Business Industry CommerceManufacturing Extractive Genetic Service Construction Trade Aids To Trade Process Domestic/Home/ Foreign/External/ Inland/National International/ Trade Trade Banking Assembly Insurance Tele- Communication Export TransportWholesale Retail Import Trade Trade Warehousing Advertising Re-export/ Entreport Salesmanship
Business is a combination of industry and commerce Industry concentrates on the manufacturing aspects whereas commerce focuses on the trading aspect. “Business is a human activity directed towardsproducing or acquiring wealth through buying and selling activities.” -L. H. Haney
Industry is a collection of firms engaged in the same product line. Industry focuses on the manufacturing aspect. Industry is classified into five sub-types.
1. Manufacturing Industry: The manufacturing industry is involved in manufacturing activities. It is engaged in converting taw materials, which are mainly products of extractive industry, into finished goods. The output of manufacturing industry may be consumer goods or producer goods. Consumer goods can be directly consumed by the end users (E.g. Biscuits, Bread, etc.) whereas producer goods (E.g. Cement, Steel, etc.) are used by the industries and not directly by end users. Manufacturing activities may be undertaken using different forms depending upon the nature of the product.
a) Process Type:In a process type of manufacturing activity the rawmaterials are introduced initially in the first process. Theoutput of the firs process becomes the input for the secondprocess and so on. This goes process goes on until thefinished product is produced as an output in the lastprocess. E.g.: Manufacturing of oil from oil seeds, textilefrom cotton, sugar from sugarcane, etc.b) Assembly Type:In a assembly type of manufacturing activity various partsare assembled (joined) together in order to create a newproduct. E.g.: Computer, Automobile, etc.
2. Extractive Industry: The extractive industry is engaged in extracting natural resources which is freely available in the nature.E.g.: Agriculture, Fishing, Mining, Quarrying, etc.
3. Genetic Industry: The genetic industry deals with multiplication of plants, animals, livestock and birds for the purpose of business activities. E.g.: Poultry farming, goat rearing, pig rearing, nurseries of plants, etc.
4. Service Industry: The service industry is engaged in providing services. The output of service industry is intangible. It cannot be seen but it can be experienced. All aids to trade can be classified under service industry. E.g.: Banking, Insurance, Warehousing,Transport, etc.
5. Construction Industry: The construction industry is engaged in construction business. The output of construction industry is tangible, fixed, erected at one place and it is immovable. E.g.: Construction projects such as dams, buildings, bridges, skywalk, sub-way, metro railway, laying of railway lines, etc.
Commerce is that component of business which is concerned with trade and aids to trade. Commerce can be further classified into groups.
1. Trade: Trade is the exchange of the products from the seller to the buyer. A minimum of two parties are required in order to trade to take place. Trade can be within the local areas, within the national boundaries or beyond the national boundaries.
a) Domestic/National/Home/Inland Trade: The trade that takes place within the national boundaries of a country is termed as domestic trade.i. Wholesale Trade: The trade that involves dealing in large quantities of goods it is termed as wholesale trade.ii. Retail Trade: The trade that involves dealing in small quantity of goods it is termed as retail trade.
b) Foreign/External/International Trade: The trade that takes place beyond the national boundaries of a country is termed as foreign trade.i. Export trade:• In export trade a seller from one nation sells goods to a buyer in another nation.ii. Import trade:• In import trade goods are being bought by a buyer in one nation from a seller in another nation.iii. Re-export or Entrepot Trade:• In re-export trade ,the goods which are imported from one country is exported in the same form to another country.
2. Aids To Trade: Aids to trade are the help and ancillary services provided to trade. Aids to trade are the services provided for the smooth functioning of the trade as well as industrial activities.
a) Banking:• A bank is an institution which borrows money from the depositors at a lower rate of interest with an objective to lend it at a higher rate of interest.b) Insurance:• Business activity comprises of risks and uncertainties.• All insurable risks can be insured by the business firms with the insurance companies.• In the event of that event occurring the business firm will be compensated for their claims.c) Tele-communication:• For the success of any business activity timely communication is most vital.• Modern tele-communication devices facilitates communication without any barriers of time or distance.
d) Transport:• Transport creates place utility.• Transport moves the goods from the place of surplus to the place of scarcity.d) Warehousing:• Warehousing creates time utility.• Warehousing stores the goods and preserves its quality till it is actually delivered to the customers.e) Advertising:• Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by the identified sponsor.• Advertising helps in creating and building powerful brand images in the minds of targeted audience.f) Salesmanship:• Salesmanship involves personal, one-to-one sales conversation which aims at including the prospect to purchase the product.