BBA Meaning of Business Concept Study Material
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Meaning of Business
The business is an activity which is primarily pursued (carried) with the objective of earning profit. A business activity involves production or exchange of goods or services so as to earn profit.
It can be said that the term ‘business’ includes all those human activity which are related to the production and distribution of goods and services with the object of earning profit through satisfying customers/consumers needs and wants.
Example : Various kind of shops in the market dealing in various articles and commodities which are in demand.
Definitions of Business (BBA Nots)
“Business is an enterprise which distributes or provides any article or service which other members of the community need.”— Urwick and Hunt
“The term business means the exchange of goods, money or services for mutual benefits.”
“Business may be defined as human activities directed towards producing or acquiring wealth through buying and selling goods.”
Characteristics of Business (BBA Business Organisation Notes)
- Profit Motive : Necessary for continuity of the business.
- Dealing in Goods and Services : Goods (i) consumers goods, e.g., cloth books etc., (ii) produver e.g., machinery, services, electricity water, gas etc.
- Production/or Procurement or Exchange of Goods : For value (price).
- Element of Risk and Uncertainty : Fashion, climate, taste, shortage of raw material, power fuel etc.
- Entrepreneur : Take initiatives and bears risk.
- Creation of Utility : e.g., place utility, time form etc.
- Organisation : Proper organisation, e.g., managers appointed.
- Financing : Fixed and working capital (availability of production).
- Consumer Satisfaction and Walfare : Goods and services produced and society, to satisfy social needs.
- Satisfying Social Needs : Not individual but society. Done in the society, with the society, to satisfy social needs.
- Legality : Business should be according to legal rules and regulations of countries.
- Mutual Benefits and Satisfaction : Not simple for profit but for mutual benefit of both business and consumers.
Concept is that idea or characteristics of any commodity, work or men which dominates the mind or heart of a person. It is not static but changes according to time and circumstances. The concept of business may be discussed as under :
Traditional or Old Concept of Business : This concept is also know as “Profit concept of business”. In older days, the sole and conclusive object of business was profit maximization at any cost and thereby accumulation of wealth and economic power even at the cost of social injustice. Money-chasing was primary objective of any economic activity.
Profit-Cum-Service Concept : The old concept of business replaced by profit-cum-service concept. The main objective of business is to make a better product at a competitive price in a dynamic economy.
With the help of profit-cum-service objective equal importance was given to profit and service motto with the result that the customers were more satisfied than in the past.
Modern Concept : Around 1950’s the above profit-cum-service concept of business prevailed. After 1950’s the experts on management and business questioned the above concept whether customers needs more satisfaction or profits are the main objective of business.
Modern concept of business indicates that modern business is dynamic. New and modern technologies herald the arrival of new products leaving behind the old ones. Today business is concerned with being an integrat part of the social system. It touches every aspect of our lives. In many ways it is institutional expression of our ways of life.
Objectives of the Business (BBA Notes)
Every human activity is started with some definite objectives. Objectives are need in every area where performance result directly and vitally affect survival and prosperity of business. The main objectives of business are as follows :
Since business is basically human economic activity, its primary objectives are economic. Economic objectives are as follows :
- Profit Motive : It is the primary objectives of business. A business needs profit not only for survival but also for growth and diversification. A business enterprise must earn sufficient profits so as to give adequate return to those persons who have invested their capital in the business. But the profit motive does not mean that consumers, workers and investors should be exploited.
- Creation of Customers : Any business enterprise can be sustained only when there are sufficient number of customers who are willing to purchase the goods and service offered by it. Further, the customers should also be satisfied with the goods or service and then only they will continuously buy your product or services and thereby new customers will also be created. Without satisfying customers we cannot imagine a business to last long. Customers are the foundations of business.
- Creation of Utilities : Goods or services offered by a business enterprise can be purchased only if they posses some utility. Thus, creation is another economic objective of business. A business enterprise create time, place and form utilities which meet the requirements of the society.
- Technical Innovation and Growth : Changes in the economy and business world are so fast and complex that a business enterprise cannot survive unless it pays due attention to innovation and growth.
Through innovation and growth the business enterprise can increase its competitive strength, expand its business and improve its image in the mind of customers.
Innovation leads to improvement in quality, more production and reduction in the cost of production.
Social Objectives (BBA Notes)
Business is an economic institution which operates in the society. It is the responsibility of business to fulfil its obligation to the society. Social objectives of business are as follows :
- Supply of Goods or Services : It is the social responsibility of any business enterprise to supply goods or services of right quality, at right time, at the right place and at a reasonable price.
- Welfare of Workers : The business enterprise should look after the welfare of its workers and they should be properly rewarded. The workers should be given incentives, wages and necessary facilities, such as housing, medicatory, education, good working conditions etc.
- Avoid Profiteering and Anti Social Practices : Another social objective is that it should avoid profiteering and antisocial practices, such as black marketing smuggling, tax evasion etc.
- Consumer’s Satisfaction : Since the business is meant for consumer it is social responsibility of the business to provide them full satisfaction. Consumer’s satisfaction is the key of business or any business enterprise.
- Proper Return to Investors : Since investors provide necessary capital to the business enterprise, it is social objective of any business enterprise to provide them necessary return (profit) on the capital provided by them.
- Co-operation with the Government : The government of country has to formulate plans, policies and programmes cannot be successfully executed without the active co-operation of business or business enterprise. Thereby it is also a social objective of business to co-operation with the government of the country to fulfil its social obligations of the public.
- From above study we conclude that the objective of business should be profit-cum-service.
- First objectives of business should be service and the second and the second objective should be profit. In short, the true objective of business should be profit through service.