What is business?

• Traditionally, business was simply used to refer to

the exchange or trade for things people wanted or
needed. Today, it has a more technical definition.
Business can be defined as a set of activities,
including the production, distribution and sale of
goods and services in return for a profit.
• First, production is the creation of services or the
conversion of raw materials into finished or semi-finished
products. The conversion of metal into car parts or crude oil
into plastics are examples.
• Next, these products need to be moved from a place of
manufacturing or factory to the market place in order to
make them available and easily accessible to the consumers
or end users. This process is known as distribution.
• Third, we have the sale of goods and services.
Sale means the exchange of a product or a
service for money. A Computer, for instance, is
sold to a customer in exchange for money. Goods
are products that people either need or want.
Computers can be classified as products.
Services, on the other hand, are activities that a
supplier performs for a customer.
• Finally, the major goal of business is the
generation or making of profit. Profit is the
economic surplus or the money that
remains after the payment of all expenses
that the company owes to its creditors.