Nature and Purpose of Business Test - 3

Making money is the purpose of any economic activity and to reach higher goals /target in the amount earned is the continuous process. Economic activities create economic or financial gain by producing goods or services.

Economic activities are related to production, distribution, exchange and consumption of goods and services(profession). Professionals involved in their profession to make money or earn their livelihood, hence it is an economic activity.

Business refers purchase and sales of goods with objective of earning profit. Business activity is an economic activity because it is related with money. Business is an economic activity.

A profession is a vocation founded upon specialized educational training, the purpose of which is to supply disinterested objective counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain. Manufacturing comes under industry / business.

Employment provides salary and an opportunity to earn livelihood. Making money is the purpose of any economic activity and to reach higher goals /target in the amount earned is the continuous process.

Main Causes of Business Risk, Natural Causes,Human Causes,Competition,use of modern technology,government policies.

Natural Causes: Risks which arise due to the actions of Nature (and hence uncontrollable) are called natural risks. For example, risk of rainfall not occurring on time or excessive rainfall causing flood is a serious risk for farmers.

Human causes are very important causes of business risks. These causes include dishonesty, carelessness and negligence of employs, riots, strikes, etc. Irrational approach of the management or the owners of the business is also a type of human failure which causes business risk.

Economic causes relate to fluctuations in demand and price or changes in the market condition. There may be loss because of price fluctuations, trade cycle, severe competition and unforeseen changes in the techniques of production.

Business risk is the possibilities a company will have lower than anticipated profits or experience a loss rather than taking a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, and the overall economic climate and government regulations.