Business Makers

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The term electronic business (e-business) refers to the buying and selling of goods and services online. It comprises on-line shopping, marketing and selling of goods and services over the internet. It involves demonstrating goods on the website, selling or filling orders, conducting transactions and receiving payments.

E-commerce is a part of E-business which refers to the full breadth of activities comprising a successful internet based enterprise. E-business includes creating a viable business model for assessing where profit can come from, financing the business, putting operating system in place and selling on the internet. E-business represents the sales side of electronic business. For example, Amazon.com started as an online bookstore. But it has now become a complete department store selling all kinds of merchandise online.

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Earning of profits is very necessary in business due to the following reasons:

1. Reward for risk bearing: Business is full of risks. No one will take the risk without the incentive of profit. Profit is the motivating force because it serves as a reward for bearing the risks of business.

2. Survival: No business can survive for long without earning profits. Profis are the lubricants that drive the wheels of business. A business can maintain its profit earning capacity by replacing its obsolete assets.

3. Growth and expansion: Profits are he internal source of finance or the expansion of business. A business can grow if it continues to develop new products, services, markets and processes. For this purpose continuous research and development is necessary .Profits provide the capital for research and development. Reinvestment of earnings is the best method of financing expansion and growth of business.

4. Reputation: A profit –making business commands prestige and recognition in society. Goodwill helps business to obtain funds and attract talented employees.

5. Measure of success: Profit is the indicator of success in business. More efficient a business is, greater are its profits. Profit is the index of performance of businesses.

6. Means of livelihood: Profits provide the means of livelihood to businessmen and their families.

Structure Of Business

Structure of business means the way business activities are organized. The broad categories of activities which together constitute business is known as the structure of business. Study of the structure of business involves understanding various categories of business activities. Business activities may be classified on the basis of six (small scale and large scale), ownership (private sector, public sector and joint sector) and function (industry and commerce).

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Pure and Speculative Risks Pure risks cause a loss and a businessman cannot make profit out of them.  These risks may arise form accident, fire, theft, strike, and others.  These are not inherent in business.  On the other hand, speculative risks are inherent in business and a person may either suffer a loss or earn a profit.  For example, change in demand may cause speculative risk.

Internal and External Risks Internal risks rise due to internal factors, e.g. breakdown of machinery, accident, etc.  Such risks can e minimized.  Risks arising from factors beyond the control of a firm are external risks.  Flood, earthquake, change in market conditions, government policies and others are causes of external risks.

Property and Personal Risks Damage or destruction of property are property risks. Injury or loss of life due to accidents, occupational diseases, etc. is personal risks.

Insurable and Non-Insurable Risks Insurable risks are hose which a can be insured it is possible to determine he probability of such risks.  No-insurable risks cannot be insured because their probability cannot be determined.

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Business risk refers to the uncertainty of profit or even the possibility f loss due stop unexpected events in future. There is a chance of loss form the day goods are produced in anticipation of demand until they are sold and the payment is received.  Risk is inseparable form business and cannot be eliminated.  But risks can be reduced and the loss arising form risk can be spread.

The main characteristics of business risks are as under: (i) Uncertainty about the future course of events (ii) Risk is inherent in the nature of business enterprise (iii) Profit is the reward for bearing risk (iv) The degree of risk varies form business to business.

Business risks arise due to the following cause: (i) Natural causes like flood, famine, earthquake, etc. (ii) Economic causes like change market conditions (iii) Human causes such as strikes, lockout, accidents, and others (iv) Political causes such as civil war, fall of Government, and others (v) Physical causes such as mechanical defects.

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Business involves producing and selling of goods and services to satisfy human wants and thereby to make money. Business is an economic activity due to the following reason:

Profit Motive: The purpose being every business activity is to earn profit by selling goods or services. Businessmen produce and buy goods to sell at a price higher than their cost. The excess of price over cost is called profit. If a family grows vegetables for its own consumption, it is not a business activity. But if the vegetables are sold in the market to earn profit, it will be a business activity.

Use of Scarce Resources: Business activities require use of scarce resources like raw material, capital. Labor, etc. A businessman has to invest capital; arrange of workers and machinery and buy raw materials for his factory. Thus, business always involves use of scarce resources physical, human and financial.

Supply of Goods and Services: Business satisfies the needs of the general public by making available the necessary gads and services. Every business enterprise involves the production, purchase and sale of gads and services.

Thus, business may be regarded as an economic activity as it is a means of earning income and also a meads of satisfying the wants of people.