What are the Characteristics of Business?
The term business is associated with manufacturing and distribution of goods as well as services for earning profits. It fundamentally refers to the economic activities that are carried out by individuals and organisations for the purpose of generating incomes. According to some of the definitions business is a human activity that is focused on the creation of wealth through the process of buying and selling of services. According to other definitions the business is termed as the form of economic activities targeted at earning income. We take a look at concepts and characteristics associated with business.
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The above picture shows that there are several characteristics of business depending from one organisation to another. However, the motive is the same, that is, to satisfy the particular needs of customers.
The Concept of Business
The term business is derived from the word “busyness” and it means being engaged in any specific activity. The business process generally involves purchasing something at lower prices and selling it at higher prices. The margin that is generated between low cost price and high selling price is termed as profit. The fundamental objective of any business is to accrue profit.
The business usually refers to an occupation which involves certain activities that are linked with the manufacturing or acquisition of goods for sale. It also refers to the addition of profit margin for selling it to clients for satisfying their requirements. While the business is focused on generating profit, it is also associated with satisfying the requirements of the customers.
The Characteristics of Business
The characteristics are the important features that are necessary for classifying the business. Some of these characteristics include Government control, change, globalisation, competition, information etc. We will have a brief look at some of the characteristics associated with business.
Goods and Services Trade
If a business plans on selling a product or goods, then it has to either manufacture or purchase that product. This helps in adding profit margin to the services or goods provided by the business. Some of the services associated with sales are transportation, security, and housekeeping.
Economic Activity
One of the crucial characteristics associated with business is economic activity. Any economy that provides fiscal return refers to economic activity. These activities are primarily concerned with production or distribution of goods and services.
Continuity in Dealings
Business is an important commercial activity which generates money. Just a single transaction related to purchase or sale cannot be a business activity. Apart from regulations, the business should be continuous in terms of its dealings. The major business organisation features determine that businesses should continuously manufacture and sell products for gaining profits.
Sale of Exchange of Products
After the procurement or production, the other features associated with business are selling services or goods for money. The product or service can be sold by introduction in the market or through the offer of sale.
Profit Earning
The fundamental goal of any business is earning profits. If any business can’t generate profit then it will be considered a failure. This is why individuals and business organisations try all possible methods for earning profits through improving sales volume or the decrease of costs.
Risk Factor
Any business has its own set of risks, and the more the risks are involved, the higher is the potential return. When someone is starting a new business, it is never certain if the business would be successful or not. The new business might earn profit but the amount or quantity of profit that is gained might vary.
Legal Activity
By the concept and nature of business, every business should be legal and lawful. The regulation of a nation mandates putting clauses on the business operations for controlling its activities. Business can be owned by a group of individuals or a single person. Profit is one of the fundamental parts of business. The activities associated with manufacturing and distribution of goods as well as services are supported for making a profit.
FAQs on Concept and Characteristics of Business
1. What is the basic definition of business?
The business is a joint effort that is made by the group of individuals for enabling them to buy specific products and selling them to make a profit. These goods or services cater to the requirements of the society. The three fundamental characteristics of a business are: The individuals must work together for successful results, the products should cater to the requirements of the society, and the businesses must make excellent profits thereby seeking the development for society.
2. What is one of the important characteristics of a business?
One of the most important characteristics of any business is making good profit. It is important for the seller or the business owner to build good relationships with buyers or customers for exchange of goods. The increase in the volume of sale of products contributes to a business getting maximum benefits and earning good profits. There are different ways and methods of generating more profits for a business and it is important to improve the sales for increasing the profit.
3. What is the risk factor associated with any business?
It is natural for any business to attract risks and it is a well known concept that the higher the risk, the higher are the returns or profits. When anyone is starting a new business, there is no certainty that the business might be successful or not. Even if it is successful, the margin of profits might differ from the projected estimates and there are lots of variables involved with businesses that impact the outcome.
4. What are the advantages of referring to the Vedantu notes on “Concept and characteristics of business”?
There are several benefits of studying from the Vedantu notes on “Concept and characteristics of business” as well as other topics or subjects. The Vedantu notes provide lucid explanation, vivid illustrations, and comprehensive description of the concepts to ensure that the students get the best resource for learning. These notes are incredibly accurate and are drafted by highly qualified professionals with an excellent grasp of the subject matter.
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6. What is a Business?
Business is the joint effort made by a group of individuals so that they can buy certain products and sell them to make a profit. These goods and services meet the needs of society. However, the business has three primary characteristics such as:
- All the individuals must work together as one for having successful results.
- Business products must meet the needs of society.
- The business must make a good profit, seeking better development of society.
7. State any one Characteristic of the Business.
The most important characteristic of a business is to make a good profit. A seller must build a good relationship with the buyer for the exchange of goods. Thus, with more sales of the products, a business gets maximum benefits and earns a good profit. However, to run a business, it is also important to increase the product sale, which can reduce its cost and hence attract more and more customers for your product. Eventually, the motive is to make a good profit.
