SCOPE OF BUSINESS

Business is a comprehensive term, which includes production, marketing and other economic activities. Business activities are broadly classified into Industry and Commerce.

Scope of business

ð  MEANING OF INDUSTRY

Industry is a part of business activity which is concerned with or responsible for production of goods and services. It creates form utility, i.e., convert raw materials into finished goods.

ð  DEFINITION OF INDUSTRY

“An industry is composed of group of firms which compete with each other in serving approximately the same set of buyers, offering products that are reasonably close substitute of one another.”                                                               -- B.O Wheeler

ð  CLASSIFICATION OR TYPES OF INDUSTRY

Generally there are five types of industries:

1.     Extractive industry: Extractive industries are concerned with the extraction of materials from the natural elements like soil, water and air. For example, fishing, mining etc.

2.     Genetic industry: Genetic industries are concerned with genetics or breeding of certain species of plants and animals. For example, forestry, cattle breeding etc.

3.     Manufacturing industry: Manufacturing industries are concerned with the conversion of raw materials into intermediates or finished products. The manufacturing industries may be broadly classified as

i)                Basic and heavy industry

ii)              Capital goods industry

iii)             Intermediate goods industry and

iv)             Consumer goods industry

4.     Construction industry: Construction industry is a booming industry in the developing countries like India. It involves construction of roads, railways, bridges, harbours, dams, residential and commercial building etc.

5.     Service industry: Service sector is one of the most dynamic sectors of the economy. It includes services like banking, insurance, transportation, marketing research, advertising and sales promotion, entertainment etc.

ð  MEANING OF COMMERCE

Commerce is a part of business activity which is concerned with or responsible for distribution of goods and services. It includes both trade and Aids- to- trade.

ð  DEFINITION OF COMMERCE

“Commerce is the sum total of those processes, which are engaged in the removal of hindrances of persons (trade), place (transportation and insurance) and time (warehousing) in the exchange (banking) of commodities.”   -- Stephenson James

ð  CLASSIFICATION OF COMMERCE

The basic aim of commerce is to ensure the supply of goods at the right place, in the right quantity and at the right time. Commerce includes trade and aid-to-trade.

1.     Trade: Trade is that branch of commerce which is concerned with the exchange of goods and services. It may be a barter exchange, i.e., exchange of goods for goods or monetary trade where money is used as a medium of exchange

i)                Internal trade: Trade between two regions of the same country is known as internal trade. It is also known as domestic trade or home trade. It may be further classified as wholesale trade and retail trade.

Wholesale trade: Buying and selling of goods in large qualities.

Retail Trade: Buying and selling of goods in small quantities

ii)              External trade: Trade between two countries with different socio-economic and political environment is referred to as external trade. It is also known as foreign trade or international trade. It is further classified into three (Export, Import and Entrepot trade)

Export trade: Sale of goods to foreign countries.

Import Trade: Purchase of goods from foreign countries.

Entrepot Trade: Buying goods from one country for the purpose of selling them to another country is called entrepot trade.

2.     Aid-to-trade: Aids-to-trade are those service-oriented industries which remove the difficulties or hindrances in the smooth flow of goods from producers to consumers. Such as, banking, insurance, transportation, warehousing, advertising and mercantile Agents.

The following are the various types of aids-to-trade.

1) Transport: It is one of the aids to trad, which facilitate the distribution of goods and service smoothly and timely, Transportation creates place utility to goods and services.

2) Communication: Information from one to another to finalise and settle the terms of sales such as prices of goods discount allowed etc.

3) Warehousing: It is another aid to trade, which facilitates by storing goods until they either get the demand or consumed by customer storing goods in warehouse creates time utility to goods.

4) Insurance: Insurance reduces the problem of risks as the business is subject to risks and uncertainties.

5) Banking: Bank is a place or an institution which provides short-term and long-term finance to the business men or organization. It also solves the problem of payment and facilities exchange between buyer and seller.

6) Advertising: Advertising helps the consumers to know about the various brands manufactured by several manufactures.