All business ultimately are a classification of one or both of two categories. These are industry and commerce. Industry relates to the creation of goods and services. Commerce relates to the act of trading goods and services.
Industry is generally subdivided into primary, secondary and tertiary industries. Primary industries produce raw materials. Secondary industries use these raw materials to create products. Tertiary industries create services using the output from the secondary industries and sometimes the primary industries.
Commerce is generally subdivided into trade and activities related to trade. Activities related to trade, essentially the act of buying or selling products or services, concern anything that helps to make that happen. For example, online sales platforms are an example of a service that helps people to buy and sell products.
Classification of Business – Industry
Industry refers to economic activities, which are connected with conversion of resources into useful goods. These include activities relating to producing or processing of goods. Production, processing and manufacturing are among the major activities that are performed by an industry. Industries are classified into the three categories as primary, secondary and tertiary.
Read More : 3 Basic Types of Business Activities
Various Type of Industries
Primary Industries
Firstly, these include all those activities which are connected with the extraction and production of natural resources; reproduction and development of living organisms, plants etc. Agriculture, mining and fishing are some of the examples of these industries.
Secondary Industries
Secondly, these industries use raw material from primary industries to produce goods for final consumption or for further processing by other industrial units. For instance, mining of an iron ore is a primary industry, but manufacturing of steel by way of further processing of raw irons is a secondary industry.
Tertiary Industries
Thirdly, these industries provide support services to primary and secondary industries as well as activities relating to trade. Therefore, these industries provide service facilities such as transport, banking, insurance, warehousing, communication, packaging and advertising.
Learn More : What are the Core Concept and Characteristics of a Business?
Classification of Business – Commerce
Commerce does not involve manufacturing or production. It basically involves trading and its related activities. It includes both, buying and selling of goods as well as auxiliaries such as transport, banking, etc. Commerce provides the necessary link between producers and consumers. It includes all those business activities, which are necessary for maintaining a free flow of goods and services. Clearly, communication facilities help the producers, traders and consumers in exchanging information with one another. Thus, postal services and telephone facilities may also be regarded as auxiliaries to business activities.
Classification of Business – Trade
Activities which are meant for assisting trade are known as auxiliaries to trade. Notably, these activities are referred to as services. As a result, these are in the nature of facilitating the activities relating to industry and trade. Two business activities which are auxiliaries to trade are
Transport
Production of goods generally takes place in particular locations. Significantly, transport facilitates movement of raw material to the place of production and the finished products from factories to the place of consumption.
Warehousing & Storage
Goods are not sold or consumed immediately after production. They are held in stock to be available as and when demand comes. Special arrangement must be made for storage of goods to prevent loss or damage. Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when needed.
Do You Know More on What Are the Classification of Business and Its Activities? Please share your knowledge by commenting on them at Trdinoo for others to learn. Please subscribe and share us with your friends and networks.
