SM NOTES

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1. Business Environment

Each business organization operates in its unique environment. Environment 

influence businesses and also gets influenced by it. No business can function free of 

interacting and influencing forces that are outside its periphery.

Business 

A business, also known as an enterprise or a firm, is an organization involved in 

the trade of goods, services, or both to consumers. The etymology of "business" 

stems from the idea of being busy, and implies socially valuable and rewarding 

work.

It is said that a business exists for profits. Profit, as a surplus of business, accrues to 

the owners. It is their share, just as wages are the share of workers. People invest 

in business for getting a return. It is a reward for risk taking, so far as the owners 

are concerned. As a motive, profit serves as a stimulant for business effort.

For business enterprises, profit is often regarded as the overall measure of 

performance. It is treated as a financial yardstick for measuring business efficiency 

and for evaluating managerial competence − how well the decisions and actions of 

managers turn out to be effective; how well they are able to combine and utilise 

resources and to sustain the enterprise as a going and a growing concern. 

Other things being equal, the higher the efficiency the greater is the level and 

volume of profit. Business efficiency is often expressed in terms of percentage of 

profit to sales volume, to capital employed, to market value of corporate shares 

and so on.

Objectives of a Business

A business has some purpose. A valid purpose of business is to create customers. It 

is for the businesses to create a customer or market. Business is society's organ of 

economic expansion, growth and change. Some of the important objectives of a 

business are:

To Be Continued....