Business is the most important activity for a human being. It is the means of livelihood. Almost all the people engage themselves in making, buying, selling and distributing goods and services for generating income. Almost every business involves risk and uncertainty. The successful business operation in the economy reflects the prosperity of the nation. It provides larger employment opportunities and utilizes available resources economically. It brings comfort and satisfaction for the people and ensures peace, prosperity and progress of the country. It helps in earning foreign currency and strength foreign relation. The development of the business increases the prestige of the people and nation.
Meaning and Definition
The term 'business' refers to all the economic activities carried by people and organizations for generating incomes. It is concerned with producing and distributing goods and services for earning a profit. It is a regular process of exchanging goods and services which involve risk and uncertainty. It is the mutual effort of industry and commerce. In fact, business is an economic activity aimed at fulfilling the needs and wants of customers through the supply of goods and services for their satisfaction.
The following are the main definitions of business:
"Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods."- L.H. Haney
"Business may be defined as an activity in which different persons exchange something of value, whether goods or services for mutual gain or profit." - Peterson and Plowman
"All the activities included in the production and sale of goods and services may be classified as a business activity." - W.F. Spiegel
Characteristics of Business
The following are the characteristics of Business:
- Economic activity
Business is an economic activity which involves in exchange of goods and services for money. It does not include non- economic activities which are not directed for generating income.
- Production and distribution
Business involves in production and exchange of goods and services. The production and distribution of goods and services are carried for the satisfaction of the customers.
- Profit motive
Profit is the essence of a business. The activities relating to the production of goods and services are carried on with the aim of earning profit.
- Risk and Uncertainty
Every business activity involves risk and uncertainty to some extent. The risk of loss is ever- present in every business activity and hence there is no certainty that the business activity always results into profit.
- Regular transactions
Every business performs its transactions on a regular basis. It makes production and distribution of goods and services to the society continuously.
Importance of Business
Business equally contributes to the individuals, society, and nation as a whole. The business is important due to following reasons:
- Means of livelihood
Business is the source of livelihood of many people. Every person lives in society by generating incomes through the production and distribution of goods and services.
- Increases the living standard
Business increases earning of a person and a family. It increases purchasing power and develops life standard of a family, which makes life full of comfort and happiness.
- Utilizes resources
Business utilizes natural, human, physical and financial resources for the production and distribution of goods and services. The proper utilization of these resources helps to generate large employment opportunities and uplift economic development of the country.
- Generates the employment opportunity
Business is the means of overcoming unemployment problem of the society. Due to the establishment and operation of a number of industrial and trading units, a large number of people get employment opportunities.
- Enhances international relationship
Business is the strong basis for maintaining and developing an international relationship. Business dealings between the people of two countries bring them into close contact which enhances the better relationship in government and public level.
- Earns foreign currency
Business is the main source of earning foreign currencies. Manufacturing industry, tourism industry and other services business export their products and services to the foreign markets and earn foreign currencies for the nation.
- Maintains peace and prosperity
Business increases earning the capacity of the people and makes their life comfort and happy. As a result, it maintains economic stability and prosperity in the society.
