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What Is a Business?

A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities. Businesses can be for-profit entities or they can be non-profit organizations that operate to fulfill a charitable mission or further a social cause. 

 

The term "business" also refers to the organized efforts and activities of individuals to produce and sell goods and services for profit. Businesses range in scale from a sole proprietorship to an international corporation. Several lines of theory are engaged with understanding business administration including organizational behavior, organization theory, and strategic management.

 

 

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Business

KEY TAKEAWAYS

A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.

Businesses can be for-profit entities or non-profit organizations.

There are various forms of a business, such as a limited liability company (LLC), a sole proprietorship, a corporation, and a partnership.

Businesses can range from small operations operating in one industry to large operations operating in many industries around the world.

Understanding a Business

Generally, a business begins with a business concept (the idea) and a name. Depending on the nature of the business, extensive market research may be necessary to determine whether turning the idea into a business is feasible and if the business can deliver value to consumers. The business name can be one of the most valuable assets of a firm; careful consideration should thus be given when choosing it. Businesses operating under fictitious names must be registered with the state.

 

 

Businesses most often form after the development of a business plan, which is a formal document detailing a business's goals and objectives, and its strategies of how it will achieve the goals and objectives. Business plans are almost essential when borrowing capital to begin operations.

 

It is also important to determine the legal structure of the business. Depending on the type of business, it may need to secure permits, adhere to registration requirements, and obtain licenses to legally operate. In many countries, corporations are considered to be juridical persons, meaning that the business can own property, take on debt, and be sued in court.

 

Business Structures

Many businesses organize themselves around some sort of hierarchy or bureaucracy, where positions in a company have established roles and responsibilities. The most common structures include sole proprietorships, partnerships, corporations, and limited liability companies (LLC), with sole proprietorships being the most prevalent.

 

A sole proprietorship, as its name suggests, is a business owned and operated by a single natural person. There is no legal separation between the business and the owner; the tax and legal liabilities of the business are thus that of the owner.

 

A partnership is a business relationship between two or more people who join to conduct business. Each partner contributes resources and money to the business and shares in the profits and losses of the business. The shared profits and losses are recorded on each partner's tax return. 

 

A corporation is a business in which a group of people acts together as a single entity; most commonly, owners of a corporation are shareholders who exchange consideration for the corporation's common stock. Incorporating a business releases owners of the financial liability of business obligations; however, a corporation has unfavorable taxation rules for the owners of the business.

 

For this reason, a relatively new (first available in Wyoming in 1977 and other states in the 1990s) business structure, a limited liability company (LLC), is available; this structure combines the pass-through taxation benefits of a partnership with the limited-liability benefits of a corporation.

 

Business Sizes

Business sizes range from small owner-operated companies, such as family restaurants, to multinational conglomerates such as General Electric. Larger businesses may issue corporate stock to finance operations. In this case, the company is publicly traded and has reporting and operating restrictions. Alternatively, smaller businesses may operate more independently of regulators.

 

Business Industries

A company may describe its business by communicating the industry in which it operates. For example, the real estate business, advertising business, or mattress production business are industries in which a business can exist. Because the term “business” can be interchanged with day-to-day operations as well as the overall formation of a company, the term is often used to indicate transactions regarding an underlying product or service. For example, ExxonMobil transacts business by providing oil.

 

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Related Terms

Sole Proprietorship: What You Should Know

A sole proprietorship, also known as a sole trader or a proprietorship, is an unincorporated business with a single owner who pays personal income tax on profits earned from the business. more

Understanding Companies

A company is an organization and legal entity set up by a group of people for the purpose of operating either a commercial or industrial business enterprise. more

Limited Liability: What You Need to Know

Limited liability is a type of liability that does not exceed the amount invested in a partnership or limited liability company. more

The Truth About Limited Liability Companies

A limited liability company is a corporate structure in the United States wherein the company members are not personally liable for the company's debts or liabilities. more

Understanding Incorporation

Incorporation is the legal process by which a business entity is formed. A corporation is a separate legal entity from its owners. more

Société Anonyme (S.A.)

A société anonyme (S.A.) is a French business structure equivalent to a U.S. corporation. It protects the owners' assets against creditor claims. more

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8 Benefits of Reengineering of a Business Proces

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The following are the benefits of reengineering of a Business Process

 

 

(i) By reengineering, an organisation can achieve radical changes in performance (as measured by cost, cycle time, service and qualit

 

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(ii) It boosts competitiveness in the operations network through simpler, leaner and more productive processes

 

(iii) Reengineering encourages organisations to abandon conventional approaches to problem solving and to “think big” (revolutionary thinking

 

(iv) The slow, cautious process of incremental improvements leaves many organisations unprepared to compete in today’s rapidly changing market place. Reengineering helps organisations make noticeable changes in the pace and quality of their response to customer needs (i.e. break-through improvements

 

(v) Through reengineering, an organisation can be transformed from a rule driven and job centred organisation structure to a marketing organisation structure that focusses directly on the custome

 

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(vi) Reengineering often results in radically new organisational designs that can help companies respond better to competitive pressures, increase market share and profitability and improve cycle times, cost ratios and quality (organisational renewal)

 

(vii) The major accomplishment of the reengineering effort is the change that occurs in the corporate culture and the basic principles by which departments operate. Workers at all levels are encouraged to make suggestions for improvement and to believe that management will listen to what they have to say. Reengineering will eventually help the culture in the organisation to evolve from an insular one to one that accepts change and knows how to deal with i

 

(viii) Reengineering has helped create more challenging and more rewarding jobs with broader

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