What is a Business? Definition, Characteristics & Examples – Video & Lesson Transcript #business #from
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What is a Business? – Definition, Characteristics & Examples
This lesson provides a definition of a business and reviews the key characteristics needed to have a business. The conclusion of this lesson includes a variety of business examples.
According to well-known professors William Pride, Robert Hughes, and Jack Kapoor, business is ‘the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs.’ A business, then, is an organization which seeks to make a profit through individuals working toward common goals. The goals of the business will vary based on the type of business and the business strategy being used. Regardless of the preferred strategy, businesses must provide a service, product, or good that meets a need of society in some way.
There are three key characteristics that must be met to have a business. First, businesses must be the result of individuals working together in an organized way. Second, businesses must satisfy a societal need. Third, businesses must seek to make a profit.
As Pride, Hughes and Kapoor note, businesses are comprised of individuals working together in an organized way in order to be successful. Businesses are organized around the resources needed to be successful, as well as the type of business that is being operated. Some businesses may be organized in a way that requires constant cooperation and communication with other employees. Other businesses may not require as much contact with other employees but may instead rely on automated workflows. They must decide the best way to be organized based on their individual goals.
Businesses must also satisfy a need for society. For example, a grocery store satisfies the need to be able to purchase food for ourselves and our families.
Grocery stores satisfy a basic societal need.
Another example of satisfying a societal need is a gas station that provides needed fuel for most cars to operate.
Gas stations provide fuel to drivers, satisfying a need in society.
Businesses must carefully consider what need they are meeting for society in order to strategically plan for success. For example, society may have a limited interest in purchasing a personal hovercraft for travel. Travel needs are currently met in other ways, so a business focused solely on personal hovercraft may struggle more than the gas station at meeting a definite need.
Finally, businesses are organizations which are profit-seeking. meaning that they are not the same as non-profit organizations. Whereas non-profit organizations seek donations and funding to meet a mission, such as feeding the homeless in a city, a business organization’s goal will be centered on profit. For example, a business organization might be seeking to become the first four-star hotel in a city.
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Examples of businesses are nearly everywhere we look. We interact with businesses each day as we commute to and from work, purchase goods and services, or decide what we’ll have for dinner. Businesses include large organizations such as Coca-Cola, Amazon, Walmart or General Motors. The heart of America, however, remains the small business. Small businesses in your city may include accounting firms, restaurants, local shops, and more. The Internet has helped to bridge the gap of competition between small and large firms. Businesses, whether large or small, are able to use the Internet to increase sales around the world as well as to compete globally.
Let’s review. A business is the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs. There are three key characteristics that must be met to have a business:
- First, businesses must be the result of individuals working together in an organized way.
- Second, businesses must satisfy a societal need.
- Third, businesses must seek to make a profit.
Businesses are all around us, from the large organizations such as Coca-Cola and Amazon to small businesses like local shops and restaurants found just next door.
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