What Is a Business?
A business is an economic institution that engages in production, merchandising, and exchange of goods and services for profit. It is an activity that generates employment and income for millions of people worldwide.
Various forms of business organisations such as sole proprietorship, Hindu undivided family, partnership firm, joint stock company, cooperative undertaking and others have been evolved for carrying on commercial activities. Whatever may be the form or size of business organisation, it possesses the following features:
1. Dealing in Goods and/or Service 2. Manufacturing (Manufacturing) 3. Selling or Exchanging 4. Services 5. Hybrid Businesses
The main characteristics of all businesses are that they produce, develop, sell and provide services to consumers. These are essentially economic activities that help in the development of economies and appreciation of gross national income or wealth in developed as well as underdeveloped countries.
These businesses are predicated on systems of law governing contract and exchange, property rights and incorporation. They employ both human and non-human resources in the best possible manner to satisfy the needs of consumers in a profitable way.
There are three important legal forms of business: individual proprietorships, partnerships and corporations. Each has its own set of advantages and disadvantages.
In the first form, a person runs a business under his own name and enjoys unlimited personal liability. This type of business is most common. However, it can be difficult to start and is more expensive to maintain.
The second form is a partnership, which is formed by two or more persons and is governed by a written agreement that determines how profits will be shared. This is a relatively inexpensive way to form a business, but it’s also risky because the owners have no legal separation from their assets.
Lastly, corporations are business organizations that have their own separate legal identities from the owners of the organization and their private assets. The shareholders own shares in the corporation and have limited liability for any business debts.
When a business grows large and complex, it sometimes wants to merge or take over other companies. This process is often called a “take-over” or a “merger.” Some examples of such mergers are Tech Mahindra’s acquisition of Satyam Computers and the sale of Motorola to Lenovo in 2010.