AKTU/MBA2 ND SEM/ BUS.ENVIRONMENT/ UNIT 1/

1. KMB 201- UNIT -1 -PART1
Business-Meaning & Characteristics
Dr .ANURAG KUMAR
ASSOCIATE PROFESSOR
DEPARTMENT OF BUSINESS ADMINISTRATION
ABES –EC GHAZIABAD

2. Business
Business: – The word business technically means a state of
being busy.
All creative human activities relating to the production of
goods or services for satisfying human wants are known as
business. It is also a gainful procedure through which
individuals and groups exchange goods and services.
It confines its study only to those human activities in
relation to exchange of goods and services for money.
Business is a human activity, which is undertaken to
provide goods and services to the people with a view to
earn profit.

3. Business
All human activities may be broadly divided into two categories:
(i) economic activities
(ii) non-economic activities.
The work of a farmer, manufacturer, teacher, doctor, trader
etc. are some examples of economic activities. They are
primarily concerned with the production, distribution and
consumption of goods and services. Economic activities are
undertaken to earn one’s living and for the production of
wealth.

4. Business
Besides economic activities, people also undertake a number of
activities for mental satisfaction. They engage in charitable
work, practice religion, undertake recreational activities and
also do many things out of love for others or out of patriotic
feelings. These activities are known as non-economic activities.
These activities are undertaken not for any material reward or
gain but for one’s happiness, pleasure or satisfaction which can
not be measured in terms of money.

5. Types of Economic Activities
• When a person is regularly engaged in a particular economic activity,
it is known as his or her occupation or vocation. Occupations may be
classified into three categories —
(i) Business,
(ii) Profession and
(iii) Employment (Service).

6. Types of Economic Activities
• Business: Activities connected with the production or purchase and
sale of goods or services with the object of earning profit are called
business activities. Mining, manufacturing, trade, transportation,
insurance, banking are business activities. Thus business may be
defined as an economic activity involving regular production or
purchase and distribution of goods and services with the object of
earning profits.

7. Types of Economic Activities
• Profession:
• Any activity which requires special knowledge and skill to be applied
by an individual to earn a living is known as profession. For example
doctors, teachers, lawyers, engineers and accountants are engaged in
profession. Profession involves intellectual activity. It is not a
mechanical or routine operation.

8. Types of Economic Activities
• Employment
• When a person works regularly for others and gets wages/salary in
return, he is said to be in employment. Thus factory workers, office
assistants and managers are said to be in employment. Those in
employment are called employees. Employment may be in
government department or in private organisation. It may be full-time
or part-time, permanent or temporary.

9. Types of Economic Activities
• The main features of employment are :
(i) Employees always work for others.
(ii) There are certain terms and conditions of work.
(iii) The people involved earn fixed income.

10. Business
Nature of Business: The nature of business is best understood on
the basis of its characteristics or features which are as follows:
1. Business is an economic activity
2. It includes the activities of production or purchase and
distribution.
3. It deals in goods and services.
4. It implies regularity of transactions.
5. It aims at earning profits through the satisfaction of human
wants.
6. It involves risk; it is not certain that adequate profit will be
earned.
7. It creates utilities.
8. It serves a social purpose by improving people’s standard of
living

11. Business
Characteristics of Business:
1. Entrepreneur : There must be some one to take initiative for
establishing a business. The person who recognized. The need for a
product or service is known as entrepreneur. The entrepreneur is a
key figure in the process of economic growth .
2.Economic activities.
3.Deals In Goods And Services: Business always deals in goods and
services .The goods include to both customers goods like clothes
,shoes, toothpaste, and industrial goods like ,raw material, tools
and machinery.
4.Risk : The business involves a greater element of risk and
uncertainty . In fact, a business man tries to foresee the future
uncertainties and plan his business activities accordingly.

12. Business
Characteristics of Business:
5.Profit:Profit is the most important characteristic of business.
Business is started for purpose of earning profit. Profit is driving force
of every business activity.
The incentive of earning profits keeps a person in business and is also
necessary for the continuity of business .This does not mean that
there will be no chances of losses in business.
6.Production : Business always deals on production of goods and
services. The object of business is to provide goods and services to
society for the purpose of earning profit. The goods must be
produced or manufactured .So that these can be sold in market.
7.Sales:Sales are related with the transfer of values .The production
for personal use does not come under the scope of business for
example if a shoe maker makes a pair of shoes and wear himself .This
act is not treated as business. If a person makes a pair of shoes for the
purpose of selling, now this act is treated as business.

13. Business
Characteristics of Business:
8.Finance: Finance is another important character of business . No
businessman can start business without finance ,finance is the lifeblood
of every business organization.
9.Management: Every enterprise needs an organization for its successful
working. Various business activities are divided in to departments
,sections and jobs .and organization creates the framework for
managerial performance and helps in coordinating various business
activities .
10.Regularity: In business, only those transactions are included which
have regularity and continuity .and isolated transactions will not be
called business ,even if the person earns profit from that deal. A person
builds house for himself. but later on sells it on profit.
11.Creation of utility: The goods are provided to the consumer as per
there liking and requirements. Business creates various types of utilities
in goods so that consumer may use them.

14. Business
Characteristics of Business:
12.Consumer Satisfaction: The ultimate aim of business is to
supply goods to the consumers. The goods are produced for the
consumers. If a consumer is satisfied the he will purchase the same
thing again. Otherwise he will go for an alternative commodity.
14.Planning: Planning is the most important character of business
.Planning is related with all the activities of business. Planning is
always based on past experience.