kind of risk cannot be forecasted and insured, e.g., loss due to fall in demand, change of fashion, etc. “Any organisation that fulfils itself through marketing a product or service is a business. It arises out of the uncertainty that goes with the profit expected from a business activity. The ability of a business to react as per the changing situation is known as adaptability. A single transaction involving buying and selling does not become business. In order to understand the concept of business completely, it is important to develop an understanding of the important characteristics of business which are outlined below: Every business activity is carried out with the aim to earn profit. etc. Factors like consumers’ tastes and preferences, government policies, technology, etc., change very rapidly and hence, the business has to change its policies to suit the changing environment. However, exchange does not include goods donated or gifted to someone. For example, a teacher when teaches in a coaching institute on payment, it is business. Every business transaction has minimum two parties that a buyer and a seller. The features of business are as discussed below: Every business transaction is concerned with either goods and/or services. Risk or uncertainty arises because the future is unknown and business has practically no control over several factors affecting profits. It is part of society and must not ignore social good. Goods and services are produced to fulfil the requirements of customers. “A business exists to create and deliver value satisfaction to customers at a profit.” —ROGER. Usually no business is set up for liquidation after a single transaction. Economic Activity – Business is an economic activity. (i) Economic Activity Business is considered to be an economic activity because it is undertaken with the aim of earning money or livelihood and not because of any sentimental reason like love, affection or sympathy. Share Your PPT File, Characteristics of Business – 10 Characteristics: Dealings in Goods and Services, Profit Motive, Risk, Creation of Utilities, Economic Activity, Social Institution and a Few Others, Business involves a series of dealings. The goods may be consumers’ goods such as bread, rice, cloth, shoes, etc. But opting out of some of these cookies may have an effect on your browsing experience. Although he has made profit out of the activity, it will still not constitute a business activity for the very reason that Vivan does not engage in buying and selling of furniture on regular basis. Hence, in addition to the basic features mentioned above, modern businesses have some additional features too. Profit Motive and a Few Others. Connected with Production 17. Through such regulations, it regulates the working of the business units in national and international markets to restrict unfair and unethical trade practices. Therefore, one single transaction of sale or purchase does not constitute business. The business enterprises carry on with the inten­tion of earning a profit. It includes transactions in goods as well as services. There is greater recognition of social responsibility of business. Earning profit is the prime motive of a business activity. This is not to undermine or belittle the importance of the element of service in business activity. Share Your Word File The goods can be of two kinds – (a) Consumer goods (e.g. Growth and Expansion: Business is started by an entrepreneur with an intention of rapid growth and expansion. Similarly, cooking food at home for personal consumption is not a business activity but cooking food in a restaurant for sale is a business activity. In the light of the features of business activity discussed here, business may be defined as the organized production or sale of goods undertaken with the object of earning profits through the satisfaction of human needs and wants. Every business invests capital in its activities with the objective of earning profit. 4. In a layman’s language the term business refers to “any activity or enterprise entered into with the aim of earning profit.”. The industry may be primary or secondary. Goods may be divided into two categories: Goods which are used by final consumer for consumption are called consumer goods e.g. Many prominent personalities have defined business in different ways. Repetitive and Recurring Transactions: To quote Peterson and Plowman, “A single transaction of sale and purchase will not constitute business. It covers the whole complex field of commerce and industry, the basic industries and the network of ancillary services, distribution, banking, insurance, transport and so on, which serve and interpenetrate the world of business as a whole”.

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