1.3 MEANING OF BUSINESS
Explanation (in simple words)
When you go to the market, you see many goods like food items, clothes, books, phones, etc.These goods do not appear on their own.
👉 First, goods are produced in factories, farms, or workshops.👉 Then, they are transported from the place of production to markets.👉 Finally, they are sold to customers like us.
Apart from goods, many people provide services such as:
Transport of goods and passengers
Banking
Insurance
Advertising
Electricity and telephone services
All these activities are done to earn a living and are carried out regularly.
Meaning of Business (Core Idea)
Whenever an activity:
is done regularly, and
involves production, buying, selling, or distribution of goods or services, and
has the objective of earning profit
👉 it is called business.
Definition of Business (Textbook-based)
Business is an activity involving regular production or purchase of goods and services for sale, transfer, or exchange with the object of earning profit.
⭐ This definition is very important for exams.
1.4 CHARACTERISTICS OF BUSINESS
(i) Deals in Goods and Services
Business involves production and distribution of goods and services.
Goods can be:
Consumer goods – bread, milk, butter, tea, etc.
Capital goods – machines, tools, equipment, plants
Services include:
Transport
Banking
Insurance
Warehousing
Advertising
👉 A business may deal in goods, services, or both.
(ii) Sale or Exchange of Goods and Services
If a person produces goods for self-use or for gifting, it is not business.
Business exists only when goods or services are sold or exchanged.
Exchange can be:
For money, or
For other goods (barter system)
👉 Without sale or exchange, an activity cannot be called business.