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- The Elements of Business
- The Essential Parts of A Business
Business is an economic activity that depends on many conditions or elements. Most of the millionaires in the world are businessmen.
The elements of business are considered or specified separately depending on the type of business existence.
The basic elements of business are discussed below.
1. Production:
Production is the process of making, creating, harvesting something that has value to the customer. It is also called an act or process of producing.
There are 4 types of production if we want to divide them. First, unit type production, second is batch type production, mass production, and continuous production.
If we go in deep, there are 7 factors of production. They are land, labor, factory, building, tools, machinery, raw materials.
What is the importance of production?
The main importance is it helps in creating value by applying different types of production factors.
It improves the customer's lifestyle and remains a welfare Institutions for the employees.
2. Distribution:
Distribution means delivering the product in the hands of the consumer through a different process.
The main goal of a business is to deliver the product to the consumer or customer.
So the basic task of the business is to take the product to the real consumer. Such a distribution process involves buying and selling more than once.
Intermediaries businessmen are involved in the distribution process to make a profit.
3. Functions of Auxiliaries to Production and Distribution:
Business is not only an economic activity related to the production and distribution of goods but also other economic activities that are conducive to production and distribution, such as banking, insurance, warehousing, transportation, advertising, etc.
By performing all these tasks, the business overcomes various obstacles that hinder production and distribution.
4. Profit Earning Motive:
The primary purpose of the business is to make a profit.
The main goal of business ventures and endeavors is to earn a living by making a profit.
Entrepreneurs establish and operate business organizations and take moderate risk in the hope of making a profit by investing money, labor, and talent.
5. Risk:
Risk is one of the most important aspects of a business. The risk is that the business enterprise may not make a profit.
In business, transactions do not rule out the possibility of future profits as well as losses.
So it can be said that no work or transaction without risk is not business.
There are many risks included in the field of business and these are strategic risk, financial risk, operational risk, compliance, and regulatory risk, etc.
6. Financing:
You know, capital is the lifeblood of a business and without it, you will not be able to run or start a business.
Anyone who takes the initiative and risk can come forward. But it is not possible to set up and run a business in practice unless the necessary funds become available.
Four different types of financial activities help your business grow, and these are invoice finance, crowdfunding, venture capital, angel investors.
7. Monetary Value:
You know, every business transaction has a monetary value.
Any transaction or exchange that cannot be measured by money cannot be called a business transaction.
Therefore, the financial value of a transaction is measured as the existence of a business.
8. Taking Initiative:
Business structure requires individual, institutional and state initiatives what type of business it is!
The existence of any business organization cannot be imagined without the initiative and effective efforts of the entrepreneur.
You know, entrepreneurship is very important for our society because it improves standards of living and helps driving innovation.
Successful entrepreneurs earned their success by increasing self-confidence. He has also the ability to learn from mistakes.
9. Legal Validity:
The business activity must be acceptable in the eye of the law prevailing in the country or society.
No action out of society or law can not be considered a business.
10. Public Welfare And Service Motive:
Although the main objective of the business is to make a profit, the businessman has to work with the attitude of public welfare and service.
Businesses bring great benefits to the people through timely production and marketing of quality products as per the demand of the consumers.
Finally, it can be said that all the activities of people are not a business activity.
Only those economic activities in which the above specific elements exist in economic activities are considered as business.
This is why business is called a condition or material-dependent economic activity.
