Basic Concepts about Businesses

Start New Business  When the social existence of a human develops, individual needs also widened gradually. When the needs and wants were diversified, it was difficult to produce all their needs and wants by themselves. As a remedy to this problem, people started to produce a large quantity of goods that they could produce the best, with the skills and resources they had. Therefore, an excess of goods was created. Then people exchanged their excess goods with others to obtain other goods they wanted. This system of exchanging goods was known as the ‘Barter System’. Even today, no one produces all what he or she wants. The farmer produces rice; the carpenter makes furniture; the teacher teaches. This individual is either a producer or a consumer in different instances. Such producers and consumers fulfill their needs and wants through businesses. Therefore, businesses are given immense importance in the modern society.

Business Concept | Start New Business

Man needs goods and services from birth to death. These needs and wants are fulfilled by the businesses. Businessmen manufacture and distribute various goods and services according to the human needs and wants. The way businesses manufacture and distribute goods and services and the way man fulfills his needs and wants have become different and complex today

A business is an economic activity which manufactures or provides different goods and services in order to fulfill human needs. Most of the firms are profit oriented whereas some firms are not profit oriented. Especially, most of the businesses in the government sector are driven by the social welfare motive. Even though a majority of private sector businesses are driven by the profit motive, some firms are also driven by the welfare motive.

A majority of production activities carried out manually in the past are now carried out using new technology. Most of the businesses do their transactions through electronic media. Therefore, today, any business activity such as ordering goods, paying money and advertising etc can be performed rapidly and easily through electronic media. Due to the accelerating growth in information and communication technology, the world has become a global village through electronic media. Any individual in any country is now consuming different goods produced in different countries in order to fulfill their needs and wants. The following activity will facilitate you to understand the extent to which your daily life has been connected to the global market today.


Business Objectives| Start New Business

As a consumer your objective is to obtain a quality product at a reasonable price to satisfy a need. Similarly, consumers and other different stakeholders of businesses have specific objectives to be fulfilled. Every business has a specific objective or set of objectives to be achieved, because the parties such as owners of a business, its managers, employees, customers, government and community expect different returns from a business.


The following are some business objectives that can be seen in common in a profit oriented business

01. Earning profits Profit earning objective is essential for a business because it has to pay a sufficient return to the owners for their investment.

02. Increasing customer satisfaction The survival of a business depends on how it satisfies the needs and wants of its customers. In achieving the above objectives, businesses need to focus on sub objectives. Some of them are discussed below.

(a) Increasing the quality of goods and services Businesses intend to provide quality goods and services at a reasonable price as well as to fulfill consumer needs and wants.

(b) Generating employment opportunities Another goal of businesses is to generate different job opportunities from labourers to top managers.

(c) Employee welfare Providing various welfare facilities in addition to wages to satisfy the employees is another objective of most of the businesses. Food, accommodation facilities, transportation facilities and medical facilities are some examples for those various welfare facilities offered by a business.

Consumer needs and wants| Start New Business

Human needs are requirements that must be fulfilled essentially for existence. Food, clothing and shelter are considered as the basic human needs and when the society develops, education, health, security, transportation, communication and entertainment are also recognized as human needs. The following characteristics can be seen in human needs.

Wants are different ways of satisfying needs. A single need can be satisfied in different ways.

Manufacturing Businesses| Start New Business

Businesses can be categorized as follows based on the nature of the product produced by a business.

Y. Commodity manufacturing businesses

Y. Service providing businesses

Commodity manufacturing businesses

Tangible and physically existing things can be called as a commodity whereas, the establishments which produce the commodity required for the fulfillment of human needs and wants are called commodity manufacturing businesses. These manufacturing businesses produce different types of goods that can satisfy a single need. They produce different goods by considering various tastes of consumers, income level and social status to ease the life style of humans. The following are some examples for different goods produced by businesses.


Factors of Production

Businesses require different resources to produce goods and services. These resources required are known as factors of production. The factors of production can be categorized basically as land, labour, capital and entrepreneurship.


Entrepreneurship encompasses the role of organizing factors of production such as land, labor and capital required for production in order to start and conduct a manufacturing process. An entrepreneur takes the risk, creates innovations, and takes decisions with regard to the business.

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