What Is Business?
Business is the activity of providing goods or services desired by society in exchange for money. Businesses range in size, from small sole proprietorships to multinational corporations with global operations.
All enterprises are driven by a need for profit, regardless of their type or structure. Every enterprise must satisfy the customer, whether that customer is an individual or a large organization.
There are many types of businesses, each with its own unique set of characteristics. But all businesses share the same underlying purpose: to provide goods and services for which a profit is generated.
Manufacturing, Retailing and Wholesale/Distribution
Businesses that manufacture products and sell them directly to consumers are considered manufacturers. Examples include automotive companies, wine producers, steel factories and shoemakers.
Retailers and wholesalers act as middlemen, buying goods from manufacturers and selling them to the end consumer at a profit. The profit comes from the difference between the price paid by the manufacturer and the retail price of the finished product. Some examples of retailers and distributors are supermarkets, brick-and-mortar stores, duty-free shops and catalog companies.
Other businesses sell intangible products, such as legal advice firms and consultancy agencies. These are also known as “service” businesses, and may include courier services and transportation providers.
Some businesses provide financial services, such as accounting or actuarial work. These are often included in a firm’s internal business function, but sometimes they are an externally-focused service.
The finance function of a business is the responsibility for raising funds and managing cash flow. This means making sure that the company has enough money to pay employees and operating expenses, as well as meet any tax obligations.
In addition, a company’s finance department must be able to forecast future needs and make strategic purchases in order to stay competitive and profitable. This requires knowledge of business strategy and the ability to identify opportunities, manage risks, and take advantage of trends in the industry.
This is a complex process that involves many different departments and tasks. It is a challenging area of study for many people, but one that can lead to significant long-term benefits.
A firm’s financial function must be able to evaluate the cost and value of a product or service and ensure that it meets market demand. This includes developing a sound pricing strategy and managing supply chains to ensure that customers are satisfied with the company’s products or services.
Another important function in a business is purchasing, which refers to the buying of raw materials and trading goods for a firm. This is usually done through a centralized procurement division.
The purchasing function must consider three aspects when sourcing and evaluating goods or services: quality, price and time of delivery. This can be a challenge, especially when the need for raw materials changes quickly and the supply chain is not always efficient. The procurement team must establish good relationships with suppliers and build a relationship that will be beneficial over the long term.
