Nature and Purpose of Business

Introduction
Business is an economic activity that involves the production and distribution of goods and services to satisfy the needs and wants of customers. It plays a crucial role in the overall development and progress of a country's economy.

Nature of Business
1. Profit orientation: The primary objective of a business is to earn profits. Profit is the reward for the risk taken by the entrepreneur and is essential for the survival and growth of a business.

2. Exchange of goods and services: Business involves the exchange of goods and services between producers and consumers. It acts as a link between the two by providing goods and services that fulfill the needs and wants of consumers.

3. Risk and uncertainty: Every business venture involves a certain degree of risk and uncertainty. This risk arises due to factors such as market fluctuations, competition, technological changes, and economic conditions. Businesses need to manage and mitigate these risks to ensure their survival and growth.

4. Continuous process: Business is a continuous process that involves various activities such as production, marketing, finance, and human resource management. These activities are interconnected and need to be carried out consistently for the smooth functioning of a business.

Purpose of Business
1. Generation of employment: Businesses create job opportunities and contribute to reducing unemployment in an economy. They provide income and livelihood to individuals and their families.

2. Creation of wealth: Businesses generate wealth by producing and distributing goods and services. This wealth creation leads to economic growth and development of a country.

3. Improvement in living standards: Businesses play a significant role in improving the overall living standards of individuals. They provide access to a wide range of goods and services that enhance the quality of life.

4. Contribution to the economy: Business activities contribute to the growth and development of the economy by generating tax revenues for the government, promoting investment, and fostering innovation and technological advancements.

5. Customer satisfaction: Businesses aim to satisfy the needs and wants of customers by providing them with high-quality products and services. Customer satisfaction is crucial for the success and sustainability of a business.

In conclusion, the nature of business revolves around profit orientation, exchange of goods and services, risk and uncertainty, and being a continuous process. The purpose of business includes generating employment, creating wealth, improving living standards, contributing to the economy, and ensuring customer satisfaction. Understanding the nature and purpose of business is essential for individuals aspiring to become entrepreneurs or work in the field of commerce.

ECONOMIC AND NON ECONOMIC ACTIVITIES

All Human beings have different types of needs. So, in order to fulfill those needs they have to perform some or the other activity. Human activities are classified into Economic & non-economic activities.

Basic MeaningEconomicNon-EconomicPurpose/ NoticeThose activities whose Objective is to earn money and to create wealth.Those activities whose aim is not to earn money, but to satisfy social, psychological and emotional needs. For example love, sympathy, patriotism.ExamplesPeople work in factories
Cooking food in restaurant.
A teacher teaching in a school.A housewife cooking food for her family. A teacher training his daughter at home.

Concept of Business: – Business refers to those economic activities involving the purchase production and / or sale of goods and services with a motive of earning profit by satisfying human needs in society.

Characteristics of Business:

1. An economic activity: Business in considered as an economic activity because it is undertaken with the objective of earning money.
2. Production or procurement of goods and services: Business includes all the activities concerned with the production or procurement of goods & services for sales. Services include transportation, banking, Insurance etc. Goods may consist of consumable items.
3. Sale or exchange of goods & services – There should be sale or exchange of goods and service between the seller & the buyer.
4. Dealing in goods & services at a regular basis: There should be regularity of dealings or exchange of goods & services. One single transaction of sale or purchase does not constitute business.
5. Profit Earning: The main purpose of business is to earn profit. A business cannot survive without making profits.
6. Uncertainty of return: Every business invests money with the objective of earning profit but the amount of profit earned may vary. Also there is always a possibility of losses.
7. Element of risk: All business activities carry some elements of risk because future is uncertain and business has no control over several factors like, strikes, fire, theft, and change in consumer taste etc.