Literally, the word “business” means the state of being busy. Generally, the term business includes all human activities concerned with earning money. In other words, business is an activity in which various persons regularly produce or exchange goods and services for mutual gain or profit. The goods and services produced or purchased for personal use are not included in “business”.
DEFINITION
According to L. H. Haney
“Business may be defined as human activities directed toward providing or acquiring wealth through buying and selling of goods.”
James Stephenson says that:
“Every human activity which is engaged in for the sake of earning profit may be called business.”
In the words of B. W. Wheeler
“An institution organized and operated to provide goods and services to the society, under the incentive of private gain” is business.
CHARACTERISTICS
Following are the essential characteristics of a good business:
1. Capital
Capital is the lifeblood of every business. It is the most essential and important element of business. In case of deficiency, loans can be taken from various financial institutions.
2. Creation of Utility
The utility is an economic term referring to that characteristic of a certain commodity, which can satisfy any human need. Business creates utility, which gives benefit to the entire society as well as the businessmen.
3. Dealing in Goods and Services
Every business deals with the sale, purchase, production, and exchange of goods and services for some consideration.
4. Employment
Business is a good source of employment for its owners as well as for other people, for example, employees, agents, transporters, etc.
5. Islamic Process
Business is an Islamic way of earning living. Income from the business is known as profit, which is Rizq-e-Halal. The Holy Prophet Muhammad himself did prosperous business.
6. Motive
The motive of business is to earn profit. Otherwise, it will not be termed as a business.
7. Organization
Every business needs an organization for its successful work. A proper organization is helpful in the smooth running of the business and achieving the objectives.
8. Productions or Purchase of Goods
A businessman deals in the production or purchase of goods. These goods are supplied to the people. So, more goods must be produced so that the demand of people may be fulfilled.
9. Regular Transaction
The business has a nature of regular dealings and a series of transactions. So, in business, only those transactions included have regularity and continuity.
10. Risks and Uncertainty
Business involves a large volume of risk and uncertainty. The risk element in business keeps a person vigilant and he tries to ward off his risk by executing his policies properly.
11. Sale or Transfer for value
Another characteristic of business is the sale or transfer of goods for value.
12. Social Welfare
Business does not only satisfy the producer, but also the consumer when products are offered for sale at low prices in markets.
NATURE OF BUSINESS
The following points state the nature of business in brief:
1. Economic Activity
Business is an economic activity as it is concerned with the creation of wealth through the satisfaction of human wants.
2. Human Activity
Business is an economic activity and every economic activity is done by human beings. Thus, business is one of the most important human activities.
3. Social Process
Business is run by owners and employees with the help of professionals and customers.
Thus, business is a social process.
4. System
Business is a systematic arrangement of various elements, which leads to the attainment of a particular objective, according to a well-established plan.
BUSINESS
The word “Business” includes all human activities concerned with earning money. In other words, business is an activity in which various persons regularly produce or exchange goods and services for mutual gain or profit.
COMPONENTS OF BUSINESS
Business bears the following components:
- Industry
- Commerce
- Business
- Industry Commerce
INDUSTRY
The industry is connected with the production and preparation of goods and services. It is a place where raw material is converted into finished or semi-finished goods, which can satisfy human needs or can be used in another industry as a base material. In other words, industry means that part of business activity, which is concerned with the extraction, production, and fabrication of products.
KINDS OF INDUSTRY
Primary Industry
Secondary Industry
1. PRIMARY INDUSTRY
Primary industry is engaged in the production or extraction of raw materials, which are used in the secondary industry. Primary industry can be divided into two parts:
- Extractive Industry
Extractive industries are those industries, which extract, raise or produce raw material from below or above or above the surface of the earth. For example, fishery, extraction of oil, gas, and coal, etc.
- Genetic Industry
Genetic industries are those, which are engaged in reproducing and multiplying certain species of animals and plants. For example, poultry farms, fishing farms, dairy farms, plant nurseries, etc.
2. SECONDARY INDUSTRY
These industries use raw materials and make useful goods. The raw material of these industries is obtained from primary industry. Secondary industry can be divided into three parts:
Constructive Industry
All kinds of constructions are included in this industry. For example, buildings, canals, roads, bridges, etc.
Manufacturing Industry
In this industry, the material is converted into some finished goods or semi-finished goods. For example, textile mills, sugar mills, etc.
Services Industry
These industries include those industries, which are engaged in providing services of professionals such as lawyers, doctors, teachers, etc.
COMMERCE
Commerce is the second component of the business. The term “commerce” includes all activities, functions, and institutions, which are involved in transferring goods, produced in various industries, from their place of production to ultimate consumers.
In the words of Evelyn Thomas:
“Commercial occupations deal with the buying and selling of goods, the exchange of commodities and distribution of the finished goods.”
Concludingly, “trade and aids to trade” is called commerce.
No comments:
Post a Comment