What is business? What people think about it?

 Mention the word business and you will get varied responses. Some people think their jobs; others of the individual merchants they deal with as consumers; and still others, of thousands of firms, large and small, that make up every nations economy.

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And rightly so, for the broad all-inclusive term can be applied to many kinds of enterprises. Business provides the bulk of our employment as well as the goods.

Business and Profits

Business consists of all profit-seeking activities and enterprises that provide goods and services necessary to an economic system. It is the economic pulse of a nation, the means through which society's standard of living improves. 

Profits are a primary mechanism for accomplishing these goals. Accountants and business people define profit as the difference between a company's revenues (receipts) and expenses (expenditures). Profits are rewards received by successful business people who take the risks involved in business.

Business and Social Responsibility

Besides earning profits, successful businesses also seek to meet their social responsibilities. The concept of social responsibility refers to management's consideration of the social as well as economic effects of its decision. Business must be responsible in their dealings with employees, consumers, suppliers, competitors, government, and the general public if they are to be successful in the long run. 

Most businesses, large or small, belong to what is called the private enterprise system, in which success or failure is determined by how well they match and counter the offerings of competitors. Competition is the battle among businesses for consumer acceptance. Sales and profits are the yardstick by which such acceptance is measured.

The business world has abundant examples of firms that were once successful but that failed to continue satisfying consumer demands. Competition assures that, over the long run, firms that satisfy consumer demands will be successful and those that do not will be replaced.

The private enterprise system requires that firms continually adjust their strategies, product offerings, service standards, operating procedures, and the like. Otherwise the competition will gain higher shares of an industry's sales and profits. 

Competition is critical mechanism for guaranteeing that the private enterprise system will continue to offer the goods and services that provide high living standards and sophisticated life styles.