1.4 Nature and Purpose of Business

Nature of Business:
The nature of business is best understood on the basis of its characteristics or features which are as follows:


1. Business is an economic activity
2. It includes the activities of production or purchase and distribution.
3. It deals in goods and services.
4. It implies regularity of transactions.
5. It aims at earning profits through the satisfaction of human wants.
6. It involves risk; it is not certain that adequate profit will be earned.
7. It creates utilities.
8. It serves a social purpose by improving people’s standard of living.


Objectives of business
Success in business depends on proper formulation of its objectives. Objectives must be clear, and attainable. Objectives may be divided into two parts -


(i) economic and


(ii) social.


Economic Objectives :
Economic objectives of business include earning adequate profit or satisfactory return on capital invested, survival in the case of competition and growth to maintain progress.


Social Objectives:
Social objectives include providing employment opportunities, supply of quality goods and services at reasonable price, improving the standard of living and contributing to environmental protection. It also includes justice to workers in terms of wages, welfare amenities, improved service conditions and professional growth.