Saturday, March 13, 2010

Charectoristics of business

Characteristics of business :-
The following characteristics of business can be point out below.
· Human activity. Business is a human activity. No business can be performed without human efforts such as owners, customers, workers. Managers, distributors etc.
· Economic activity. Business is an economic activity undertaken by an individual or a group of individuals to serve the interest of the society. It is concerned with earning profits and generating wealth, which are measured in terms of money.
· Enterprise. The owner or the entrepreneur generates the idea of business, then starts and operates the business activities. The same person bears the risk of business. Therefore, a business is an enterprise of a person who generates idea, bears risks. Produces new products or services, and sells them to the consumers.
· Production of goods and services. Business is concerned with the production and sale of goods and services to the society. It never produces goods and services for self-consumption. The goods and services are sold for a price. For example: if a student purchases books for one's personal use, it is not business, but of the some book is purchased for re-sale that is business.
· Consumer satisfaction. The main purpose of business is to earn profit through creation of customers i.e., by providing appropriate services to the customers. The consumers purchase goods and services for their satisfaction. The more they are satisfied with the goods and services, the more they consume them. Therefore. the foundation of business is consumer satisfaction.
· Continuity in dealings. Business must be regular and continuously produce and sell goods and services to customers. One time dealing cannot be termed as business. For example, selling a house for profit is not business. In business, houses are constructed or bought and then sold to buyers on a regular basis. Therefore, there must be regularity and continuity of dealings in goods and services.
· Profit motive. Profit motive is a very common and important feature of business. All businesses are carried out in an expectation of earning some return on investment. It does not mean, however, that they should earn profit by all means. Rather, the profit should be earned through legal and fair means and in an ethical manner. Therefore, earning profit by illegal and unfair means such as gambling, smuggling and black marketing cannot be considered as business.
· Risk and uncertainty. Risk and uncertainty are important elements of business. In simple words, risk is a possibility that loss may occur. The risk of loss always arises from the uncertainty of future. Since future is uncertain, anything can happen in business. The technology, fashion and consumers' tastes may change. As a result, instead of profit, loss may occur to business.
· Finance or capital. Business needs some capital to acquire some productive assets, whereby goods and services can be produced and marketed. Thus, capital is said to be the lifeblood of business. No business can ever be started and successfully run without adequate finance.
· Creation of utility. Business is primarily concerned with the creation of utility. That means, it performs such activities that satisfy consumers. Business creates different forms of utility like form utility by converting raw materials into final products, place utility by transporting products from the location of the factory to the place of consumption, time utility by storing products and delivering them at the time when they are actually needed and possession utility by selling and transferring ownership from manufacturer to consumer.
· Creation of customers. Customers are the backbone of business. Unless customers are created and satisfied, no business can survive and grow. Customers are created and satisfied only when they are properly serviced. Business has to deliver in such a manner that it can create new customers and retain the existing ones. The creation and retention of customers are essential for business for its perpetual existence and growth.
· Ownership and employment. Every business is owned by an individual or a group of individuals. The owners of business contribute capital to start and run it. Business owned by an individual is normally a sole proprietorship. Business owned by a group of individuals is either a partnership, a joint stock company, or a co-operative, owners themselves are not involved in day to day activities of the business. Therefore, some people are employed for performing the activities of business on behalf of the owners. Ownership and employment are, thus, the important characteristics of business.
· System. Business is also a system. It is the organized whole consisting of interrelated activities – inputs, process and outputs. Inputs consists of raw material s, technology, human efforts, capital investment and management skill. All inputs have to pass through a process, which are sold to customers in the form of goods and services and to the owners in the form of profit.
· Organization. Business is an organized activity, as it is performed in the form of a well –designed system. It hires people of different abilities and skills to carry out its activities. They are assigned appropriate tasks and responsibilities together with adequate authority to achieve the business objectives.


OBJECTIVES OF BUSINESS
Business is a very important economic activity. The success of any activity depends on definite objectives. So, it is necessary to have definite objectives for it, to perform successfully. The objectives are goals where all efforts are concentrated for the fulfillment of the objectives.
The main objective of business is to earn profit. It makes continuity in the business. It also measures the success of business. No business can continue for ling if it ignores public service. So, earning profit and public service are the main objectives of business. However, the objectives of business may be broadly categorized under the following heads:
1. Economic Objectives
2. Social Objectives
3. Human Objectives

Economic Objectives
Earning profit
Production of goods
Creation of markets
Technological improvements

Social Objectives
Providing goods
Supply of quality goods
Proper price
Providing employment
Utilizing the scarce resources properly
Avoiding social nuisances

Human Objectives
Welfare of employees
Satisfaction of consumers
Satisfaction of shareholders

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