What is Business?
What is business? is a question that has vexed us for a long time. The question itself is complex, involving many aspects. What are some types of business? We’ll take a look at the activities that constitute business and discuss the types of business. Business activities include production, distribution, finance, insurance, packaging, and transportation. According to Derek F.Abell, an economist at the University of Texas, there are three different dimensions of business: product, customer, and alternative technologies.
A business primarily involves the production of goods and services for a profit. This is different from other activities, such as producing goods and services for free. For instance, selling a house for money is not a business activity. But buying and selling buildings regularly is a business activity. In short, any activity that produces a utility can be classified as a business. The most important feature of a business is regularity. If a business owner sells furniture every few months, that’s a business.
A business must earn profit in order to continue operating. Otherwise, it cannot be a business. Therefore, people who engage in business activities are motivated by the profit motive. Profit motives are important for the survival of a business, as they provide the motivation to continue. In addition to the profit motive, business enterprises must adopt the service motive. In essence, businesses buy, produce, and sell goods. But the business should also provide services, which are intangible.
A business’s downsides are also inherent to it. Various types of business involve risk and uncertainty. For example, businesses are exposed to market changes and revisions in government policies. Businesses are also subject to trade cycles. According to Keynes’ trade cycle, businesses can undergo periods of good trade and bad trade, with high unemployment rates. However, these negative aspects are outweighed by the benefits that can be gained from business. In the end, profit is the most important aspect of any business.
Corporate success must be measured in terms of the outcomes that the organization can provide for others. It may want to merge with another business to increase its market share or take over another company (as Satyam Computers did). A large company might wish to split into smaller entities. Whatever the case, business needs to continuously evaluate its strategies and adapt them to make the most money. The corporate strategy function, known as the “Corporate Strategy Division,” is typically handled by the top management.