Dimensions of Business:
Business Covers Large or wide area and the dimension of business covers wide area of business activities. It involves all kinds of economic activities. Broadly business may be classified into two categories viz. Industries and Commerce. ” The Dimension of business refers to its scope or area or components i.e. industry, Industry and Auxiliary to commerce” Industry involves producing goods and services whereas commerce is concerned with the distribution of goods and services from manufacturers to the customers. Thus, the scope of business may be studied under the following components:
- Industry: Industry Involves the Production of finished products from raw materials through some specific processes.
- Commerce: All the business activities other than industry are commerce. These activities include trade and its auxiliaries.
- Service Enterprises: Service enterprises are those who provide service to their customer. Service product is those which can not get ownership.
A. Meaning and Type of Industry:
” Industry ” refers to the production of goods by manufacturing or processing. It converts raw materials into finished goods and thus creates form utility. Goods produced by industry may be “consumers’ goods” or “producers’ goods”. Consumer goods are in the form in which consumer wants them e.g. cloth, radio, television, foodstuffs, etc. Industry directly satisfy human needs and human wants. Producers’ goods are used by other producers for further production e.g. machinery, factory, building, plants, tools, etc. Industry may be further divided into Two Types.
1. Primary Industries:
2. Secondary Industries:
1. Primary Industries:
The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry, fishing and mining. The primary sector is usually most important in less-developed countries, and typically less important in industrial countries.
Primary industry is a larger sector in developing countries; for instance, animal husbandry is more common in Africa than in Japan.
- Genetic Industry: Genetic Industry is related to the reproducing, breeding and multiplying of certain species of plants and plants and animals with the object of earning profit from their sale. The activities involved are rearing, breeding of animals, birds, and growing plants. Nurseries, where plants are grown for sale. cattle breeding farms, poultry, etc. come under the genetic industry.
- Extractive Industry: The Extractive Industry concerned with the extraction or drawing of products from natural sources. It supplies basic raw materials to other industries. Examples of such industries are farming, mining, hunting, lumbering, fishing, etc. Materials once extracted from the earth can not be replaced. Hence, these industries are also called exhaustive industries because with extraction there is depletion of resource and exhausts
2. Secondary Industries:
Any industry that processes raw materials that are then provided to the primary industry for the manufacture of products. This sector, also called the manufacturing industry, (1) takes the raw materials supplied by primary industries and processes them into consumer goods, or (2) further processes goods that other secondary industries have transformed into products, or (3) builds capital goods used to manufacture consumer and non-consumer goods. The secondary industry also includes energy-producing industries (e.g., hydroelectric industries) as well as the construction industry.
Secondary industry may be divided into heavy, or large-scale, and light, or small-scale, industry. Large-scale industry generally requires heavy capital investment in plants and machinery, serves a large and diverse market including other manufacturing industries, has a complex industrial organization and frequently a skilled specialized labor force, and generates a large volume of output. Examples would include petroleum refining, steel and iron manufacturing, motor vehicle and heavy machinery manufacture, cement production, nonferrous metal refining, meat-packing, and hydroelectric power generation.
Light or small-scale, the industry may be characterized by the non-durability of manufactured products and smaller capital investment in plants and equipment, and it may involve nonstandard products, such as customized or craftwork. The labor force may be either low skilled, as in textile work and clothing manufacture, food processing, and plastics manufacture, or highly-skilled, as in electronics and computer hardware manufacture, precision instrument manufacture, gemstone cutting, and craftwork.
- Construction Industry: This industry is concerned with the construction, erection, fabrication or building products. Examples of such industries are road, bridge, dams, canals, buildings, construction, etc. In this type of industry basic materials are manufactured by other industries like cement, iron, etc. The distinctive characteristic is that their products are not carried to the market for sale, they are erected or built at a fixed site. The products of construction industries are immovable.
- Manufacturing Industry: Generally the term ‘industry’ refers to the manufacturing industry. This industry is mainly concerned with the production of different types of goods by using raw materials or semi-finished goods. It creates form utility in them. Manufacturing industries produce most of the goods that are used by consumers. Textile, cement, soap, television, petrol, etc. are examples of manufacturing industries. It may be classified as follows:
- Analytical Industry: In this industry, many types of products are manufactured by analyzing and separating different elements from the same material. For example, crude oil is processed and separated into petrol, diesel, kerosene, lubricant oil, etc.
- Synthetic Industry: In this industry various raw materials are put together in the manufacturing process to make a final product. For example combining and mixing concrete, gypsum, coal., etc produces cement
- Processing Industry: In this industry raw material is processed through different stages of production resulting in the final product. Textile, paper and sugar are examples of this type.
- Assembling Industry: In this industry various instruments or component parts already manufactured are assembled to make new useful products. For example, cars, bicycles, radio, television, etc.
3. Tertiary/Service industry:
This sector also called the service industry includes industries that, while producing no tangible goods, provide services or intangible gains or generate wealth. In the free market and mixed economies, this sector generally has a mix of private and government enterprise.
The industries of this sector include banking, finance, insurance, investment, and real estate services; wholesale, retail, and resale trade; transportation, information, and communications services; professional, consulting, legal, and personal services; tourism, hotels, restaurants, and entertainment; repair and maintenance services; education and teaching; and health, social welfare, administrative, police, security, and defense services.
B. Commerce:
Commerce concern with the distribution and exchange of products and services. Producing good or service doesn’t complete the concept of business but it needs to distribute from manufacturer to customer and exchange, commerce is playing a vital role. Simply, commerce is the bridge which fills up the gap between the manufacturer (Producer) and customer with the help of different trade and auxiliary of trade.
Types of commerce:
A. Trade:
Trade is related to buying and selling goods and services for earning profit. It supplies quality goods at a reasonable price. Those activities which are related to buying, selling and distributing goods in the market is known as trade
Types of trade
1. Home trade:
Home trade means national, domestic or internal trade i.e. Buying and selling within a nation. In home trade, both buyers and sellers are from the same nation. In home trade task is simple than foreign trade. It is classified into two types they are.
A. Wholesale trade:
When a trader buys goods in bulk amount and resells to retail in a small volume is called wholesale trade. In this trade goods are bought from the manufacturer and are sold to retail. It acts as a middleman between the manufacturer and retailer. It deals with a special product
B. Retail trade:
When trader buys goods in bulk amount and resell to the customer in small volume is called retail trade. In this trade goods are bought from wholesalers and are sold to the customer. It acts as a middleman between wholesalers and customers. It deals with various types of products.
2. Foreign trade:
Foreign trade means international, global, external trade i.e. Buying and selling is between two or more nations. In foreign trade buyers and sellers are from different nations. In foreign trade task is difficult than home trade. It is classified into three types they are.
A. Import:
A good or service brought into one country from another is called import. Along with exports, imports form the backbone of international trade. The higher the value of imports entering a country, compared to the value of exports, the more negative that country’s balance of trade becomes. Buying goods from India, China is called import.
B. Export:
A good or service sold to another country from one is called export. Along with imports, exports form the backbone of international trade. The higher the value of exports exiting a country, compared to the value of imports, the more positive that the country’s balance of trade becomes. Exporting herbs, garments to Germany, India is an example of export
C. Entry port:
The trade-in in which a country purchases the goods from one country and sells it to another country is called entry port trade. The goods bought from a country are not used for self-benefit but are rather exported to another country. For example, India buys herbs from Nepal and sells it to China.
B. Auxiliaries of trade:
It supports or assists the trade activities. It helps to run the business smoothly. It helps to transfer goods from the production area to the consumption area. It creates time and place utility.
1. Transportation: It transfers goods from one place to another. There are many means of transportation that can assist business and trade activities. They are air travel. Bus route, sea route, rope route, etc. It delivers the right product and the right time in the right place. It creates time utility
2. Warehouse: It is one of the auxiliaries of trade. It helps to protect and store goods until customers use them. It provides the goods hen demand is created. It also helps to provide unseasonal goods.
3. Insurance: It acts as nutrition to trading activities. It helps to reduce risks and uncertainties. It is a contract between an organization and its future. The system that takes the responsibility of compensation for certain risks is called the insurance system.
4. Banking: Banks are the financial institution that supports for traders. It provides loans, investment, credit facilities to the trading companies. It helps with the expansion and flexibility of trade. Bank provides long term loan as fixed capital and short term loan as working capital. Along with the provision of funds, the commercial banks provide many other services such as collection and deposit of checks, issues bank draft, overdraft, cash credit limit etc.
5. Advertising and Promotion: It is a supporter to trade. It provides information to customers about goods and services. Its aim is for the creation of demand. It also acts as a promotional tool. Promotion is the process of introducing a product or service to the customer. In this competitive business environment, promotion is really important and this can be a real game-changer to introduce products in the market.
6. Communication: Communication is the best way to collect important and required information related to the business organization from both internal and external sources. Business makes business strategy, plan and future forecast with the help of data or information which they can access through different media, tools and techniques.
7. Packaging: packaging removes the hindrance of the risk of spoilage.
