It is the hope of making money that induces people to go into business. Business must earn profit by serving the society. However, cooking food in a restaurant for customers and charging from them is a business. Though profit making is an important objective of any business, it should not be the sole objective of business. Production or Procurement of Goods and Services, 3. Changes in societal norms, political ideology, fashion trends, economic condition and regulation impact businesses in many ways. The goods may be consumers’ goods such as bread, rice, cloth, shoes, etc. Recurring sale rather than an isolated deal is the hallmark of business. Characteristics of Business – 5 Characteristics: Sale Transfer or Exchange, Dealings in Goods and Services, Regularity in Dealings, Profit Motive and ... 1. But when a person cooks for those who patronize his restaurant and pay for their meals, it becomes his business. The ultimate object of production and sale is to meet some felt need of the people in the community. Everything you need to know about the characteristics of business. 3. The risks are related with certain factors like changes in consumer tastes and fashions, changes in methods of production, increased competition in the market, fire, natural calamities, etc. Share Your PPT File, Characteristics of Business – 10 Characteristics: Dealings in Goods and Services, Profit Motive, Risk, Creation of Utilities, Economic Activity, Social Institution and a Few Others, Business involves a series of dealings. For example, wheat is produced in large quantities in Punjab and Haryana. Business involves production and distribution of goods for sale for gain or profit or some reward. If, for instance, a person cooks at home for personal consumption, if is not business, for its does not entail any transfer for value or exchange. Services consist of those items which are not stored by consumers, such as- transport services. You also have the option to opt-out of these cookies. In order to survive, companies produce and distribute many products at the same time. Connected with Production 17. For example – Tarun has set up a factory to manufacture glassware and sell them through a retail shop in Faridabad. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. They serve a useful purpose and involve optimal utilization of resources. Risk or uncertainty of return is an essential feature of business. The primary aim of a business concern is to earn profit as it is a driving force behind every business. Goods and services are the centre of business. Business could be local or it could be Global. (ii) Old Concept of Business-The term business was conceived as – “the business of business is to do business” and they are not in business for their health. Before an activity can be called business there must, therefore, exist not only the goal of profit but the risk of loss. Disclaimer Copyright, Share Your Knowledge Your email address will not be published. 16. There is uncertainty of return on amount invested in business. 10. For instance, cooking food for personal consumption is not business. The hope of making a good profit attracts men of ability to business. At the same time, the ability of a person to understand a business situation and respond to it on the basis of one’s intelligence and experience differs from person to person. Business also deals with services (e.g. instance, if a person sells his old scooter, it is not business. For example – Vivan sells one of his antique showcase at a profit to his colleague. For example, one may not be able to sell all the goods produced or purchased, amount due from credit sales may not be collected, etc. Information so collected helps the business units to take correct and timely decisions. The goods or services may be procured by an enterprise through production and/ or purchase. But the Hindustan Times Ltd. and Bajaj Auto Ltd. are business concerns because they are regularly dealing in the same article. 5. Corporate Social Responsibility is now a regulatory requirement. Characteristic # 6. Any activity or transaction that is required to complete the process of making goods or services available for a price to the consumers is called a business activity. 3. It is through risk-taking that any businessman earns his profit. Today’s business is service-oriented rather than profit-oriented. The element of risk exists due to a variety of factors such as – change in the demand of goods, risk of loss due to fire, earthquake, pilferage, theft etc., competition, changes in government policies etc. Dealing in Numerous Transactions 14. Business and society are closely inter-related with each other and therefore, there is a great interaction between the two. Profit Motive: Profit is an indicator of success and failure of business. Services are intangibles, such as supply of electricity, insurance, banking, etc. Privacy Policy3. It includes transactions in goods as well as services. (iii) Sale or Exchange of Goods and Services Business involves transfer or exchange of goods and services for value addition. Production, if done with a profit and economic motive is business. 8. Therefore, one single transaction of sale or purchase does not constitute business. But cooking food and selling it to others for a price, becomes business. In order to be called a business enterprise, the activities must be continuous. Business enterprises are subject to risks and uncertainties. Share Your Word File This is not to undermine or belittle the importance of the element of service in business activity. It is caused by some unfavorable or undesirable event. The foremost characteristic of business is the exchange or transfer of goods and service for price or value. Risk implies the uncertainty of reward or the possibility of loss. In the words of Peterson and Plowman, “Business may be defined as an activity in which different persons exchange something of value, whether goods or services, for mutual gain or profit”. Prof. L.R. Business involves a series of dealings. Goods involve consumer goods such as clothes, shoes, etc. Recurring and repetitive transactions of sale and purchase alone means business.” Therefore, there must be repetition and recurrence of transactions. A single transaction like sale of old newspaper by a housewife or the sale of one’s old scooter is not business though the seller gets money in exchange. For e.g., if a person sells his old television for money, then it cannot be called as business. For example, a farmer who keeps cows to obtain milk for his family is not running a business. To that extent, there are certain principles that need to be followed. Production of several goods is seasonal but their demand remains throughout the year. The goods produced or acquired for business purposes may be consumers’ goods like cloth, crockery, etc., or producers’ goods like tools and machinery. The basic objective of undertaking a business is to earn profit. Top 10 Qualities Of A Successful Businessman. 4. Profit Motive 5. Business refers to a set of organised activities for production and exchange of goods and services with an objective to earn profit. are some of the many factors which create risk in business leading to uncertainty of sales and thereby profits. ii. It plays the role of a regulator by forming various acts and policies. A single transaction involving buying and selling does not become business. Dealings in Goods and Services: Every business enterprise produces and/or buys goods and services for selling them to others. To the producer it must give some profit and to the consumer some usage value. In fact, profit is, in a sense, a reward for the individual ability or efficiency of the enterpriser and also for the service that ne renders to the community.

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