GNDU B.Com (Bachelor of Commerce)

Chapter 1: Nature of Business and Social Responsibility

Summary

Business is a human activity directed towards producing or acquiring goods and services for sale at a profit and to satisfy the wants of society. Its essential features include the regular dealing in goods and services, the profit motive, the presence of risk and uncertainty, the creation of utility, and an exchange or transfer of goods for value. The components of business are broadly industry (which creates form utility by producing goods) and commerce (which distributes them through trade and the auxiliaries to trade such as transport, banking, insurance, warehousing and advertising). The modern business world shows clear trends: the rise of Indian multinational companies (MNCs) and transnational corporations, increasing globalisation, and the resulting challenges for Indian business in the new millennium, including foreign competition, rapid technological change and the need for higher quality and efficiency. Globalisation opens larger markets but also exposes domestic firms to intense competition. Alongside the profit motive, business is expected to discharge social responsibility, that is, obligations to various stakeholders such as owners, employees, consumers, the government and the community at large. Arguments in favour of social responsibility include long-run survival, a better public image and the use of business resources to solve social problems; arguments against include the dilution of the profit objective, the lack of social skills among managers and the extra costs that may weaken competitiveness.

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Practice quiz