In a simple sense, business is a way of procuring goods and services from external sources and selling them with value addition after necessary reprocessing activities. However, the term ‘business’ is a broad concept which covers different economic activities ranging from trading to industrial operations. Whatever the classification of its activities is, the central objective of business functions is to earn profit. A part of the profit goes to national exchequer in the form of income tax and the rest belongs to the owners of the business entity. Business activities help generate employment and support government directly. In addition to this visible support, invisible hands of a business entity create demand in the society which encourages incremental economic activities. Readymade garments can be taken as an example. Through this business, different sectors have been developed and benefited such as accessories trading, banking, transportation etc. So, real business operations help the country grow.
   Business produces goods and services to meet the demand of the society at home and export abroad. The outputs produced through business operations are priced at monetary value. In calculating price, costs of producing goods are major ones, with which selling and administrative costs are added to arrive at the total cost of the goods. As such, the products of business entity create economic activities in the society.
   Adjustment of the costs for external goods and services with sales price of outputs results in value addition for the entity. The portion of value addition is distributed to the employees of the entity in the form of salary and benefits, government in the form of taxes/levies and owners in the form of profits/dividends. The quantum of value addition depends on different variables.
   Value addition equivalent only to staff salary and benefits may lead a business entity to run but it will not bring any benefit to the owners and to the national exchequer. If such situation continues for a long time, the entity will die. On the other hand, value addition not even equivalent to the benefits for the staffs will bring loss to the entity which will have to be sustained by the owners. This situation arises when the operating costs become higher than the price of goods and services to be sold in the market. This will result in the death of the entity since owners cannot sustain the loss for a long period.
   In addition to high operating costs compared to sales price, there is another situation in which a business entity cannot run its operations if the current assets created on credit sales remain unrealised and are classified badly. This situation creates financial crisis for the entity in respect of working capital and so the business operations may come to an end unless incremental capital in any form is injected into the entity. Such a situation arose in the developed economies in 2008 for which governments came forward to rescue the dying entities through different types of bailout programmes.
   In respect of high operating costs compared to sales price, a business entity cannot survive unless the operating costs are minimised or sales price is increased. It is possible to increase sales price only when market forces allow to do so. On the other hand, operating costs can be minimised through identification of cost centres, analysis of the same and implementation of different cost-controlling tools.
   Production of goods and services of a business entity can be sold at home and abroad. In case of high product costs, government may come forward to extend financial support at the production stage to keep the entities alive. This means that government is offering gift to the local consumers if the goods are sold at home. On the other hand, government support will be a gift to the foreign buyers if the goods are sold abroad as export.
   Exporters are contributing to the economy through their activities in creating employment and earning foreign exchanges. Definitely they may need support. Support should be provided in the form of favourable policy environment through which export operations can be conducted without going into complex regulatory process. Required raw materials can be imported easily, uninterrupted utility service may be availed of at rebated rate etc. In addition to such domestic support, opening the doors to enter foreign markets with equal national treatment through continuous bilateral/multilateral trade negotiations with trading partners is an international marketing support which can create a level playing field for the exporters. This all may minimise regular expenses which will stand as invisible gifts to determine fair value of products with profit to compete in international market. Subsidies in cash, irrespective of products, should only be considered for business entities having a specific work force to the extent of gap between competitive export price and product costs determined through the review of profitability of the products. This may be the new programme in days to come.
   Mehdi Rahman
   Via e-mail