We explain what business is and some characteristics of this term. Also, how it can be classified according to its activities.
What is business?
The term business owes its etymology to Latin negotiumthat is, a denial of leisure: the occupation carried out by people for profit. This etymological character is quite particular because it defines the word in a different way than the greater use we give it today.
We do not understand by business the work activity of any person, but particularly those people who are dedicated to the trade of goods and services. However, it is a meaning recognized by the RAE that understands the term as a way of calling any occupation that people carry out.
The circuit of production of goods has different specific phases. From the mere obtaining of raw materials, their most precarious transformation, their travel and the additions of added value, they perfect the object until reaching the one that is believed to respond to the needs of consumers. This process is justified from the business, a method to obtain money from users in exchange for the provision of a service or the delivery of some good.
business men are entrepreneurs or business administrators who strive to keep some variables balanced in the best possible way: they will seek to have high prices but accepted by buyers, they will seek to have good quality that does not demand an amount of money that forces them to increase prices, and they will seek to decrease as much as possible. possible expenses, in order to increase the profit margin.
Wherever people have a need or desire, there will be someone interested in satisfying it and making a profit for it. Some businesses will have overwhelming successes while others may suffer resounding failures.
To analyze the performance of a business, you must analyze what the expenses were and compare them with the income obtained. The company Disney began its activity with 230 dollars in 1923, and today it has a turnover of around 16 billion of dollars each year. Russia sold the territory of Alaska to the United States for barely 7.2 million, later discovering that it was a territory with a large amount of metals including gold, and also with a lot of oil.
See also: Entrepreneur
Types of business
The business concept can also be classified according to the activity from which the profit is obtained:
- Extraction businesses. Those who take advantage of natural resources, having simply purchased a portion of territory, or having invested money in elements that enhance nature (seeds for planting, animal grazing). The existence of an extraction business is the guarantee of subsequent production businesses.
- Product businesses. They are those who – as was said – incorporate added value to a raw material and transform it until it is in a position to meet the needs to which people allocate part of their income. Without these businesses existing, only things found in nature could be marketed.
- Service businesses. They are those that lend some intangible good to people, based on the possession of some good or some skill. In these cases the business does not come from a production chain, you simply have something whose effects people (who do not own it) demand.
- Wholesale businesses. They are the ones that obtain a large quantity of already manufactured products, and without transforming them or adding anything of value, they have a storage capacity that allows them to be distributed by retail businesses. They act as intermediaries.
- Retail businesses They are the ones who buy goods wholesale, to sell them directly to people. In some Latin American countries, this type of activity is directly known by the term 'business', since they are the reason why all the previous ones are founded. The production chain is abruptly cut when it is consumed by a person, who supports all the incorporated value and feeds back into the circuit.
