Essential Features of Business And Objectives of Business
Now let us study the important characteristics of the business. We can list the following five broad features of the business.
1. Dealings in goods and services: Business deals with goods and services. The goods may be consumer goods such as sweets, bread, cloth, shoes, etc: They may be producer's goods such as machinery, equipment, etc., which are used to produce further goods for consumption. The business also deals with services such as transport, warehousing, banking, insurance, etc., which are intangible and invisible goods.
2. Production and/or exchange: You can call an economic activity a 'business' only when there is production or transfer or exchange or sale of goods or services for the value. If goods are produced for self-consumption or presentation as gifts, such activities shall not be treated as a business. In business activity, there must be two parties i.e., a buyer and a seller. Such activity should concern the transfer of goods or exchange of goods between a buyer and a seller. The goods may be bartered or exchanged for money.
3. Continuity and regularity in dealings: A single transaction shall not be treated as a business. An activity is treated as a business only when it is undertaken continually or at least recurrently. For example, if a person sells his residential house, it is not considered as a business. If he repeatedly buys houses and sells to others, such activity comes under business. But how frequently the transaction should occur depends on the nature of the activity. For example, a shipbuilding company takes a long time to manufacture and sell a ship. At the same time, a vegetable vendor purchases vegetables from the market in the morning and sells them out to his customers by evening. But both these activities are treated as a business.
4. Profit motive: Earning profit is the primary motive of business. This is not to undermine the importance of the element of service in business activity. In fact, a business will flourish only when it is able to serve its customers to their satisfaction. Profits are essential to enable the business to survive, to grow, expand, and to get recognition.
5. Element of risk: In every business, there is a possibility of incurring a loss. This possibility of incurring a loss is termed as risk. The element of risk exists due to a variety of factors that are outside the control of the business enterprise.
There are two kinds of risks.
(1) Risks whose probability can be calculated and can be insured. Losses due to fire, floods, theft, etc., are some examples.
(2) Risks whose probability cannot be calculated and which cannot be insured against, e.g., changing technology, fall in demand, changing fashions, short supply of raw materials, etc. These risks are to be completely born by the enterprise.
Objectives of Business
You have learned that the primary objective of a business is to earn a profit. Although profit plays an important role as a criterion of success, a business may not exist for long with the sole objective of earning profit. As stated by Henry Ford, "business is not mere money chasing ' but it also should aim at serving the community". According to Urwick, "profit can no more be the objective of a business than eating is the objective of living". Thus, serving community is regarded as another important objective of the business. In fact, some authors regard 'service to the community' as the major objective of business and state that this provides the main justification for the existence of business as an important human activity.
Therefore, while profit is necessary for the businessman to stay in business, he ought to aim at something more for its survival and growth.
'The objectives of business could be listed under three broad headings:
(1) economic objectives,
(2) social objectives, and
(3) human objectives.
Economic Objectives: Basically being an economic activity, the primary objectives of the business are economic. Some of the main economic objectives are:
1. Earning satisfactory profits.
2. Exploring new markets and create more customers.
3. Growth and expansion of business operations of the firm.
4. Making innovations and improvements in goods and services so that customers get improved and more economic goods and services.
Social Objectives: Business, being a part of the society, has obligations towards the society also. Some major social objectives are :
1. Providing more and more employment opportunities to the people in the country.
2. Supply of quality goods to the community.
3. Providing goods at reasonable prices.
4. Ensure fair returns to investors.
5. Voidance of profiteering and unfair practices.
6. Production of goods in accordance with national interests and priorities.
Human Objectives: Business activity is, generally, carried out through employees who are human beings. In fact, the efficiency and the success of the business enterprise depend on the motivation and ability of its employees. Therefore, a business must also have some human objectives to safeguard the interests of its employees. Some of the major human objectives are :
1. Fair deal to employees in terms of wages and incentives.
2. Providing better working conditions and environment to the employees.
3. Provide job satisfaction.
4. Provide employees more and more' promotional/growth opportunities.