Business is a word that is commonly used in many different languages. But
exactly what does it mean? The concepts and activities of business have increased
in modern times. Traditionally, business simply meant exchange or trade for
things people wanted or needed. Today it has a more technical definition. One
definition of business is the production, distribution, and sale of goods and ser-
vices for a profit. To examine this definition, we will look at its various parts.
First, production is the creation of services or the changing of materials into
products. One example is the conversion of iron ore into metal car parts. Next,
these products need to be moved from the factory to the marketplace. This is
known as distribution. A car might be moved from a factory in Detroit to a car
dealership in Miami.
Third is the sale of goods and services. Sale is the exchange of a product or
service for money. A car is sold to someone in exchange for money. Goods are
products that people either need or want; for example, cars can be classified as
goods. Services, on the other hand, are activities that a person or group per-
forms for another person or organization. For instance, an auto mechanic per-
forms a service when he repairs a car. A doctor also performs a service by taking
care of people when they are sick.
Business, then, is a combination of all these activities: production, distribu-
tion, and sale. However, there is one other important factor. This factor is the
creation of profit or economic surplus. A major goal in the functioning of an
American business company is making a profit. Profit is the money that remains
after all the expenses are paid. Creating an economic surplus or profit is, there-
fore, a primary goal of business activity.