Thursday, December 3, 2015

Basic features of business

Let us discuss each of the basic features of business one by one: 

1. Promoter/Owner/Entrepreneur All business have an owner, be it a small or big one or be it a private business or government business. The owner or the promoter or the entrepreneur takes the responsibility of establishing the business and runs it by leading from the front. 

2. Organisation and management All business are an organisation. Organisation assures the perfect and structured linkage among different components of the business. Again management is the art of getting the job done in an organisation with and through people for mutual benefit. So, organisation and management are absolutely necessary for any business throughout the world. 

3. Capital, investment and finance All business need financing to have Capital. Capital is the life blood of business. Through capital, the business cycle moves. It is required to purchase fixed assets for financing recurring expenses and investment. Broadly speaking capital may be: 

a. Fixed capital 
b. Working capital 

Again classification of the sources of finance for the capital may be- 

a. Owned capital 
b. Borrowed capital 

Moreover, by classifying investment we can have: 

a. Internal investment 
b. External investment 

4. Risk taking All business are subject to risk and uncertainty. In business, profit is basically the reward of risk taking and going through uncertain conditions. The risk is minimised if the forecasting and management is efficient and it is maximised otherwise. 

5. Forecasting Predicting the future is one of the common activity of any business. If the forecasting or the prediction is correct, then the possibility of success is more. The forecasting is necessary for policy, consumer behaviour, international relations, economic conditions etc. 

6. Surplus generation Any business aims at creating surplus, be it a small, medium, or large one, government undertaking or private undertaking. Creation of surplus is the benchmark of efficiency ofthe business. In case of private sector, profit is the measure of surplus but in case of government, excess as well as the generation of social benefit are the yardstick of surplus. Greater the surplus, better the business and viceversa. 

7. Generation of values and utilities Any business organisation aims to create utility. It is the creation of utilities which leads to the value addition to the products or services of the organisation to earn the surplus. 

8. Recurring and perpetual activities All business tends to perform repetitive task and keep the cycle moving. It is expected that any business would continue to run period after period and perform specialised recurring activities to attain the objective. 

9. Transferability and inheritance Any business is transferable by way of sale, donation or inheritance. The owner may change but the business is expected to continue forever, until voluntarily wind up by the owner(s). 

10. Profit motive Profit is the yardstick of success of any business. So profit motive is a common issue to all business. Mainly in case of private sector, it is a must. Though profit is not the sole motive of the public sector, still in modern world even PSU are expected to earn profit for their survival. 

11. Freedom All the business, specially the owners enjoy absolute freedom in relation to all the legitimate activities. The business owners are their own boss, so have less accountability but have huge responsibility with flexibility. 

12. Creativity All the business aims at certain level of creativity as there is freedom. Specially in case of entrepreneurial activity creativity is a must. Creativity may be in the nature of innovation or it may be in the nature of creative imitation. 

13. Mutual benefit Any business operates at its best when it indulges in such an activity(s) which benefit the owners, employees, customers, government and public at large. This mutual benefit is the key to the long thriving business houses. 

14. Mission and vision Last but not the least, all business houses are having an objective which is known as the mission which in short run or medium term in nature. Again, all the organisation have a long term aim which is known as the vision. Without the mission and vision no organisation would progress. 

Thus, we find that all the business have certain common features be it a local, small business or an MNC operating in large scale, as found in the above discussion.

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