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Concept and characteristics of business: The concept of business arises out of a very basic and obvious everyday fact in the world. Every human being needs different types of goods and services in the course of his living. However, it is known that everyone does not possess everything he wants. Everyone has some things in excess of what he wants and he barters them for those he is in need of. In order to appreciate how business activity is different from other activities in society, the nature of business or its fundamental character must be explained in terms of its distinguishing characteristics,

Comparison of business, profession and employment:
As has been mentioned earlier, economic activities may be divided into three major categories viz.,
  1. Business
  2. Profession
  3. Employment
Business refers to those economic activities, which are connected with the production or purchase and sale of goods or supply of services with the main object of earning profit. People engaged in business earn income in the form of profit. Profession includes those activities, which require special knowledge and skill to be applied by individuals in their occupation.

Classification of business activities: Various business activities may be classified into two broad categories — industry and commerce. Industry is Concerned with the production or processing of goods and materials. Commerce includes all those activities groups of firms producing similar or related goods. For example, cotton textile industry refers to all manufacturing units producing textile goods from cotton. Similarly, electronic industry would include all firms producing electronic goods, and so on. Further, in common, certain services like banking and insurance are also referred to as industry, say banking industry, insurance industry etc.

Objectives of business: A business objective is what is central to the existence of the business entity. It is the reason why it exists It is generally believed that business activity is carried on only for profit. Business persons themselves proclaim that their primary objective is to produce or distribute goods or services for a profit However, it is widely accepted nowadays that business enterprises are part of society and need to have several objectives, including social responsibility to survive and prosper in the long run. Profit is found to be the leading objective but not the only one. Although earning profit cannot be the only objective of business, its importance cannot be ignored.

Business risks: The term 'business risks' refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events. For example, demand for a particular product may decline due to change in tastes and preferences of consumers or due to increased competition from other producers. Decrease in demand will result in lesser sales and profits. Although no business enterprise can escape the presence of risk, there are many methods it can use to deal with risk situations. For instance, the enterprise may (a) decide not to enter into too risky transaction - this is called risk avoidance; (b) take preventive measures like firefighting devices to reduce risk - risk reduction; (c) take insurance policy to transfer risk to insurance company - risk transfer; (d) assume risk by making provisions in the current earnings as is the case of provision for bad and doubtful debts - risk retention and management; or (e) share risks with other enterprises as manufacturers and wholesalers may do by agreeing to share losses which may be caused by falling prices.

Starting a business — basic factors: Successful results in business depend largely upon the ability of the entrepreneurs or the starters of a new business to anticipate problems and solve them with minimum cost. And as always said, well begun is half done. This is especially true of the modern business world where competition is very tough and risks are high. Some of the problems, which business firms encounter, are of a basic nature. For example, to start a factory, plans must be made and implemented about such problems as the location of the business, the possible number of customers, the kind and amount of equipment, the shop layout, purchasing and financing needs, and hiring of workers. These problems become more complex in a big business.

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