What Is Business?

Business is the process of making goods and services available to the people of the society at large for adequate consideration or exchange. Business involves the creation, acquisition and exploitation of wealth in the form of movable assets. In other words, it is the whole complex of gainful human activities. It includes manufacturing, trading, banking, insurance, warehousing etc.

In simple terms, a person doing some work from morning till night for the sake of earning a living is engaged in business. According to Melvin Anshen, “Business is the way men make their living”.

Business can be defined in a very broad manner and all kinds of activities that lead to the creation and distribution of goods and services are called as business. However, the definition is based on a certain principle and it requires regularity in such activities. Moreover, the activity must be legal in nature and it should also be profitable. The profit motive is a major objective of every business. It is the reason behind the whole business activity. Without profit, no business can run.

The business enterprise has to bear the day-to-day expenses and maintenance costs of the goods and services it produces. Therefore, it is essential for a business to earn profit on a regular basis. It is the only way that a business can grow and thrive. The more profits it earns, the greater its goodwill and value becomes in the market. The more its goodwill and value increases, the easier it is for it to borrow money from financial institutions.

Profit is the main objective of a business because it motivates the businesspersons to produce quality-rich goods and services. The businesspersons want to sell the goods and services at a higher price than their cost in order to earn a larger amount of money, i.e. profit. The satisfaction of the consumers is also the major goal of any business. If the consumers are satisfied with the quality of the goods and services, they will purchase them willingly. If the consumers are not satisfied, they will look for substitutes.

In addition to the above mentioned objectives, a business should set up definite and clear-cut goals at both the corporate level and functional level. For example, a business should establish its aims and targets related to its growth in terms of size and scope. It should lay down objectives related to its production, marketing, financing and personnel.

Similarly, it should set up goals related to its sourcing, purchasing and transportation operations. The business should ensure that the quality of the raw materials it purchases is high and that it receives the goods at the right time to meet its deadlines. For this purpose, it should establish a relationship with its suppliers and try to understand their needs.

Another important point is that a business should have the ability to change its strategy in accordance with the changing environment. For example, if it wants to expand its market, it may need to take over or merge with other businesses. It may even decide to break up into different segments and become a smaller, more focused business.