The Purposes of Establishing Business Enterprise

Purpose of business enterprises

• Businesses carry out activities such as
producing goods or providing services with the aim of
selling them to customers and making a profit. As
such, the purpose of business activity is to provide
goods and services that customers want, at a price that
they are willing to pay.
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GOODS
Goods are tangible items that can be used and
stored. Businesses make goods and sell them
to customers, who then own them. Examples
include:
• computers
• food
• clothes

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Services are intangible actions

Services that cannot be stored.
Businesses provide services to
customers, who have access to
them for a period of time.
Examples include:
• hairdressing
• train journeys
• internet access

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• Many businesses exist in order to

meet a specific need or fill a
certain gap in the market. To do
this, they sell goods, services or
both. An entrepreneur might
start a business enterprise
because there is a demand for
the goods or services they can
provide. This means that they
have spotted an opportunity to

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meet the needs of customers in a
way that is not currently being 5
Satisfying the needs of customers
• Businesses exist to provide what their customers need or
want. A business is more likely to survive and make
a profit if it provides customers with what they want,
whether that is specific product features, low prices, fast
delivery, an easy-to-use website or a pleasant shopping
experience. Knowing what customers need and want is an
important part of running a business.
 needs
Needs are things required in order to survive. These life-
essential things include:
• clothing
• food
• shelter
• warmth
• water
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wants
Wants are things that people would like to have
but can survive without. Wants are unlimited,
and might include:
• event tickets
• designer accessories
• holidays
• laptops and mobile phones

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• cars
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 Subjective and objective for putting up a business

• SUBJECTIVE REASON – one common reason for putting

up a business is the desire to make more income for oneself
and his/her family. Another reason that may push you into
entering in a business world is your desire for competition.
• OBJECTIVE REASON - the objective purpose of business
is to increase profits.