Mgt211 final term past paper

Mgt211 final term past paper

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INTRODUCTION

CONCEPT OF BUSINESS

Literally, the word “business” means the state of being busy. Generally, the term business

includes all human activities concerned with earning money. In other words, business is an

activity in which various persons regularly produce or exchange goods and services for

mutual gain or profit. The goods and services produced or purchased for personal use are

not included in “business”.

DEFINITION

1. According to L. H. Haney

“Business may be defined as human activities directed toward providing or acquiring

wealth through buying and selling of goods.”

2. James Stephenson says that:

“Every human activity which is engaged in for the sake of earning profit may be

called business.”

3. In the words of B. W. Wheeler

“An institution organized and operated to provide goods and services to the society,

under the incentive of private gain” is business.

CHARACTERISTICS

Following are the essential characteristics of a good business:

1. Capital

Capital is the lifeblood of every business. It is the most essential and important element of

business. In case of deficiency, loans can be taken from various financial institutions.

2. Creation of Utility

Utility is an economic term referring to that characteristic of a certain commodity, which

can satisfy any human need. Business creates utility, which gives benefit to the entire

society as well as the businessmen.

3. Dealing in Goods and Services

Every business deals with sale, purchase, production and exchange of goods and services for

some consideration.

4. Employment

Business is a good source of employment for its owners as well as for other people, for

example, employees, agents, transporters etc.

5. Islamic Process

Business is an Islamic way of earning living. Income from business is known as profit, which

is Rizq‐e‐Halal. The Holy Prophet Muhammad (SAWW) himself did prosperous business.

6. Motive

The motive of business is to earn profit. Otherwise it will not be termed as business.

7. Organization

Every business needs an organization for its successful working. A proper organization is

helpful in the smooth running of business and achieving the objectives.

8. Productions or Purchase of Goods

A businessman deals in production or purchase of goods. These goods are supplied to the

people. So, it is necessary that more goods should be produced so that demand of people

may be fulfilled.

9. Regular Transaction

Business has a nature of regular dealings and series of transactions. So, in business, only

those transactions included which have regularity and continuity.

10. Risks and Uncertainty

Business involves a large volume of risk and uncertainty. The risk element in business keeps

a person vigilant and he tries to ward off his risk by executing his policies properly.