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Classification of Business Activities

Business activities refer to all economic activities related to producing and distributing goods and services. They can be broadly classified into primary, secondary, and tertiary industries. Primary industries extract or cultivate raw materials. Secondary industries process raw materials into goods. Tertiary industries provide services. Commerce involves trade, which distributes goods internally and externally, as well as auxiliaries like transportation, warehousing, and banking that facilitate trade. E-commerce is online trading that has grown with digital evolution. Overall, business activities work together to produce and deliver goods and services to satisfy customer demand.

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2K views6 pages

Classification of Business Activities

Business activities refer to all economic activities related to producing and distributing goods and services. They can be broadly classified into primary, secondary, and tertiary industries. Primary industries extract or cultivate raw materials. Secondary industries process raw materials into goods. Tertiary industries provide services. Commerce involves trade, which distributes goods internally and externally, as well as auxiliaries like transportation, warehousing, and banking that facilitate trade. E-commerce is online trading that has grown with digital evolution. Overall, business activities work together to produce and deliver goods and services to satisfy customer demand.

Uploaded by

Muhammad Azeem
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BUSINESS ENVIRONMENT

Definition: Business activities refer to all the economic activities, whether


directly or indirectly related to making the goods and services available to the
consumer and ensure profit earning through customer satisfaction. All the
business activities depend on each other to ensure constant process and cannot
serve the purpose of customer satisfaction solely.

Example: A farmer produces tons of pulses and cultivates it to sell it in the


market. He doesn’t have a warehousing facility to store his yield. The lack of
storage leads to crop destruction.

Content: Business Activities

1. Classification
2. Industry
3. Commerce
4. Conclusion

Classification of Business Activities


Other than the production of goods and services, there are numerous other
activities which can be termed as business activities.

It can be broadly classified as follows:

Industry
The industry refers to all the activities concerned with the extraction, processing
and production of goods and services to generate revenue. Industries are majorly
categorised under three heads:

Primary Industries

The enterprises engaged in the generation of raw material through extraction or


breeding of natural resources, whether living or non-living are listed under
primary industries.
For example; Breeding of sheep for wool, mushroom plantation, salt extraction,
coal mines

Based on the process through which the


natural resources are acquired, the primary industries are divided into the
following two types:

 Extractive: Industries which extract the resources already available with


nature.
For example; The petroleum industry, iron ore mines, the fishery industry,
etc.
 Generic: Industries involved in the rearing of cattle, animals and birds or
growing of plants, flowers and vegetation to sell them or their products.
For example; Sunflower farms, dairy farming, horticulture

Secondary Industries

Secondary Industries procure the natural resources produced by primary


industries as raw material to create different goods to meet customer
requirement.
For example; Road contractors, bag manufacturing industry, medicine
manufacturing
The secondary industries are bifurcated into two streamlines:

1. Manufacturing: Industries engaged in the production and creation of


goods to convert raw material into the usable form are known as
manufacturing industries. There are four types of manufacturing industries:

o Analytical: Analytical industry focuses on extracting different


products from the specific raw material.
For example; Extracting LPG from natural gas
o Synthetical: These industries concentrate on combining various
ingredients to create a new product.
For example; the perfume industry
o Processing: When the raw material is treated at different stages to
acquire the final product, it is known as processing.
For example; The salt processing unit
o Assembling: Assembling refers to the compilation of different
products to develop a new product.
For example; Mobile phones manufacturing
 Construction: Building up of immovable goods using various
goods as raw material to serve the consumer’s utility is called construction.
For example; Construction of dams from bricks, cement, iron, etc

Tertiary Industries
The tertiary industry refers to the service industry. It includes all kinds of services
provided to consumers to satisfy their needs and requirements.
For example; Schools, hospitals, hotels, banks, etc.

Commerce
Commerce is the means of making the product available to consumers. It works
parallel with the industries and can be seen as a medium between the enterprises
and the consumers.

E-commerce: E-commerce refers to the trading of goods and services through


the online market over the internet. Commerce is further sorted into two
principal heads:

Trade

Only the production of products and services is not enough until it reaches the
end consumers. Trade is the channel between the industries and the consumers,
that is responsible for the distribution of products and services.

It is basically of two
types:

1. Internal Trade: Internal trade or domestic trade makes sure that the
goods and services are traded within the geographical confinement of a
country. It is further divided into the following two categories:

o Wholesale Trade: Purchasing the products in bulk quantity from


the manufacturer and selling comparatively in small amounts to the
retailer at a marginal profit is known as wholesale trade. Wholesalers
majorly deal with limited products.
For example; Wholesale gourmet store, aluminium partition
wholesaler
o Retail Trade: The retailer buys goods in comparatively smaller
quantity from the wholesaler, to be sold further to the customers at
MRP (Maximum Retail Price) or an appreciated price.
For example; Apparel shop, furniture Showroom
 External Trade: When goods and services are traded outside the
geographical confinements of a country, it is termed as external trade or
foreign trade. External trade can be classified as follows:
o Import: Import refers to procuring goods and services from the
other country.
For example; India imports lead from Nigeria
o Export: Selling or supplying of products and services to the other
country is termed as export.
For example; Spain exports porcelain tiles to India
o Entrepôt: Purchasing goods from one nation and selling it to
another country is called entrepôt.
For example; Club factory.in buys products from all over the world and
sells them universally

Auxiliaries to Trade

To simplify the trading process, there is a need for additional activities which are
termed as auxiliaries to trade.
Such services synchronise and manage the buying and selling process for both
the sellers and the buyers.

The various
kinds of auxiliaries to trade are mentioned below:
 Warehousing: To store the goods produced in bulk quantities, to keep
the products safe from damage and to maintain a regular supply of goods in
the market is known as warehousing.
For example; Cold storage warehouse to keep ice-creams fresh
 Transportation: The process of moving the finished products from the
industry or production unit to the marketplace for easy availability to
customers is known as transportation.
For example; Goods train transports a variety of goods on a large scale
 Insurance: Insurance of goods provides financial security against the risk
of loss or damage caused to the products at the time of transport or
otherwise.
For example; Fire insurance of the crackers stored in a warehouse
 Banking and Finance: There are financial institutions that
provide financial leverage to the trading firms in the form of business loans
and other banking services. Such as fund transfer, cheque payments,
current account transactions, etc.
For example; Commercial banks
 Advertising: To introduce and generate product demand in the market,
advertising the product through newspapers, radio, television, internet,
hoardings, etc. is essential.
For example; Hoarding advertisement agencies
 Communication: Communication implies the service facilitating the
exchange of opinion and information between two or people.
For example; Internet service provider

Conclusion

With the growing population, the demand for merchandise is rising


tremendously. To satisfy these demands for ensuring customer satisfaction,
business activities play a significant role.

The world is experiencing an era of digital evolution. Thus the concept of e-


commerce has developed as a part of business activities.

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