Professional Documents
Culture Documents
Concept of Business
Concept of Business
In Layman terms, business means to get something at low cost and sell it at a higher
cost, meanwhile, the margin produced between that is the profit. Business’s only
purpose is profit, it is driven by it. Business is derived from the word ‘busyness’
meaning engaged in an activity.
If we were to define business in much finer terms, we can say that “Business is any
occupation which includes all activities which are connected with production or
procurement of goods for sale and adding a profit margin to the costs for further
selling it to the customer for the satisfaction of their needs.”
Most importantly, the business aims at a profit but only through the satisfaction of
the needs of the customers. The business includes every occupation in which people
are busy in earning the income by the means of producing, purchasing, selling or
exchanging goods or services to fulfill needs of other people with the objective of
making a profit.
CHARACTERISTICS OF BUSINESS
Characteristics are the features which are necessary to classify the business.
Therefore let’s have a look at them.
1. Economic Activity
Business necessarily has to be an economic activity. But what exactly is an economic
activity? Any activity that gives a monetary return is an economic activity. For
example, if your friend’s father picks you up and drops you at college every day, he
is doing this act out of kindness. But if he starts a transportation service of picking
up and dropping by charging money then it’s an economic activity.
2. Production or Trading of Good or Services for Sale
If a business plans on selling a product, it has to either manufacture that product or
purchase it and add a profit margin to it and sell it further. Business is interested in
every activity that is concerned with the production or purchase of goods for selling,
this makes it one of the most important characteristics of a business. Services for
sale include transportation, housekeeping, and security. Whereas, goods are mostly
consumable items.
3. Sale or Exchange of Goods and Services
The third and crucial one of the characteristics of business after production or
procurement is to sell that product for the money. The way to sell a product or