Nature and Characteristics Flashcards
Economic Activity
An economic activity involves the production or purchase of goods and services and sale or exchange of the goods and services on a regular basis for earning profits.
Buying and selling
The basic activity of any business is trading. The business involves buying of raw material, plants and machinery, stationery, property etc.
On the other hand, it sells the finished products to the consumers, wholesalers, retailers etc.
Continuous process
It is a continuous process of production and distribution of goods and services. A business should be conducted regularly in order to grow and gain regular returns.
Profit motive
Profit is an indicator of success and failure of business. Profit is required for survival, growth and expansion of the business. Business has many goals but profit making is the primary goal of every business.
Risks and Uncertainties
Risk is the effect of uncertainty arising on the objectives of the business. Predictable factors
(controllable to some extent) include taxes, change in the volume of expected sales, cost of supplies and equipment, overhead costs, salaries and cost of goods and services offered. Unpredictable factors include changes in trends and tastes of customers, impact of the local economy on customer base, and any unexpected action taken by the competitors.
Creative and Dynamic
Business firm has to come up with creative ideas, approaches and concepts for production and distribution of goods and services. It means to bring things in fresh, new and inventive way.
Customer Satisfaction
Modern business believes in satisfying the customers by providing quality product at a reasonable price. Consumers are satisfied only when they get real value for their purchase. The purpose of the business is to create and retain the customers.
Social Activity
Business has some responsibility towards the society and in turn it needs the support of various social groups like investors, employees, customers, creditors etc. Business needs support of different sections of the society for its proper functioning.
Government Control
Business organisations have to follow certain rules and regulations enacted by the government.
E.g. Companies Act 2016, Environmental Quality Act 1974, Employment Act 1955.
Optimum Utilisation of Resources
Business facilitates optimum utilisation of countries’ material and non-material resources and achieves economic progress. The scarce resources are brought to its fullest use for concentrating economic wealth and satisfying the needs and wants of the consumers.
