Explain the characteristics of business. |
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Ans : There are several characteristics of business which are presented below:
i) Economic activity:- Business involves money oriented economic activities. They are related to production and marketing of products. Such activities involve cost. Economic activities are performed by humans on regular bases and they are measured in terms of money. They are driven by profit motive.
ii) Production, distribution and exchange:- Business activities are concerned with production, distribution and exchange of goods for public consumption. Manufacturing organizations are involved in production of goods and services from raw-materials. Similarly, trading organization distributes goods and services to final consumers. Generally, manufacturer supply to whole seller, whole seller supply to retailer and retailer supply to final consumers. In the course of exchange of goods and services they earned profit.
iii) Regularity in dealing:- Business is a continuous process. It involves continuous dealing or exchange of goods and services. It is not one time financial activities. Business includes only those activities which have regularity and continuity.
iv) Entrepreneur:- The person who recognizes the need for a product of services, invest and bears the whole risk is a entrepreneur. He visualizes a business, combines various factors of production and pt them into a going concern. Entrepreneur is the main figure who promotes business and without whom business is not possible.
v) Profit motive:- The primary objective of business is to earn profit and maximize wealth. The survival of business depends upon its ability to earn profit. Profit is reward to the investors in return of their investment. Profit s essential for paying salary and wages, rent, taxes, interest on the capital invested in the business etc.
vi) Risk and uncertainty:- Risk means possibility or danger of loss. It reduces changes of profit. T arises due to uncertainties of future. The element of risk exists due to variety of facture which are outside the control of business enterprise. Those risk and uncertainty are change in technology, consumer taste, government policies, shortage of raw-material, fire, theft and corrupt management or wrong decisions.
vii) Creation of utility:- Business creates various utilities to give satisfaction to consumers and earn money. The manufacturers create firm utility, warehousing created time utility, transportation creates place utility, insurance fulfills security utility, bank and financial institution creates financial utility etc.
viii) Consumer satisfaction:- The ultimate aim of business is to supply quality goods and services for the satisfaction of consumers. So that the demand of his product is maintained. Profit is made by satisfying consumer’s needs. Satisfied consumers are the back bone of the business.
ix) Organization:- Organization is a place where business activities takes places. It is an association of people. It has objectives, structure and technology. Organization is essential for planning, executing the plan and controlling the performance. So a proper organization is helpful in smooth running of the business and help to achieve its objective.
x) Finance:- Finance is an important factor to start and run a business. It is the life blood of a business. The money could be in the form of fixed assets or working capital. All the factors of production require sufficient capital. The size of a business depends upon the availability of finance. The success of business organization depends upon its financial management system.
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