What is Business?

Business is defined as an organized e ort of individuals to produce and sell goods in order
to satisfy the needs of society. The primary objective is to acquire profit. It is an economic unit
that controls resources and engages in buying and selling of goods or services.

Business primarily aims to satisfy the consumer's basic and secondary needs. It can be
achieved through the use of effective business marketing practices and strategies for reasonable
returns to compensate for the businessman's efforts and risk of loss. Profit is the main objective
of business which distinguishes it from charitable institutions and government agencies.
In practical sense, business is any activity involved in the production and distribution of
goods and services, aimed to meet the economic needs of consumers with an objective of
eventually earning profit. Consequently, any unlawful activities like selling prohibited drugs and
smuggling can be considered business following the definition of business. Nevertheless,
students of business are taught and trained to become businessmen based on the moral standards
and values of the society.

The Relationship Between Business and Economy

Basically, the role of business is to produce goods and services which consumers need.
The business produces goods and services from the factors of production provided by society.
Consumers, in turn, buy these goods and services. Business firms thus contribute to the country’s
economic growth.
Consequently, to produce goods and services, the business firm has to purchase materials,
components, or semi-finished goods from other producers, thereby creating demand for the
outputs of other businesses. It has to pay wages to its personnel. These wages come from the
income of workers, who in turn buy foods, clothes, and other goods and services. A business
firm co-exists and interrelates with other members in the economic systenu When we combine
these firms as a group, we call them an industry. Thus, we may define industry as a group of
business firms offering similar goods or services. Some examples are cars, electronics, banking,
petroleum and construction industries.
Industries may be broadly classified by sectors, such as the agricultural, manufacturing,
trade, construction, and government sectors. The manufacturing sectors include all industries
involved in producing goods, while the trade sector includes both domestic and foreign trade.