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Nature and purpose

  1. Prepared By PRASANTH.S.R
  2. Concept of business Business means busyness or the state of being busy . Business includes all occupations in which people regularly engage in activities with a view to earning profit. Such activities may consist of production or purchase of goods for sale , or exchange of goods or providing services to satisfy the needs of others
  3. Human Activities In every society , people undertake various activities to satisfy their wants. These activities may broadly be classified in to two; Economic activities Non - economic activities
  4. Economic activities Activities undertaken with the object of earning money or livelihood are known as economic activities . for example ; a teacher goes to school, a manager to his office, a doctor to his clinic , a worker to the factory and a lawyer to the court, etc.
  5. Non-economic Activities Activities which are undertaken to derive psychological satisfaction or for religious or social obligations, or are performed out of love, sympathy, patriotism and similar sentiments are called non economic activities. A house wife cooking for the family, a man visits to the temple for the day’s prayers are all examples of non-economic activities. The purpose of such activities is not to earn money . It gives the happiness, pleasure or satisfaction , which cannot be expressed in terms of money
  6. Characteristics of business activities An Economic Activity Production or Procurement of Goods & services Sale or exchange of goods & services Dealing in goods & services on a Regular basis Profit Earning Uncertainty of Returns
  7. An Economic Activity Business is considered to be an economic activity since it is concerned with the production and distribution of goods and service. And carried on regularly with the object of earning profit.
  8. Production Or Procurement Of Goods And Services Before goods are offered to people for consumption, these must be either produced or procured from various sources. Thus, every business enterprise either produce on its or assembles them from producers to be sold to consumers. Goods may be consumer goods (items of daily use like pen , pencil ,soap, sugar ). Services denotes facilities offered to; transportation, insurance, banking ,electricity etc..
  9. Sales Or Exchange Of Goods And Service Sales or exchange of goods and service is for the satisfaction of human needs. All business activities involves production, purchase, sale and transfer of goods and service And essential characteristics of business is that there should be sale or exchange of goods and services between buyer and seller.
  10. Dealing in goods and services On a Regular Basis Business consists of dealing in goods and service on a regular basis. Goods produced or purchased for business purpose may be consumers goods like cloth ,shoe ,food stuffs etc.., or capital goods like tools and machinery. Consumer goods are used directly for consumption. Capital goods assist in the production of consumer goods. Services are those facility offered to customers in the form of transportation, supply of electricity, water etc...
  11. Profit motive One of the main purpose of business is to earn income by way of profit . It must earn profit for its survival, growth, expansion, research and development and for its own prestige . Profits must be earn through legal and fair ways.
  12. Uncertainty of Returns It is through risk - taking that a businessman earns profits. Risk means the possibility of a loss. Business decision are based on several assumption which may not come true. Profits of a business depend not only upon the efforts of the business concerned but also upon a large number of uncertain and uncontrollable factors like, • change in technology • change in consumers taste and fashions • increase in the degree of competition • labour problems • shortage of raw materials • fire, theft, natural calamities and accidents