Nature and scope of business

Nature and scope of business

When we pay attention around us, we see that most people are engaged in some work.  

      Teachers teach in schools, farmers work in fields, laborers work in factories, drivers drive vehicles, shopkeepers sell goods, see medical workers, etc.  In this way every man is busy with some work all day, or sometimes overnight. 

     But now the question arises that why do we all keep ourselves so busy in some work like this?  There is only one answer to this, to fulfill your needs. 

      By working in this way, we either fulfill our various responsibilities or earn money, so that we can buy the goods and services we need.

 Let us study about the various actions in which we are busy to fulfill our needs.  Business here we have to know in detail as a human action.

 Human actions

 The various actions performed by human beings are called human actions.  We can divide all these verbs into two categories - (1) economic verbs, and (2) uneconomical verbs.

 Economic activities

 Activities that are done for the purpose of earning money are called economic activities.  For example, the farmer plows the field and earns money by selling it, the factory or office worker receives salary or wages in exchange for his work, the trader earns profit from the sale and sale of goods.  All these activities are economical.

 Human actions

 Types of Economic Activities

 There can be many types of economic activities.  Economic activity can be done by humans once or continuously.  For example, if we are aware of electrical equipment and know how to repair them.  If we get a few rupees as a result of improving one's electric fan or cooler, then it is an economic action that has been done once.  When we start this action continuously and earn the monetary income, then this action will be called our business. Actually every person is engaged in some business.

 (i) Profession -

An engineer is proficient in mapping a building, estimating its cost, inspecting and evaluating a construction work and possesses specialized knowledge and charges a fee for this work. 

      A doctor acquires specialized knowledge and training to examine patients, detect and treat their disease, for all these tasks he charges his patients.

      Similarly, if we look around us, you will find that there are many people who are chartered accountant, architect, film actor, dancer, artist, etc.who provide specialized knowledge and training in their fields and provide services to the people. 

     All these are called professional persons and the actions which they do are called profession. Thus in conclusion we say that "any action performed by a person for earning a living, in which specific knowledge and skills are used.  If required, it is called occupation. 

      Some of its basic characteristics to explain the concept of profession are as follows-

 Profession is a profession which requires a person to acquire specific knowledge and skills.

 The amount they receive as a reward for such services is called 'fee'.

 Most professional people are regulated and managed by a professional institute.  Which creates the code of conduct which the members of the profession follow.

      For example, in India, Chartered Accountants are regulated by the Institute of Chartered Accountants of India, the International Council of Cricket Players by the International Cricket Council.

 Mostly professionals acquire specialized knowledge from colleges, universities or specialized institutions.

        In some situations, people do this by training such knowledge and skills or by getting training from a specialist in that field: such as a dancer, musician etc.

 Professionals usually work alone, they charge fees as a result of their services and are called profession.

       There are also some professionals who work as employees or consultants in organizations.

 Although all professionals charge fees, their basic purpose is to provide service.

        They should not exploit people by using their specific knowledge.  All the economic activities in which professionals provide personalized services of special and specific nature on the basis of training and efficiency and which have to follow certain rules (code of conduct) is called profession.

 (ii) Employment 

- We see teachers, clerks, officers, nurses, postmen, laborers going to work every day and saying that they are all going to their jobs.

       A postman distributes letters and this is his employment.  The postal department is the employer and the postman is its 'employees'.  The postman works under certain conditions and receives salary as a consideration.

       Thus we say that "when a person works continuously for others and receives wages / salaries as a result, is said to be engaged in employment."  The main characteristics of employment are as follows-

 It is a business in which one person (employee) works for another person (employer).

 There are certain conditions of working like working hours (how many hours in a day), duration of work (how many days or how many hours in a week or month etc.), holiday facilities, salary / wages, workplace etc.

 Employees receive salaries (usually paid per month) or wages (usually paid daily / weekly) as a reward for their work.

      This amount is usually predetermined, decided by mutual consent and increases from time to time.

 Legally, the relationship of employer and employee is based on the contract or contract and the right of the other party to take legal action if either party violates the condition.

 There are some jobs that do not require any technical education or special skills.  But some employment skills, specificity and technical requirements are required which require basic technical education at a particular level.

 The purpose of employment is to get fixed income in the form of wages and salaries.  An economic activity that one person performs for another person under a service contract, in exchange for a fixed reward, is called employment.

 (iii) Occupation -

     Business means' to be busy in some work: hence the term 'occupation', meaning the state of being busy in Hindi, was selected.  Thus, the literal meaning of business is to engage in some economic activity.  

     You must have heard about the Tata group of companies.  They produce many items from salt to trucks and buses and sell them to people like you and us.  In this process they earn profit. Just look at your nearest shopkeeper. 

       What does he do ?  He buys large quantities of goods and sells them in small quantities.  He makes a profit in the process.

        All these people engaged in business are called businessmen.  All these perform their actions regularly to earn profit.

       Therefore, the definition of business can be defined as an economic activity in which the regular production, sale, transfer and exchange of goods and services is done for the purpose of making profit.

 We see many businessmen such as cable operators, factory-owners, transporters, backers, tailors, taxi drivers etc. selling or providing services.

         They have invested some amount, they take risks and work for the purpose of making profit.  Hence the main features of the business are-

 It is a business in which a person is engaged in the manufacture or sale of goods and services.  These items can be consumer goods or capital goods. Similarly services can be in the form of transportation, banking, insurance, etc.

 Actions are performed regularly in this.  A single transaction is not called business.

       For example, if a person sells his old car at a profit, then we would not call it a commercial activity.  But if he regularly works by purchasing old cars and selling them, then we will say that he is engaged in business.

 The sole purpose of business is to make profit.  It is mandatory for the business to exist.

        Yes, it is of course that this is done by providing goods and services.

 All businesses require some amount of capital which can be in the form of cash or property or both.  It is usually made available by the owner or the owner borrows at his own risk.

 Income in business is always uncertain because the future is uncertain and there are some elements that affect income and which the businessman has no control over.  Thus every business has an element of risk and it has to be borne by the businessman ie the owner.

 (iv) Job - 

       Job means a business in which a person regularly works for others and in return receives salary or wages.

        Government employees, corporate executives, officers, bank employees, factory workers, etc. are considered to be engaged in the job. 

       The working hours in the job have conditions regarding the amount of wages / salary and other facilities, if any.  Generally the employer sets these conditions.

      Any person who wants a job should start working only when he is satisfied with the conditions.  The consideration of the employee is fixed and is paid as wages or salary.

 Uneconomical actions

 The actions that are done for the purpose of achieving satisfaction, rather than earning money, are called non-monetary activities.  Such actions are done to fulfill social responsibilities, recreation or health benefits.   

      People visit places of worship, donate to a flood or earthquake relief fund, engage themselves in sports for health purposes, do gardening, listen to radio, watch television or perform similar activities.  These are some examples of economic events