QUESTION-1 What is Business and how it can be understood? Explain thesignificant characteristics of Business. Ans: Business
Business is an important institution in society. Be it for the supply of goods or services, creation of employment opportunities, offer of better quality life, orcontribution to the economic growth of a country, the role of business is crucial. So the first
question arises in anyone’s mind is what really a business is? The following definition is an
attempt to provide appropriate answer.
Business is nothing more than a person or group of persons properly organized to produceor distribute goods or services. The study of business is the study of activities involved in theproduction or distribution of goods and services-buying, selling, financing, personnel and the
Practically the above said definition is true but in theoretical sense it is incorrect. Before anyactivities can be considered in the business, there must exist both the goal of profit and the risk of loss. Thus Business c
an be accurately defined by K. Ashwathapa as “Complex field of
commerce and industry in which goods and services are created and distributed in the hope of
profit within a framework of laws and regulations”.
Understanding the Business:
To understand any business the critical step is to explore all thefactors related to business and properly judging its impact on the business. There are manyfactors and forces which have considerable impact on any business. All these forces comeunder one word called environment. Hence understanding the business means understandingits environment. Environment refers to all external forces which have a bearing on thefunctioning of business.From the micro point of view, a business is an economic institution, as it is concernedwith production and/or distribution of goods and services, in order to earn profits and acquirewealth. Different kinds of organizations (i.e., sole trader ship, partnership, Joint Stock Companyand co-operative organization) are engaged in business and are operating from small scale, asin case of grocery in a start, to large scale, as in case of Tata Iron and Steel Co., Bajaj Auto,Maruti Udyog, and Reliance Industries.
Characteristics of Business
Whatever may be the nature and scale of operations, a business enterprise possesses thefollowing characteristics:
1. Dealings in Goods and Services:
The first basic characteristic of a business is that it dealsin goods and services. Goods produced or exchanged, may be consumers' goods, such as bread,rice, cloth, etc. or producers' goods such as machines, tools, etc. The consumer goods are meant for direct consumption, either immediately, or after undergoing some processes, whereas theproducers' goods are meant for being used for the purposes of further
goods are also known as capital goods. Services include supply of electricity, gas, water finance,insurance, transportation, warehousing, etc.