What are the Features, objectives and types of Business. Distinguish between Business, Profession and Employment.

 

BUSINESS

Any activity carried primarily with the object of earning profit can be called business activity. This objective of earning profit is achieved by production and/or exchange of want satisfying goods and services. Therefore, we can define business as any activity concerned with the production and/or exchange of want satisfying good, and services carried with a view of earning profit". Production of soaps, sale of eggs, production of TV sets, transport, etc., are some examples of business. A person who is engaged in business is called a businessman or entrepreneur. Similarly, a firm formed the purpose of carrying a business activity is called a business enterprise or a busines firm.

Essential Features of Business:

 You have learnt that business refers to the human activities engaged in production and/or exchange of want satisfying goods and services carried with the intention of earning profits. Now let us study the important characteristics of business. We can list the following five broad features of business.

1.     Dealings in goods and services:

Business deals with goods and services. The goods may he consumer goods such as sweets, bread, cloth. shoes. Etc. They may be producer's goods such as machinery, equipment, etc. which are used to produce further goods for consumption. Business also deals with services such as transport, warehousing, banking, insurance. etc. which are intangible and invisible goods.

2.     Production and/or exchange:

You can call an economic activity a 'business' only when there is production or transfer or exchange or sale of goods or services for value. If goods are produced for self-consumption or presentation as gift, such activities shall not be treated as business. In a business activity, there must be two parties i.e., a buyer and a seller. Such activity should concern with the transfer of goods or exchange of goods between a buyer and a seller. The goods may be bartered or exchanged for money.

3.     Continuity and regularity in dealings:

A single transaction shall not be treated as business. An activity is treated as business only when it is undertaken continually or at least recurrently. For example, if a person sells his residential house, it is not considered as business. If he repeatedly buys houses and sells to others, such activity comes under business. But how frequently the transaction should occur depends on the nature of the activity. For example, a ship building company takes a long time to manufacture and sell a ship. At the same time, a vegetable vendor purchases vegetables from the market in the morning and sells out to his customers by evening. But both these activities are treated as business.

4.     Profit motive:

 Earning profit is the primary motive of business. This is not to undermine the importance of the element of service in business activity. In fact, a business will flourish only when it is able to serve its customers to their satisfaction. Profits are essential to enable the business to survive, to grow, expand, and to get recognition.

5.     Element of risk:

In every business, there is a possibility of incurring loss. This possibility of incurring loss is termed as risk. The element of risk exists due to a variety of factors which are outside the control of the business enterprise. There are two kinds of risks. (1) Risks whose probability can be calculated and can be insured. Losses due to fire, floods, theft, etc., are some examples. (2) Risks whose probability cannot be calculated and which cannot be insured against, e.g., changing technology, fall in demand, changing fashions, short supply of raw materials, etc. These risks are to be completely born by the enterprise.

 

Objectives of Business:

 You have learnt that the primary objective of business is to earn profit. Although profit plays an important role as a criterion of success, business may-not exist for long with the sole objective of earning profit. As stated by Henry Ford, "business is not mere money chasing but it also should aim at serving the community". According to Urwick, "profit can no more be the objective of a business than eating is the objective of living". Thus, serving the community is regarded as another important objective of business. In fact, some authors regard 'service to community' as the major objective of business and state that this provides the main justification for the existence of business as an important human activity. Therefore, while profit is necessary for the businessman to stay in business, he ought to aim at something more for its survival and growth.

The objectives of business could be listed under three broad headings: (1) economic objectives. (2) social objectives, and (3) human objectives.

Economic Objectives: Basically, being an economic activity, primary objectives of business are economic. Some of the main economic objectives are:

1- Earning of satisfactory profits.

2- Exploring new markets and creation of more customers.

3- Growth and expansion of business operations of the firm.

4- Making innovations and improvements in goods and services so that customers get improved and more economic goods and services.

Social Objectives: Business, being a part of the society, has obligations towards the society also. Some major social objectives are:

1 Providing more and more employment opportunities to the people in the country.

2 Supply of quality goods to the community.

3 Providing goods at reasonable prices.

4 Ensure fair returns to investors.

5 Avoidance of profiteering and unfair practices. 6 Production of goods in accordance with national interests and priorities.

Human Objectives: Business activity is, generally, carried out through employees who arc human beings. In fact, the efficiency and the success of the business enterprise depends on the motivation and ability of its employees. Therefore, business must also have some human objectives to safeguard the interests of its employees. Some of the major human objectives are

1 Fair deal to employees in terms of wages and incentives

2 Providing better working conditions and environment to the employees.

3 Provide job satisfaction.

4 Provide the employees more and more promotional/growth opportunities

Classification of Business:

 You just recollect what we have stated about business. We stated that business is Concerned with production and/or exchange of goods and services with the intention of earning profit. It states that business is concerned with two aspects i.e. production and exchange. Based on this, we may classify business activities into two categories. In the first category we can group all the business activities relating to production. Similarly, all the activities relating to exchange may be grouped under the second category. The first category is known as 'industry', while the second category is called 'commerce'.

Business Distinguished from Profession and Employment

You have learnt about the essential characteristics of business. Keeping in mind these characteristics, let us now analyse how business is different from profession and employment.

Read Table 1 carefully. You will find the distinct features of business, profession and employment.

Features	Business	Profession	Employment
I Establishment	An individual or a group of individuals decides to start business. Legal formalities like registration, etc., are to be fulfilled.	Acquire required qualifications. training. etc. Become the member of concerned professional body.	Enter into service contract with the employer.
2 Qualifications	Specific qualifications are not required	Professional knowledge and training in the specific field is necessary.	In some cases specific qualifications required and in some other cases not required.
3 Investment	Capital is required. Actual amount depends on the nature of business	Some amount of capital required for equipment and establishment of office.	Capital not required.
4 Nature of work	Production and/or exchange of goods and services.	Renders personalised services of a specialised nature to the clients.	Performing the work assigned by the employer under the service contract.
5 Motive	Mainly profit motive.	Although fee is charged, service is the main motive.	No specific motive. Mainly to earn livelihood.
6 Reward	Profit.	Professional fee	Wage or salary.
7 Transferability of ownership interest	By following required legal formalities, business can he transferred to others.	Not possible to transfer	Not possible to transfer.
8 Risk	There is risk of loss.	Possibility of not getting enough fee to meet the expenditure on establishment.	No risk. Employee gets wage or salary regularly so long as the firm continues in operation.