BUSINESS AND ITS NATURE

                     

                      

BUSINESS AND ITS NATURE

1) What is Business?

 In daily life, we purchase many products from the markets. These product are produced by different businesses operating in the markets. A market is a place where buyer and seller of a particular product meet and buyer purchase the product from the seller by paying a price.These business work in markets to sell different goods and services to the consumers by estimating their economic needs and wants for different products.

                          An economic need is a desire for which a good or service is required. The different needs of customers include the need for food, clothes, residence, travel,entertainment etc. A business exists to fulfill these economic needs of the customers and earn profits in doing so. We can define business as any legal activity done for purpose of earning profit by selling different goods or providing services to a person. The above  definition of a business has three main components: legal activity , profit and products.

Its Nature

- Legal Activity

 A business needs to be in the legal form in country which requires registering it with the relevant government department. The registration of business is necessary to make its activities legal. For example, the selling of car by a smuggler is not considered to be a business activity. Generally , a government decides which activities are allowed to be conducted in a business and which are not , depending on their social and economic utility.

-Profit:

 profit is the main objective of a business. The profit is defined as an amount which a person receives from the consumers after deducting the relevant expenses. In a simple equation form it can be shown as:

                                                            Profit = Sales - Expenses

 The profit is calculated by adding the all amounts received from the consumers and then deducting from it the all expenses incurred on the production and selling of that product.To increase the profit a business, a person is required to increase its sales and reduce its expenses.

-Product:

 A business can be started in the form of selling goods or providing services to the consumers. For example, a company may start producing clothes to sell it to the consumers.Another company may serve its customers by opening a hotel and serving different foods. Every business exists to meet the economic needs and wants of the customers.

                                                                           

      

 A business is start to supply goods or to deliver services to the public at reasonable price. The target of all business is to sell more products in the market by meeting the demands of customers. The customers of a product include all people who buy the products of that company.