Economic activities are divided into three major categories, namely business, professions and employment. While all these may seem similar in the world of business they are distinctly different. Let us learn about all three and also the differences amongst them.
Business refers to those economic activities, which are connected with the production or purchase & sale of goods or supply of services with the main object of earning a profit. To earn income in the form of profit people engage themselves in business. Examples: fishing, mining, farming, manufacturing, wholesales etc.
Browse more Topics under Nature And Purpose Of Business
- Objectives of Business
- Classification of Business Activities
- Concept and Characteristics of Business
- Nature of Business Risks
Professions includes those activities, which require special knowledge & skill to be applied by individuals in their occupation. Those engaged in professions are known as professionals. Professionals are generally subjected to guidelines or codes of conduct laid down by professional bodies.
Examples: lawyers are engaged in the legal profession, governed by the bar council of India & chartered accountants belonging to the accounting profession are subject to the regulations of the Institute of chartered accountants of India.
Getting remunerated in return for the work done for others refers to an employee. Employees are the people who are employed by others. Thus, people who work in factories, offices of banks, insurance companies or government department, etc at various posts are the employees of these organizations. They receive wages & salaries. Examples: working in offices, banks, insurance companies, shops, as a manager, clerk, peon, salesman etc.
Business Functions at the Enterprise Level
The business includes many numbers of functions performed by many different types of organizations known as business enterprises or firms. To carry on any business the enterprise has to perform four major functions namely financing, production marketing & human resource management.
Mobilizing & utilizing funds for running a business enterprise is meant by financing. The conversion of raw material into finished goods comes under production. Facilitating the exchange of goods & services from producers to the people who need them, at a place they require, at a time they need & at a price they are ready to pay is known as marketing. Human resource management means ensuring the availability of working people who have proper skills to perform various jobs in a firm.
Difference between Business, Profession, and Employment
|Commencement||Business may commence with the decision of entrepreneur.||The profession may commence on completion of a degree course & by getting a certificate of practice.||Employment commences on joining duty by entering into a service agreement.
|Qualification||No minimum qualification required before starting a business.||Prescribed & professional qualification & training required.||Qualification depends on the nature of the job.
|Investment||Capital requirement depends on the scale of business.||Limited capital investment is required.||No capital investment is required.|
|Risk||In business, there is always risk & uncertainty.||In the profession, there is little risk present.||In employment, there is no risk involved.|
|Transfer of interest||Transfer of interest is possible with some formalities.||Transfer of interest is not possible.||Not possible to transfer the service contract.|
|Main objective||The main objective of business is to earn a profit.||The main objective of a profession is to provide service.||The main objective of employment is to earn income in the form of salary by satisfying the employer.|
|Code of conduct||There is no prescribed code of conduct for business.||Code of conduct is prescribed by the professional associations.||The terms & conditions of service contract are applicable to an employee.|
|Nature of work involved||It involves production, purchase & sale or exchange of goods & services.||It involves the rendering of personalized services of specialized nature.||It involves performing the work as assigned by the employer.|
Q.1. Explain the following terms:
- Business: Business is where goods and services are exchanged for one another or for money.
- Profession: Requiring special knowledge & skill to be applied by individuals in their occupation is called a profession.
- Employment: People those who work in their offices of banks, insurance companies or government department, as managers, assistants, clerks, peons or security guards are the employees of these organizations
Q2. State two differences between Business and Profession?
Ans. Two differences between Business and Profession are:
|Commencement||Business may commence with the decision of entrepreneur.||The profession may commence on completion of a degree course & by getting a certificate of practice.|
|Main objective||The main objective of business is to earn a profit.||The main objective of a profession is to provide service.|