A business, also known as an enterprise or a firm, is an organization involved in the trade of goods, services, or both to consumers. Businesses are prevalent in capitalist economies, where most of them are privately owned and provide goods and services to customers for profit. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning[clarification needed].
The etymology of “business” stems from the state of being busy, and implies commercially viable and profitable work. The term “business” has at least three usages, depending on the scope in which it is used. A business can mean a particular organization, while a more generalized usage refers to a particular market sector, i.e. “the music business”. Compound forms such as agribusiness represent subsets of the word’s broadest meaning, which encompasses all the activity by all the suppliers of goods and services.
Basic forms of business ownership
Forms of business ownership vary by jurisdiction, but several common forms exist:
• Sole proprietorship: A sole proprietorship is owned by one person and operates for profit. The owner may operate the business alone or employ other people. A sole proprietor has unlimited liability for all obligations incurred by the business, whether from operating costs or judgementsagainst the business. All assets of the business belong to a sole proprietor, including, for example, computer infrastructure, any inventory,manufacturing equipment and/or retail fixtures, as well as any real property owned by the business.
• Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. The three most prevalent types of for-profit partnerships are general partnerships, limited partnerships, and limited liability partnerships.
• Corporation: The owners of a corporation have limited liability and the business has a separate legal personality from its owners. Corporations can be either government-owned or owned by individuals. They can organize either for profit or as not-for-profit organizations. A non-government for-profit corporation is owned by itsshareholders, who elect a board of directors to direct the corporation and hire its managerial staff. A privately owned, for-profit corporation can be either privately held by a small group of individuals, or publicly held, with publicly traded shares listed on a stock exchange.
• Cooperative: Often referred to as a “co-op”, a cooperative is a limited liability business that can organize for-profit or not-for-profit. A cooperative differs from a corporation in that it has members, not shareholders, and they share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy.
• Agriculture and mining businesses produce raw material, such as plants or minerals.
• Financial businesses include banks and other companies that generate profits through investment and management of the capital.
• Information businesses generate profits primarily from the sale of intellectual property and include movie studios, publishers and internet and software companies.
• Manufacturers produce products, from raw materials or from component parts, then sell their products at a profit. Companies that make tangible goods such as cars, clothing or pipes are considered manufacturers.
• Real estate businesses sell, rent, and develop properties including land, residential homes, and other buildings.
• Retailers and distributors act as middlemen and get goods produced by manufacturers to the intended consumers, and make their profits by marking up their price. Most stores and catalog companies are distributors or retailers.
• Service businesses offer intangible goods or services and typically charge for labor or other services provided to government, consumers, or other businesses. Interior decorators, consulting firms and even entertainers are service businesses.
• Transportation businesses deliver goods and individuals to their destinations for a fee.
• Utilities produce public services such as electricity or sewage treatment, usually under a government charter.
Main article: Management
The efficient and effective operation of a business, and study of this subject, is called management. The major branches of management are financial management, marketing management,human resource management, strategic management, production management, operations management, service management and information technology management.
Owners may administer their businesses themselves, or employ of managers to do this for them. Whether they are owners or employees, managers administer three primary components of the business’ value: its financial resources, capital or tangible resources, and human resources. These resources are administered in at least five functional areas: legal contracting, manufacturing or service production, marketing, accounting, financing, and human resources.
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