What is Business? Meaning, Definitions and Features of Business

What is Business? Meaning

Human beings are continuously engaged in some activity or another to satisfy their unlimited wants. Every day we come across the word 'business' or 'businessman' directly or indirectly. The business has become an essential part of the modern world.

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Business is an economic activity, which is related to continuous and regular production and distribution of goods and services for satisfying human wants.

All of us need food, clothing, and shelter. We also have many other household requirements to be satisfied in our daily lives. We met these requirements from the shopkeeper. The shopkeeper gets from wholesaler. The wholesaler gets from manufacturers. The shopkeeper, the wholesaler, the manufacturer are doing business and therefore they are called as Businessman.

Definitions of Business

Stephenson defines business as, "The regular production or purchase and sale of goods undertaken with an objective of earning profit and acquiring wealth through the satisfaction of human wants."

According to Dicksee, "Business refers to a form of activity conducted with an objective of earning profits for the benefit of those on whose behalf the activity is conducted."

Lewis Henry defines business as, "Human activity directed towards producing or acquiring wealth through buying and selling of goods."

Thus, the term business means continuous production and distribution of goods and services carried out to earn profits under uncertain market conditions.

Features of Business

Characteristics or features of the business are discussed in the following points:-

1. Exchange of goods and services

All business activities are directly or indirectly concerned with the exchange of goods or services for money or money's worth.

2. Deals in numerous transactions

In business, the exchange of goods and services is a regular feature. A businessman regularly deals in several transactions and not just one or two transactions.

3. Profit is the main objective

The business is carried on with a motive to earn a profit. The profit is a reward for the services of a businessman.

4. Business skills for economic success

Anyone cannot run a business. To be a good businessman, one needs to have good business qualities and skills. A businessman needs experience and skill to run a business.

5. Risks and Uncertainties

Business is subject to risks and uncertainties. Some risks, such as risks of loss due to fire and theft can be insured. There are also uncertainties, such as loss due to change in demand or fall in price cannot be insured and must be borne by the businessman.

6. Buyer and Seller

Every business transaction has a minimum of two parties that is a buyer and a seller. Business is nothing but a contract or an agreement between buyer and seller.

7. Connected with production

The business activity may be connected with the production of goods or services. In this case, it is called as industrial activity. The industry may be primary or secondary.

8. Marketing and Distribution of goods

The business activity may be concerned with marketing or distribution of goods in which case it is called a commercial activity.

9. Deals in goods and services

In business there has to be dealings in goods and service.

Goods may be divided into following two categories:-

1. Consumer goods : Goods which are used by final consumer for consumption are called consumer goods e.g. T.V., Soaps, etc.
2. Producer goods : Goods used by producer for further production are called producers goods e.g. Machinery, equipments, etc. Services are intangible but can be exchanged for value like providing transport, warehousing and insurance services, etc.

10. To satisfy human wants

The businessman also desires to satisfy human wants through the conduct of business. By producing and supplying various commodities, businessmen try to promote consumer's satisfaction.

11. Social obligations

Modern business is service-oriented. Modern businessmen are conscious of their social responsibility. Today's business is service-oriented rather than profit-oriented.