1. Economic activity:
Business is an economic activity of production and distribution of goods and services. It provides employment opportunities in different sectors like banking, insurance, transport, industries, trade, etc. it is an economic activity corned with the creation of utilities for the satisfaction of human wants.
It provides a source of income to society. Business results in the generation of employment opportunities thereby leading to the growth of the economy. It brings about industrial and economic development of the country.
2. Buying and Selling:
The basic activity of any business is trading. The business involves buying raw material, plants, and machinery, stationary, property, etc. On the other hand, it sells the finished products to consumers, wholesalers, retailers, etc. Business makes available various goods and services to the different sections of the society.
3. Continuous process:
Business is not a single time activity. It is a continuous process of production and distribution of goods and services. A single transaction of trade cannot be termed as a business. A business should be conducted regularly in order to grow and gain regular returns.
Businesses should continuously involve in research and developmental activities to gain a competitive advantage. A continuous improvement strategy helps to increase the profitability of the business firm.
4. Profit Motive:
Profit is an indicator of the success and failure of a business. It is the difference between the income and expenses of the business. The primary goal of a business is usually to obtain the highest possible level of profit through the production and sale of goods and services. It is a return on investment. Profit acts as a driving force behind all business activities.
Profit is required for survival, growth, and expansion of the business. It is clear that every business operates to earn the profit. Business has many goals but profit-making is the primary goal of every business. It is required to create economic growth.
5. Risk and Uncertainties:
Risk is defined as the effect of uncertainty arising on the objectives of the business. Risk is associated with every business. Business is exposed to two types of risk, Insurable, and Non-insurable. An insurable risk is predictable.Predictable factors are controllable to some extent, such as:
b) Change in the volume of expected sales
c) Cost of supplies and equipment
d) Overhead costs
f) Cost of goods and services offered
Unpredictable factors include:
a) Changes in trends and tastes of customers.
b) Impact of the local economy on the customer base.
c) Any unexpected action taken by your competitors.
The calculation and management of the risk are vital to ensure the success of a business firm. Insurance and Risk management helps in minimizing the risk associated with the business.
6. Creative and Dynamic:
One has to be innovative because the business operates under a constantly changing economic, social, and technological environment. Businesses should also come out with new products to satisfy the growing needs of consumers.
7. Creation of Utilities:
Business Creates utilities of goods and services to satisfy customers’ wants and needs. Business has many branches or components involves in the creation of certain utility like form, place, time, risk, finance, etc. The manufacturers create form utility, transportation creates place utility, warehousing creates time utility, bank, and financial institutions fulfill financial utility, etc.
8. Customer satisfaction:
Modern business believes in satisfying the customers by providing a quality product at a reasonable price. It emphasizes not only profit but also customer satisfaction. Consumers are satisfied only when they get real value for their purchase.
The purpose of the business is to create and retain customers. The ability to identify and satisfy customers is the prime ingredient for business success.
9. Social Activity:
Business has some responsibility towards the society and in turn, it needs the support of various social groups like investors, employees, customers, creditors, etc. by making goods available to various sections of the society, the business performs an important social function and meets social needs. Business needs the support of different sections of the society for its proper functioning.
10. Government control:
Some important acts framed by the government include:
i. The Competition Act
ii. Foreign Exchange Management Act
iii. The Environment Act
iv. Indian Companies Act
v. Consumer Protection Act
11. Optimum utilization of resources:
12. Mutual Advantages:
Business Activities are not a one-sided benefit. In business, both buyers and sellers are benefited. The sellers are benefited by getting money in return for goods whereas buyers are benefited by having goods that satisfy their needs.
13. Production, Distribution and exchange:
14. Capital Investment:
Organizational structure is one of the parts of the business. For the completion of any business activity, an organization is required. An organization is constituted for delegation of authority and responsibility and completion of activities on a pre-planned basis. A proper organization structure makes plans and distributes authority and responsibility among the employees.