Business is an activity in which goods or services are produced and exchanged for some value (profit) and satisfies human wants. It includes all activities performed by individuals and groups of people since morning till evening, which have some purpose of earning profit through the production and sale of goods and/or services.
Definition: A business is a systematic and organized production and / or exchange of goods and services undertaken regularly and continuously to earn a profit by satisfying human needs. It is a gainful and systematic activity that involves an element of risk and uncertainty as the businessman must make the right decision on the basis of economic, financial, technical, social and political considerations in order to earn profit.
Functions: There are many functions in a business organization. These functions can be broadly categorized into three groups: Internal Functions, External Functions and Support Functions.
Procurement: This function deals with the process of purchasing raw materials or trading goods and ensuring that they are delivered at the desired time and in the required quality. It also involves the process of forecasting future requirements and building relationships with strategic suppliers. Large organizations have centralized Purchases or Procurement divisions to help them achieve their objectives of cost reduction and timely delivery.
Merchandising: This is a ‘buy and sell’ business strategy where the products are bought from a manufacturer or a wholesaler and sold to the customers at a higher price than the cost of manufacturing. Examples of merchandising businesses are grocery stores, supermarkets, and distributors.
Hybrid Businesses: These businesses are those who practice two or more business types at the same time, for example KFC develops its own recipes and also buys cold drinks from PepsiCo. These businesses make a profit by selling the products at a higher price than their cost of manufacturing.
Strategy: This function is usually handled by senior management or by the Corporate Strategy division of a business. It aims at creating new markets, increasing market share and profitability by focusing on customer satisfaction, developing and implementing strategic plans for growth and expansion and by leveraging the resources of its competitors.
A business must be able to attract and retain qualified employees to perform its various activities. A well-qualified and motivated workforce is essential to meet the demands of its customers, produce goods and services on time, maintain high levels of quality and provide a competitive advantage to its business.
A business must be able to raise and manage money to meet its financial obligations, pay salaries, and purchase necessary supplies. It must also be able to make strategic investments in order to enhance the performance of its operations and grow. The business must have a system for distributing and managing profits, which should be monitored by the Board of Directors and senior managers. It must have a strong ethical code and conduct itself in an appropriate manner in accordance with the rules and regulations of its industry and local laws.