concept, meaning, features of business

1. BUSINESS

2. INTRODUCTION
• The ordinary meaning of the word business is busyness, i.e. any
activity in which a man is busy.
• A person may be busy in two kinds of activities-
1. Economic activity
2. Non economic activity
• Economic activity denotes to work, efforts, and acts of people or human
busy in connection with the production of wealth.
• Economic activity of a man is called business.

3. INTRODUCTION
• Business may be defined as a human activity directed towards
producing or acquiring wealth through buying and selling of goods
and services.
• Business is an integral part of modern society.
• Modern society cannot exist without business.
• It is an organized and systematic activity for earning profit.

4. INTRODUCTION
• Business improves the standard of living of the people by providing
better quality and large variety of goods and services at the right
time and at the right place.
• Business provides opportunities to work and earn a livelihood.
• It generates employment in the country, which in turn reduces
poverty.

5. Meaning and Definition of Business
• Business is a wide term and signifies all economic activities carried
on with the objective of earning money or profit or gain.
• Economic activities involve production, exchange, and distribution
of goods and services.
• The term business can be explained to mean an economic activity
which involves production, exchange, and distribution of goods and
services with a view to earn profit or gain.

6. Meaning and Definition of Business
• Boone & Krutz defined business as-
“Business comprises all profit seeking activities and enterprises that
provided goods and services necessary to an economic system. It is
the economic pulse to a nation striving to increase society’s standard
of living. Profits are a mechanism for motivating these activities”.
• According to Peter F. Drucker, “Any organization that fulfils
itself through marketing of product or service is a business.”

7. Meaning and Definition of Business
• According to B. O. Wheeler, “Business is an institution organized
and operated to provide goods and services to society under the
incentive of private gain.”
• According to Urwick and Hunt, “Business is any enterprise which
makes, distributes or provides an article or service which other
members of the community need and are able and willing to pay
for.”

8. Features or Characteristics of business

9. Features or Characteristics of business
• Business is an economic activity, as it is conducted with the primary
objective of earning money.
• Goods and services are produced or procured by business entities, so
as to add value and sell them to the consumer.
• Business must involve the transfer of goods to the customer for value,
through selling.
• Every business requires regularity in transactions, i.e. an isolated
transaction of exchange of goods or services will not be considered as
business.

10. Features or Characteristics of business
• The basic purpose of business is to make the profit from its activities.
• Risk is the key element of every business, concerned with exposure to
loss.
• In business, the return is never predictable and guaranteed, i.e. the
amount of money which the business is going to reap is not certain.
• No matter, in which type of business the company is engaged, it should be
legal in the eyes of the law.

11. Features or Characteristics of business
• The consumer is regarded as the king in the market, and so the aim
of business is to supply goods and services to consumers, so as to
satisfy their wants.

12. Importance of Business

13. Importance of Business
• It is the key to revenue generation for the business owner since
it brings in profit and proves to be a source of income for the owner.
• It is essential for the economic growth of a country since high
revenue means higher tax collection.
• A country with more industrial units and companies experience a
higher rate of employment and better living standards.
• Manufacturing units involve large-scale production, which
ultimately reduces the cost of production, and people get a
continuous supply of goods at a reasonable price.

14. Importance of Business
• It is a long-term process which requires the human resource to
function correctly. Therefore, it creates job opportunities.
• A good strategy and high customer satisfaction lead to a strong
customer base aiming at market expansion.

15. Classification of Business Activities
• According to Sec.2 (13), of The Income Tax Act, 1961, “Business
means any trade, commerce or manufacture or any adventure in the
nature of trade, commerce or manufacture.”
• Business= Trade + Commerce + Industry

16. Trade
• The process of buying and selling of goods, is called Trade.
• One who buys and sells is a trader.
• A trader is a middleman between the producer and the consumer.
• Trade may be classified into two categories-
1. On the quantity basis
2. On the region basis

17. Trade
Classification of Trade
On the basis
of quantity
Wholesale
trade
Retail
trade
On the basis
of region
Domestic
trade
Foreign
trade

18. Trade
• In a wholesale trade, a wholesale trader purchases in large quantities
from the producers, and sells in small quantities to the retail traders.
• In a retail trade, A retail trader is one who purchases from the
wholesale trader or sometimes directly from the producer, and sells in
smaller quantities to the ultimate consumers.
• Trade may be carried on within a country when it is called home or
domestic trade.
• Trade may be called foreign or international trade when it is carried
on between two different countries

19. Commerce
• To help trade, some facilities such as storing, grading, financing,
transporting and insuring are needed, these are called Commerce.
• It is concerned with making the same available to those who need them.
• It is mainly concerned with distribution of goods.
• It embraces all those functions which are essential for maintaining a free
and uninterrupted flow of goods.
• The term commerce includes ‘‘aids to trade’ or “auxiliaries to trade”.

20. Commerce
• Aids to trade may be classified into five categories:
i. transportation,
ii. warehousing,
iii. insurance,
iv. advertising, and
v. Banking.

21. Industry
• The production side of business activity is referred as industry.
• It is a business activity, which is related to the raising, producing,
processing or manufacturing of products.
• The products are consumer’s goods as well as producer’s goods.
Consumer’s
goods
Producer’s
goods

22. Industry
• Consumer goods are goods, which are used finally by consumers.
E.g. Food grains, textiles, cosmetics, etc.
• Producer’s goods are the goods used by manufacturers for
producing some other goods. E.g. Machinery, tools, equipment's,
etc.
• Expansion of trade and commerce depends on industrial growth.
• It represents the supply side of market.

23. Industry
• There are various types of industries.
Primary industry
Genetic industry
Extractive industry
Manufacturing industry
Construction industry
Service industry

24. Industry
• Primary Industry:
Primary industry is concerned with production of goods with the
help of nature.
It is a nature-oriented industry, which requires very little human
effort.
e.g. Agriculture, farming, forestry, fishing, horticulture, etc.

25. Industry
• Genetic Industry:
Genetic industries are engaged in re-production and
multiplication of certain spices of plants and animals with the
object of sale.
The main aim is to earn profit from such sale.
e.g. plant nurseries, cattle rearing, poultry, cattle breeding, etc.

26. Industry
• Extractive Industry:
 Extractive industry is concerned with extraction or drawing out
goods from the soil, air or water.
Generally products of extractive industries come in raw form
and they are used by manufacturing and construction industries
for producing finished products.
e.g. mining industry, coal mineral, oil industry, iron ore,
extraction of timber and rubber from forests, etc.

27. Industry
• Manufacturing Industry:
Manufacturing industries are engaged in transforming raw
material into finished product with the help of machines and
manpower.
The finished goods can be either consumer goods or producer
goods.
e.g. textiles, chemicals, sugar industry, paper industry, etc.

28. Industry
• Construction Industry:
Construction industries take up the work of construction of
buildings, bridges, roads, dams, canals, etc.
This industry is different from all other types of industry
because in case of other industries goods can be produced at one
place and sold at another place.
But goods produced and sold by constructive industry are
erected at one place.

29. Industry
• Service Industry:
In modern times service sector plays an important role in the
development of the nation and therefore it is named as service
industry.
The main industries, which fall under this category, include
hotel industry, tourism industry, entertainment industry, etc.