Define the business, discuss the Nature/Characteristics of Business
- Economic activity: Business is an economic activity of the production and distribution of goods and services. The business provides job opportunities to society which generate sources of income. It helps in economic development by providing employment opportunities.
- Profit Motive: The primary objective of every business is to earn Profit, which helps in the survival, growth, and expansion of the business. It also contributes to economic growth.
- Continuous process: Business is a continuous process of production and distribution of goods and services. It is conducted regularly in order to achieve its goals and objectives. A continuous process helps to increase the profit of the business firm.
- Creative and Dynamic: A business firm has to come up with innovative ideas for the production and distribution of goods and services. Businesses should come up with new products to satisfy the growing needs of consumers.
- Customer satisfaction: Is the main objective of every business is to satisfy the customer by providing goods and services as per the customer needs.
- Social Activity: Every business has a social responsibility towards society, employees, customers, etc. by providing job opportunities to the weaker section of the society, quality goods, and good infrastructure.
- Government control: Every business organization must follow the rules and regulations made by the government. The government ensures the proper conduct of business activity. Some important acts framed by the government include:
The Competition Act, 2002
Foreign Exchange Management Act, 1999
The Environment Act, 1986
Indian Companies Act, 1956
- Consumer Protection Act Optimum utilization of resources: Optimum utilization of available resources leads to increase efficiency by reducing wastage.
Significance of Business in Modern Society/Importance of Business:
- Improve the standard of living: Business helps people in general to improve their standard of living by providing job opportunities.
- Proper utilization of resources: Optimum use of available scarce resources leads to efficiency. It helps to reduce wastage.
- Quality: Business involves the production, purchase, and sale of goods and services. Customer satisfaction is the backbone of modern business, therefore business organizations provides goods and services as per the customer needs.
- Creates utilities: Business creates utilities by producing customer based product to satisfy their wants effectively and economically.
- Employment opportunities: Business provides employment opportunities to a large number of people in society.
- Workers’ welfare: Nowadays business organizations provide a safer and healthier work environment for employees to work efficiently.
Economic objectives of a business refer to the objective of earning profit and those which have a direct impact on the profit-earning objective of the business.
- Some of the main economic objectives of the business are:
- Earning adequate profits;
- Exploring new markets and the creation of more customers;
- Growth and expansion of business operation;
- Making innovations and improvements in goods and services; and
- Making use of available resources in the best possible manner.
(B) Social objectives of the business are:
- Production and supply of quality goods and services to society;
- Making goods available at reasonable prices;
- Avoidance of unfair practices like hoarding, black-marketing, over-charging, etc.;
- Contributing towards the general welfare and upliftment of the society;
- Ensuring a fair return to the investors;
- Taking steps in the direction of consumer education; and
- Conserving natural resources and wildlife and protecting the environment.
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Reference: ML Jhingan, Manan Prakashan