A business can be defined as any type of organization or enterprise undertaking to undertake commercial, industrial, or even service activities for the benefit of others. A business can be established either by a person or by an entity. A business can be a sole proprietorship, partnership, corporation, business organization, partnership, joint-venture, or an unincorporated firm. A business can be run through a number of ways. Most businesses are run by the owners or leaders, although there are exceptions. In most cases, all members of a business must participate in management and participate in decision making processes.
The objective of all businesses is to make a profit. All businesses strive to achieve their profit targets and these targets are frequently determined by the performance of the firms in the relevant market segments. To undertake successful business ventures, all business firms require some level of market penetration or exposure. Market penetration is the measure of a firm’s ability to have a significant influence over the market or the sector to which it belongs. There are various measures of market penetration such as sales volume, average price, number of dealers, average dollar sales, and penetration of markets such as high-tech, finance, and information technology.
All firms carry various levels of fixed costs. Some firms carry only fixed costs, while others carry both fixed and variable costs. Fixed cost components include labor, raw materials, and plant and equipment. The term fixed profit is usually used in a comparative analysis in order to compare firms based on their capital, operating, and maintenance costs. A firm that makes a higher profit margin than its competitors generally has lower fixed costs than its competitors.