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Note on Business

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Introduction

Business is the most important activity for a human being. It is the means of livelihood. Almost all the people engage themselves in making, buying, selling and distributing goods and services for generating income. Almost every business involves risk and uncertainty. The successful business operation in the economy reflects the prosperity of the nation. It provides larger employment opportunities and utilizes available resources economically. It brings comfort and satisfaction for the people and ensures peace, prosperity and progress of the country. It helps in earning foreign currency and strength foreign relation. The development of the business increases the prestige of the people and nation.

Meaning and Definition

The term 'business' refers to all the economic activities carried by people and organizations for generating incomes. It is concerned with producing and distributing goods and services for earning a profit. It is a regular process of exchanging goods and services which involve risk and uncertainty. It is the mutual effort of industry and commerce. In fact, business is an economic activity aimed at fulfilling the needs and wants of customers through the supply of goods and services for their satisfaction.

The following are the main definitions of business:

"Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods."- L.H. Haney

"Business may be defined as an activity in which different persons exchange something of value, whether goods or services for mutual gain or profit." - Peterson and Plowman

"All the activities included in the production and sale of goods and services may be classified as a business activity." - W.F. Spiegel

Characteristics of Business

The following are the characteristics of Business:

  1. Economic activity
    Business is an economic activity which involves in exchange of goods and services for money. It does not include non- economic activities which are not directed for generating income.
  2. Production and distribution
    Business involves in production and exchange of goods and services. The production and distribution of goods and services are carried for the satisfaction of the customers.
  3. Profit motive
    Profit is the essence of a business. The activities relating to the production of goods and services are carried on with the aim of earning profit.
  4. Risk and Uncertainty
    Every business activity involves risk and uncertainty to some extent. The risk of loss is ever- present in every business activity and hence there is no certainty that the business activity always results into profit.
  5. Regular transactions
    Every business performs its transactions on a regular basis. It makes production and distribution of goods and services to the society continuously.

Importance of Business

Business equally contributes to the individuals, society, and nation as a whole. The business is important due to following reasons:

  1. Means of livelihood
    Business is the source of livelihood of many people. Every person lives in society by generating incomes through the production and distribution of goods and services.
  2. Increases the living standard
    Business increases earning of a person and a family. It increases purchasing power and develops life standard of a family, which makes life full of comfort and happiness.
  3. Utilizes resources
    Business utilizes natural, human, physical and financial resources for the production and distribution of goods and services. The proper utilization of these resources helps to generate large employment opportunities and uplift economic development of the country.
  4. Generates the employment opportunity
    Business is the means of overcoming unemployment problem of the society. Due to the establishment and operation of a number of industrial and trading units, a large number of people get employment opportunities.
  5. Enhances international relationship
    Business is the strong basis for maintaining and developing an international relationship. Business dealings between the people of two countries bring them into close contact which enhances the better relationship in government and public level.
  6. Earns foreign currency
    Business is the main source of earning foreign currencies. Manufacturing industry, tourism industry and other services business export their products and services to the foreign markets and earn foreign currencies for the nation.
  7. Maintains peace and prosperity
    Business increases earning the capacity of the people and makes their life comfort and happy. As a result, it maintains economic stability and prosperity in the society.

  • Business is an economic activity aimed at fulfilling the needs and wants of customers through the supply of goods and services for their satisfaction.
  • Business equally contributes to the individuals, society and nation as a whole.
  • Business increases earning capacity of the people and makes their life comfort and happy. As a result, it maintains economic stability and prosperity in the society.
  • Economic activity, production and distribution, risk and uncertainty, profit motive and regular transactions are the characteristics of the business.
  • On the basis of the nature of these business activities, the business can be classified into: industry, commerce and trade.
  • Industry is the activity relating to extraction, reproduction, manufacturing and construction of products. It can be classified into Primary industry(Extractive and Genetic industry) and Secondary Industry(Manufacturing and Constructive Industry)
.

Very Short Questions

Business equally contributes to the individuals, society and nation as a whole. The business is important due to following reasons:

  1. It is the means of livelihood:
    Business is the source of livelihood of many people. Every person lives in society by generating incomes through the production and distribution of goods and services.
  2. It increases the living standard:
    Business increases earning of a person and a family. It increases purchasing power and develops life standard of a family, which makes life full of comfort and happiness.
  3. It utilizes resources:
    Business utilizes natural, human, physical and financial resources for the production and distribution of goods and services. The proper utilization of these resources helps to generate large employment opportunities and uplift economic development of the country.
  4. It generates the employment opportunity:
    Business is the means of overcoming unemployment problem of the society. Due to the establishment and operation of a number of industrial and trading units, a large number of people get employment opportunities.
  5. It enhances international relationship:
    Business is the strong basis for maintain and developing an international relationship. Business dealings between the people of two countries bring them into close contact which enhances the better relationship in government and public level.
  6. It earns foreign currency:
    Business is a main source of earning foreign currencies. Manufacturing industry, tourism industry and other services business export their products and services to the foreign markets and earn foreign currencies for the nation.
  7. It maintains peace and prosperity:
    Business increases earning the capacity of the people and makes their life comfort and happy. As a result, it maintains economic stability and prosperity in the society.

The term 'business' refers to all the economic activities carried by people and organizations for generating incomes. It is concerned with producing and distributing goods and services for earning profit. It is a regular process of exchanging goods and services which involve risk and uncertainty. It is the mutual effort of industry and commerce. In fact, business is an economic activity aimed at fulfilling the needs and wants of customers through the supply of goods and services for their satisfaction.

According to L.H. Haney,"Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods."

According toPeterson and Plowman,"Business may be defined as an activity in which different persons exchange something of value, whether goods or services for mutual gain or profit."

From the above definitions, it is clear that a business is an economic activity of individuals and organisations aimed at earinig profit through the production and distribution of goods and services.

The following are the characteristics of business:

  1. Economic activity
    Business is an economic activity which involves in exchange of goods and services for money. It does not include non- economic activities which are not directed for generating income.

  2. Production and distribution
    Business involves in production and exchange of goods and services. The production and distribution of goods and services are carried for the satisfaction of the customers.

  3. Profit motive
    Profit is the essence of a business. The activities relating to the production of goods and services are carried on with the aim of earning profit.

  4. Risk and Uncertainty
    Every business activity involves risk and uncertainty to some extent. The risk of loss is ever- present in every business activity and hence there is no certainty that the business activity always results into profit.

  5. Regular transactions
    Every business performs its transactions on a regular basis. It makes production and distribution of goods and services to the society continuously.

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  • "Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods." This definition is given by ______.

    W.F. Spriegal


    John Nash


    L.H. Haney


    Peterson and Plowman


  • The act of buying, selling and distributing of goods and services is called ______.

    trade


    commerce


    business


    industry


  • The act of buying goods from the wholesaler in a large quantity and selling them in a smaller quantity of final consumers for their personal use is called ______.

    import trade


    foreign trade


    retail trade


    export trade


  • The act of buying goods in a larger quantity and selling them in a smaller quantity to a number of retailers is called ______.

    import trade


    export trade


    foreign trade


    wholesale trade


  • Genetic industry is concerned with ______.

    conducting a construction work at a particular site


    reproducing or multiplication of different species of plants and animals


    taking out products from beneath the surface of the earth, soil, water and air


    converting raw materials into finished goods and constructing different assets


  • The act of buying goods from foreign countries and selling them to another foreign country is called ______.

    import trade


    foreign trade


    export trade


    entrepot trade


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