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Scope Of Business
SCOPE OF BUSINESS
The activities
which come within the scope of business are Classified into following
categories:
Business
concerns engaged in production of goods are termed as industries. Industrial
concerns produce goods either by performance of manufacturing processes or by
extraction or farming etc. Industrial concerns are classified as follow:
1. Manufacturing Industry
An industry that
converts raw materials into finished goods by performance of a manufacturing
process is termed as manufacturing industry. A sugar mill, steel mill, shoe
factory, garments factory, refinery, perfumery etc. are examples of manufacturing
industries.
2. Construction Industry
Business units
engaged in construction work are classified as construction industry. Construction
industry undertakes the work of building dams, bridges; roads, canals,
buildings etc.
3. Extraction Industry
Extraction industry consists of business units engaged in raising goods from the soil or obtaining goods from beneath surface of the earth. Mining, fishing, agriculture etc. are examples of extraction industry
.
4. Genetic Industry
Business units
that earn profit by reproduction of animals or plants are categorized as
genetic industry. For example,hatcheries and nurseries etc.
All those
economic activities which facilitate exchange of goods as between producers and
consumers are classified as commerce. These business activities include: (1)
trade and (2) aids to trade. Following is a brief description of activities
comprising commerce:
1. Trade
Trade means
buying and selling of goods. Producers of goods cannot deal directly with large
number of consumers scattered over vast geographical area. Therefore, traders purchase goods from producers and sell them
to consumers or to other traders who resell the goods to consumers. Thus
traders serve as links between producers and consumers. Trade is further
classified into two categories i.e. (i) home trade and (ii) foreign trade.
(i) Home Trade
Home trade, also
termed as domestic or internal trade, is buying and selling of goods within
boundaries of a country. Home trade includes wholesale trade and retail trade.
When a trader buys goods from producers and sells them to retailers, it is
called wholesale trade. When a retailer buys goods from wholesalers and sells
them to consumers, it is called retail trade.
(ii) Foreign Trade
When goods are being traded with a trader
outside boundaries of a country, it is termed as foreign trade, international
trade or external trade. Foreign trade includes import trade and export trade.
When a trader of a country buys goods from a trader of another country, it is
called import trade; and when a trader of a country sells goods to a trader of
another country, it is called export trade.
2. Aids to Trade
The activities
which facilitate and assist the process of buying and selling are classified as
aids to trade. These activities are broadly grouped into following categories:
(i) Mercantile Agents
Mercantile agents are businessmen who do not
buy and sell their own goods but they only bring buyers and sellers in contact
with each other and facilitate completion of transaction between them e.g.
property dealers, car dealers, commission agents in grain market etc.
(ii) Transport
It is carriage of goods from the place of
production to the place of consumption. Transportation creates place utility
and makes goods available at the place where they are needed by consumers.
(iii) Warehousing
Warehousing is
storage of goods. Warehousing creates time utility by storing and preserving
goods from the time they are produced till the time they are demanded by
consumers..
(iv) Banking
Banks are institutions which deal in money and
credit. Banks facilitate trade by offering safe modes of payment like cheque,
bank draft, letter of credit etc. and by providing finance to traders in the
form of cash credit, overdraft, discounting of bills of exchange etc
(v) Insurance
Insurance
provides coverage against risk of loss of goods by fire, flood, earthquake,
accident etc. when the goods are in the course of transportation or
warehousing.
(vi) Communication
Such commercial
services as post office, telephone, internet etc. are classified as
communication. Communication facilitates all of the business activities by.
providing means of communication to the parties.
(vii) Advertising
Advertising
creates awareness about products, it creates and stimulates demand and it
enables the buyers to make an intelligent choice. Specialized services that
generate advertisements are categorized as advertising.
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