Business is all about the nature and purpose. This is the fundamental concept that underlies all business activities. This concept of business and its objectives clearly indicate what the company is all about. At the same time, it also clearly indicates what the various business activities are all about.
Essentially, the purpose of a business is to provide for the nature and purpose of life. A business can be defined as an institution or an entity with the sole purpose of generating profit. In simple terms, a business is all about generating income and increasing its wealth. There are various other aspects of business, which are related to the nature and purpose of business.
The nature and purpose of business can be clearly seen from various business activities that are performed on a daily basis. These various business activities have their own specific characteristics and hence they can be properly understood only after understanding the nature and purpose of business. One of the important aspects of business is risk management. It is a fact that no business can exist without taking any risk. Business takes various risks and all these risks can be controlled or managed effectively depending on the strategy adopted for managing the risks involved in the business.
Risk management is a very important aspect of business. It helps the organization to identify various risks and to minimize their negative effects. Risk management has two elements. These are recognized risk and unrecognized risk. Recognized risk refers to the adverse effects of a change in the nature and condition of the business to the extent that the anticipated results are actually negative and not positive. Unrecognized risk is the opposite of identified risk.
The nature and purpose of business has been known since time immemorial. Every human being, with few exceptions, has a desire to earn money. In order to earn money, one has to do some work. In the business world, the nature and purpose of business are money making.
Money making in business is a process of extraction. Money is the universal element and business is no exception. In order to extract money from the business environment, various techniques are employed. The nature and purpose of business, however, have nothing to do with the nature and purpose of these techniques. Therefore, money making in business is not a natural process.
A business is said to be in existence when it makes a profit. This profit is calculated in terms of net income. Net income in a business refers to the total income obtained from the business by subtracting the expenses incurred in its operation from the total income accumulated. Businesses engage in a number of activities such as purchasing resources and goods; producing the same for sale; marketing these products or providing the services related to these products and providing facilities and amenities to customers on behalf of the business; and employing people to carry out these activities. All of these activities contribute to the nature and purpose of business.
A business can survive without any direct involvement with customers. However, it cannot flourish unless customers are happy. A business enterprise that aims at pleasing customers by providing superior service, superior quality products or competitive prices cannot survive for long. Satisfied customers are the foundation of a healthy business. Therefore, the nature and purpose of business is to meet customers at their satisfaction and help them feel that they are being treated fairly and their needs are met adequately.
The nature and purpose of business therefore are determined by people’s needs, desires and tastes. In fact, business can be said to be a social activity. It involves the interaction of people in a marketplace. The process of business is therefore a process of social interaction. It is a non-specific, individualistic undertaking which requires that the nature and purposes of business should be adapted to the general nature and purposes of the society in which it operates.
For purposes of this discussion, it would be useful to focus on the nature and purpose of business as a whole. This will give a clear picture of the nature and purposes of business. A business is said to be in existence when it is bringing a profit to its investors. It is also in existence when the cost of conducting business is less than the revenue collected from consumers for the same purpose, and it is able to make a distribution of profits to its stockholders.
The nature and purpose of business thus include a variety of elements including profit and loss, return on investment, expansion and competition. It also involves some activities such as marketing, research and development, and accounting. All these processes are driven by profit. However, profit is not the only aspect of business. There are also costs and risks. These should always be managed to ensure that the business runs smoothly.