The Concept of Business

Business is a word that is commonly used in many languages. Traditionally, business simply meant exchange or trade for things people wanted or needed. Nowadays, the concept and activities of business have increased. One definition of business is production, distribution, and sale of goods or services for a profit. To examine this definition, let us look at its different parts.

First, production is the creation of services or processing of materials into products. Example is the conversion of iron ore into metal car parts. Next, these products need to be moved from the plant to the marketplace. This is known as distribution. A car might be moved from a plant in Germany to a car dealership in Poland. Third is the sale of goods and services. Sale is the exchange of a product or service for money. A car is sold to someone in exchange for money.

Goods are products that people either need or want; for example, cars can be classified as goods. Services, on the other hand, are activities that a person or group perform for another person or organization. For example, an auto mechanic performs a service when he repairs a car. A barber renders a service when he cuts your hair.

Business, then, is a combination of all these activities: production, distribution, and sale. However, there is another important factor, i.e., creation of profit or economic surplus. A major goal in the functioning of any business company is making a profit. Profit is the money that remains after all the expenses are paid. Creating an economic surplus or profit is, therefore, a primary goal of business activity.

The three traditional forms of business are the sole proprietorship, the partnership, and the corporation. The sole proprietorship means going into business for oneself. All one needs is some knowledge about the business, start-up. capital and knowledge of regulations. The partnership is an association of two or more people involved in business under a written partnership agreement. The corporation is the legal entity having a right to issue stock certificates. The people*who own such stock certificates (or shares) are called stockholders/ shareholders. They in fact own the corporation.

II. Ответьте на вопросы.

1. What is one modern definition of business?

2. What does distribution involve?

3. What differ goods from services?

4. What are the constituents of business?

5. What is profit?

6. Give the three forms of business.

Комментарий

III. Запомните эти слова и составьте с ними предложения.

52

53

IV. Запомните толкование этих слов на английском языке.