Nature of Business

Introduction: 

There are different types of business which we encounter each day. The needs of the consumers are met by providing various services and products. Products produced or provided by the business are tangible items, Eg: Groceries, Electrical equipment. Services offered by the business are intangible items, Eg: Services provided by doctors, lawyers, chefs. 

The goods produced and the services provided by the business create a base for our standard of living. The business also defines the quality of life of a person. Businesses offer jobs to individuals, which helps them to earn income, thereby improving their standard of living.

The overall activities in its quest are to create, market, and sell a service or a product are referred to as the nature of business. The primary focus of what a company does in a specific sector or industry is known as that company’s nature of business.

Nature Of Business:

As the name implies, the concept of business is derived from being busy, i.e., being occupied with some form of activity. However, it goes much beyond being alive. It is essential to understand the nature of the business to have a better insight into it.

• Involvement of a buyer & seller: In any business transaction, there are two parties involved to transact the business – merchandiser (seller) & buyer.
• Investment requirement: Based on the size of the business type of industry to be concentrated upon, investment is required to establish the business.
• Profit factor: Business is a regularly performed practice to generate income.
• Create Form, Place & Time utility: Goods and services must be capable enough to convert into a consumable form to result in utility. Time utility is met when the goods and services are produced as per required timelines and demand. When the goods and services are made available to the consumers at their choice and preference, place utility is met.
• Consideration of risk factors: Risk is involved in all businesses. Failure & loss must be considered while initiating the business in the planning phase.
• Monetary gain: Every business aims to generate profit from the goods and services produced by them.
• Meeting the consumer demands: Irrespective of any nature of business, it is the primary responsibility of the business to satisfy the consumer’s request. 
• Managing the social responsibilities: Any nature of business should have a fundamental social responsibility to develop the standard of the economy. This can be achieved by providing job opportunities, renewing licenses as per timelines, and paying taxes per the required amount.
• Improve wealth: The primary purpose for any individual to be involved in a business is to increase the wealth and improve their standard of living.

Nature Of Business Environment: 

Business environment refers to a group of individuals, entities, or factors with a common interest. They may or may not be under the direct control of the organization. Their decisions and actions may affect the business’s performance, productivity, growth, existence, profitability, and, correspondingly, the nature of the business environment. 

The nature of the business environment should be practical enough to facilitate the growth of any business. Several components add up to form the complete business environment. They include government policies, economic conditions, consumers, marketing & advertisements, suppliers, competitors, technological aspects, legal clauses, and environmental conditions. 

As the combination of internal & external factors affects the functioning of the business, the nature of the business environment shall be affected. There are two types of business environments. They include:

• Microenvironment: The microenvironment includes the enterprise itself, and all the elements inside the enterprise contributing to continuing the business constitute the Micro nature of a business environment.

• Macro environment: This environment that prevails outside the micro and the market environments refers to the Macro nature of the business environment.

 Types Of Business: 

Any business in producing goods and services can be broadly categorized under the following headers.

1. Manufacturing category: Goods are produced with the raw materials to make corresponding profits. The materials produced are to the benefitted consumer in some form of utility. E.g., The wool is graded, distilled, dyeing, and dried in a manufacturing unit to produce the end product of wool.
2. Merchandising Category: Goods are procured from a wholesaler or manufacturer at a lower price and sold to consumers at a higher price. E.g., A fruit seller is selling fruits.
3. Service Category: Professional skills and expertise are used to satisfy the needs of the consumers. E.g., A music teacher makes money by teaching music to students either online or offline.
4. Hybrid Category: Refers to the type of business that involves all the three above categories- Manufacturing, Merchandising, and Service. E.g., An ironsmith manufactures hammers and other iron-related equipment. He buys old iron at a lower price & sells the produced hammer at a higher price. He also provides services to repair the hammer & his equipment in case of any damages involved.

Importance Of Business:

Business activities are essential to the business owner and the economy in the following aspects:

• Business is vital for the economic growth of the country.
• Business improves the standard of living of the people by generating job opportunities, paying salary and so on.
• Innovation and creativity: Implementing new ideas in business paves the way for innovation and creativity.
• Market extension: A good business approach leads to customer satisfaction and a customer base. Thereby results in market expansion.
• Revenue making: The key element of any business is t make a profit as it is the source of income for the business owner.

Conclusion: 

Many individuals have started to create their businesses and establish their identities. When a properly planned strategy is implemented, they are sure to succeed. As the nature of business is all about making a profit, excellence in products and delivery of services should be accordingly meeting the consumer’s requirements and demands.