Concept and Characteristics of Business

The term business is associated with manufacturing and distribution of goods as well as services for earning profits. It fundamentally refers to the economic activities that are carried out by individuals and organisations for the purpose of generating incomes. According to some of the definitions business is a human activity that is focused on the creation of wealth through the process of buying and selling of services. According to other definitions the business is termed as the form of economic activities targeted at earning income. We take a look at concepts and characteristics associated with business.

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The above picture shows that there are several characteristics of business depending from one organisation to another. However, the motive is the same, that is, to satisfy the particular needs of customers. 

The Concept of Business

The term business is derived from the word “busyness” and it means being engaged in any specific activity. The business process generally involves purchasing something at lower prices and selling it at higher prices. The margin that is generated between low cost price and high selling price is termed as profit. The fundamental objective of any business is to accrue profit.

The business usually refers to an occupation which involves certain activities that are linked with the manufacturing or acquisition of goods for sale. It also refers to the addition of profit margin for selling it to clients for satisfying their requirements. While the business is focused on generating profit, it is also associated with satisfying the requirements of the customers. 

The Characteristics of Business

The characteristics are the important features that are necessary for classifying the business. Some of these characteristics include Government control, change, globalisation, competition, information etc. We will have a brief look at some of the characteristics associated with business. 

• Goods and Services Trade

If a business plans on selling a product or goods, then it has to either manufacture or purchase that product. This helps in adding profit margin to the services or goods provided by the business. Some of the services associated with sales are transportation, security, and housekeeping. 

• Economic Activity

One of the crucial characteristics associated with business is economic activity. Any economy that provides fiscal return refers to economic activity. These activities are primarily concerned with production or distribution of goods and services.

• Continuity in Dealings

Business is an important commercial activity which generates money. Just a single transaction related to purchase or sale cannot be a business activity. Apart from regulations, the business should be continuous in terms of its dealings. The major business organisation features determine that businesses should continuously manufacture and sell products for gaining profits. 

• Sale of Exchange of Products

After the procurement or production, the other features associated with business are selling services or goods for money. The product or service can be sold by introduction in the market or through the offer of sale.

• Profit Earning

The fundamental goal of any business is earning profits. If any business can’t generate profit then it will be considered a failure. This is why individuals and business organisations try all possible methods for earning profits through improving sales volume or the decrease of costs.

• Risk Factor

Any business has its own set of risks, and the more the risks are involved, the higher is the potential return. When someone is starting a new business, it is never certain if the business would be successful or not. The new business might earn profit but the amount or quantity of profit that is gained might vary.

• Legal Activity

By the concept and nature of business, every business should be legal and lawful. The regulation of a nation mandates putting clauses on the business operations for controlling its activities. Business can be owned by a group of individuals or a single person. Profit is one of the fundamental parts of business. The activities associated with manufacturing and distribution of goods as well as services are supported for making a profit.