MDU BBA NOTES
Concepts of Business And Nature of Business
Concepts Of Business
- Definition 1:- A business is any enterprise that makes, distributes, or provides any service that other members of the community need and are willing to pay for it.
- Definition 2:- Business denotes Busi-ness, which is the state of being busy – any activity in which one keeps himself busy. But the economic term of business refers to work, efforts, and acts of people or humans busy in connection with the production of wealth. Business is the sum of total activities which are connected with the production or purchase and sale of goods and services with the primary objective to earn profit.
- Definition 3:- The business may be defined as an economic activity involving the production and sale of goods and services undertaken with the motive of earning profit by satisfying human needs in society.
- Definition 4:- In other words, the term business is derived from the word ‘busy’. This business means being busy. However, in a specific sense, business refers to an occupation in which people regularly engage in activities related to the purchase, production, and /or sale of goods and services with a view to earning profits.
- Definition 5:- A business may be defined as an activity involving regular production or purchase of goods and services for sale, transfer, and exchange with the object of earning profit.
Characteristics of Business
1. Production or Acquisition of Goods And Services
Every business whether small or large scale deals with goods and services. The goods may produce, manufacture or procure. Business is either to produce, manufacture or procure and then to supply for a price to those who are in need of the goods so produced, manufactured, or procured.
2. Profit – The basic motive of business
Profit is an essential part of business; in fact, profit is the motivation factor behind a business one carries on. Profit is a stimulus and a guarantee to continue the business. Profit is the factor that ensures the survival of the business. Profit is the reward of all those individuals engaged in a particular business. The efficiency of a businessman depends on the profit which he is able to make during the business operation.
3. Risk – Uncertainty of Future
Every business involves risk and uncertainty while carrying on its operations. The future is uncertain and business activity focuses on the future. This focus on the future and uncertainty of the future naturally entails risk. It is a risk that every businessman takes when he embarks upon a business activity.
4. Dealing in Goods and Services
Business refers to goods and services dealt with with a view to supplying to those who need them and are ready to make payment for the same. Dealing with goods and services is business. The goods may either be consumers’ or goods (Cloth, books, electronics appliances, medicine, etc) Producer goods (machinery, tools, etc), or services (courier or transport services, etc).
5. Regular Dealings
One of the important characteristics of business is regularity and recurrences. Business is not a single operation. A single operation would never constitute a business. It should be a regular and continuous entity. Recurrence of dealing is a must to constitute a business. Selling furniture of his household with a view to replacing it with a new one is not business.
6. Sale or Exchange of Goods and Services
Business directly or indirectly involves the transfer or exchange of goods and services for the value. if goods are produced not for the purpose of sale but say for personal consumption, it can not be called a business activity.
7. An Economic Activity
Business is considered to be an economic activity because it is undertaken with the object of earning money or livelihood and not because of love, affection, sympathy, or any other sentimental reason .it may be mentioned here that this activity can be undertaken either at small and individual level .or on a large scale in a more formal and sale by a cooperative society or company.
Nature of Business
1. Business is an Economic Activity
Business is an economic activity involving the production and sale of goods and services undertaken with the motive of earning a profit by satisfying human needs in society.
2. Business is an Art
Business is an art because it includes some functions of arts, like the existence of theoretical and personalized knowledge, based on practice and knowledge, etc.
3. Business is a Science
Business is a science because it includes some functions of science like experiments with new things, innovation, practical experience, judgment, foresight, and luck.
4. Business is a System
A business system is a documented procedure that outlines how to do something in your organization to achieve your business goals. that’s why we called the business a system.
5. Business is a Social Activity
Business is basically social activity because it provides goods and services to society, which helps people to improve their livelihood. so business is essentially a social institution and not merely a profit-making activity.
Features of Business
Dealing with goods and services for value
The business provides goods and services to society. The goods may be for consumption or for production. The first type of goods is called consumer goods, e.g., clothes, shoes, fans, sugar, etc., and the second type is called capital goods, e.g., plant and machinery.
Recurring Nature of Transactions
A single transaction of sale or purchase or any dealing casually does not amount to a business transaction though it might have resulted in profits. A transaction comes under business only when it occurs at regular intervals or it is recurring in nature. For example, when a person sells his scooter that is not business.
To Earn Profits
Business is a human activity directed towards earning wealth. Profit is essential for the livelihood of the entrepreneur as well as the survival and expansion of the business.
Increase in Utility
Business activities create utility in one form or the other. Manufacturers convert raw materials into finished products: wholesalers, retailers, transporters, etc. help in their distribution. Thus each one of them increases the utility of goods.
Business is full of risks. Profits do not depend solely on the efforts of an entrepreneur. Certain other forces may intervene over which a businessman had no direct control. These factors may be changes in consumer tastes and fashions.
Concepts of Business, Features of Business, Nature of Business, Characteristics of Business.