Nature and Scope of Business: Comparison of Business, Importance and Objectives of Business (For CBSE, ICSE, IAS, NET, NRA 2022)

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What is Business?

Business

Business is defined as an activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit. Example: mill owners, transporters, bankers, traders, tailors, taxi operators etc. are doing business.

Basic features of Business

  • Person is engaged in manufacturing or buying and selling of goods and services.
  • Activities must be carried on regularly.
  • Sole objective of business is to earn profit.
  • Every business requires some investment in cash or kind or both.
  • Every business involves an element of risk.

Comparison of Business, Profession and Employment

Table of Comparison of Business, Profession and Employment
BasisBusinessProfessionEmployment
EstablishmentDecision to start business and compliance of legal formalities requiredMembership of a professional body is essentialEnter into service contract with employer
QualificationSpecific qualification not requiredProfessional knowledge and training in same field is essentialAs per needs of employer and job involved
CapitalCapital investment is mustSome amount of capital investment is required for establishmentNo capital investment is required
Nature of workProduction or purchase

and sale of goods

Expert servicePerformance of job
Return or rewardProfitProfessional feeWage or Salary
RiskThere is risk of lossRisk of not getting sufficient feeNo risk
MotiveProfit motiveService motive though fee is chargedMotive is to earn a livelihood

Importance of Business

  • Business improves standard of living of people by providing better quality and large variety of goods and services at right time and at right place.
  • It generates employment in country.
  • Utilizes scarce resources of nation and facilitates mass production of goods and services.
  • Enables people of a country to use quality goods of international standard.
  • Gives better return to investors on their capital investment.
  • Promotes social interest by providing tourist services, sponsoring cultural Programs, trade shows.
  • Facilitates exchange of culture among people of different nations, in this way it maintains international harmony and peace.
  • Helps in development of science and technology.

Objectives of Business

Business objectives are something, which a business organisation wants to achieve or accomplish over a specified period of time. To make profit is primary objective of business. Business objectives also need to be aimed at contributing to national goals and aspirations as well as towards international well-being.

Classifying Objectives of Business

  • Economic objectives: It refers to objective of earning profit and those which have a direct impact on profit-earning objective of business.
  • Social objectives: Objectives which are desired to be achieved for benefit of society are called as social objectives.
  • Human objectives: It primarily refers to objectives aimed at safeguarding interest of its employees and their welfare.
  • National objectives: Objective of fulfilling national goals and aspirations comes under this category.
  • Global objectives: facing challenges of global market is global objective of business.

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