Business and its objective
Business means an activity which involves regular purchase and sale of goods and services with the object of earning profits through the satisfaction of needs, but with an element of risk. In the words of B.O. Wheeler, ‘Business is an institution organized and operated to provide goods and services to society under the incentive of private gain.’ Business may be distinguished from other activities by the fact that goods and services created or purchased are only for sale and not for self-consumption.
Some important features of business are as follows: –
- Dealings in goods and services
Every business dealing is done with goods and services for selling them to others. These goods may be categorized as consumer goods like bread, tea, etc. or producers’ goods used to produce further goods like raw materials, machinery, etc. Services like warehousing, insurance, banking, etc. are considered as intangible and invisible goods.
- Production and/or exchange
All the business activities which are economic in nature, involves transfer or exchange of goods and services for consideration. This consideration is usually money. Goods being produced for self-consumption shall not be taken into consideration as business. In all the business activity, transfer or exchange of goods and services should take place between a buyer and a seller only for money.
- Continuity and regularity in dealings
A single isolated transaction shall not constitute business. If any activity that takes place continuously or least recurrently, it is treated as business. For e.g. if a person sells his old car, it is not business though the seller gets money in exchange. But if he opens a shop and sells cars regularly, it will become a business. Therefore, in business, continuity and regularity is also important.
- Profit motive
The only primary aim of the business is to earn profits. Only if the satisfaction of the customer is fulfilled, the business will run. Profits are most important for the survival, growth and expansion of any business.
- Element of risk
As stated already, every business has an element of risk. This risk that business face is the loss incurred. The function of business enterprise is uncertain and uncontrollable environment, so the element of risk exists. Some risks’ probability can be insured like floods, fire, while some can’t be insured as fashion, change in demand, etc.
Risks can’t be eliminated but can be reduced.
OBJECTIVES OF BUSINESS
As discussed before, the primary aim of the business is to earn profits. Every kind of business enterprise has certain objectives based on which its activities are generated. Profit plays an important role in the successful running of any business organization, but it’s not just the sole objective for the survival of the business longer.
Thus, business is considered as an economic activity as it also generates income and satisfies the wants of society. As the profit leads a businessman to stay in the business, some objectives are also required for the survival and growth of the business.
Various objectives of business may be classified into three broad categories :-
- ECONOMIC OBJECTIVES
- SOCIAL OBJECTIVES
- HUMAN OBJECTIVES
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