Nature and Scope of Business

NATURE AND SCOPE OF BUSINESS

1. NATURE OF BUSINESS

Meaning of business. In the literary sense, the word 'business1 means 'the state of being busy'. Technically, the term 'business' means all those activities which are related to the production and distribution of goods and services with the object of earning profit. For example, the farmer who cultivates land, the fisherman who catches fish, the manufacturer who converts raw material into semi fished (raw cotton to yarn) or finished goods (yarn to cloth) etc with the sole objective to earn profit, are engaged in business. In addition to this, the purchase and sale of goods on wholesale or retail basis by individuals and firms, the financing of trade by the bankers, the transporting of goods from one place to another by transporters etc. etc., for earning profit are economic activities and included in business. Beside goods, business also provides direct services to individuals and to business enterprises. The services may be health services like provision of doctor, legal services (provision of a lawyer) insurance services etc. The illegal activities like smuggling, gambling black marketing etc., are not included in business activities.

Activities excluded from business:

There are certain organizations which do not seek profit as their goal. These organizations are established with the sole objective of rendering service to the community. For instance, a hospital, a university, a library, a government agency, etc, may render service purely for a social benefit to society. These and such other non-profit organizations having a standard different from the profit-seeking organizations are excluded from the study of business.

Similarly, all the activities which are concerned with the production or purchase of goods and services for personal consumption fall outside the scope of business. For instance, a shoemaker making a pair of shoes for personal consumption or a taior sewing shirts for his own use or a nurse nursing her own child are not business activities because these do not involve in sale or transfer for value. However, if a shoemaker, manufactures shoes for sate in the market with a view to earn profit, It will be purely a business actfvty. The word, business, can be summed up in the foiowing words: 'Business1 refers to all those activities which are

related to the production or purchase of goods and services with the object of selling them at a profit. It includes activities connected with manufacturing, trading, transporting, warehousing, insurance, banking and finance. It does not include non-economic and illegal activities of man.

Definitions of business:

The term business has been defined by various authors. Some of the selected definitions are given below.

According to L.H._Haney, 'Business may be define as human activity directed towards providing or acquiring wealth through buying and sellings.'
Urwick and Hunt describes 'Business as an enterprise which makes, distributes or provides any article or service which the other members of the community need and are able and willing to pay for it."
Aecording^R.N. Owen, business includes all the commercial and industrial activities are provide goods and services to the people with an object