2 INDUSTRY AND COMMERCE

1 NotesBUSINESS STUDIES31 INDUSTRY AND COMMERCEB usiness represents organized efforts by an individual or group of individualsengaged in making a living. The term business has been defined by differentauthors in their own way. According to Urwick and Hunt, Business is anyenterprise which makes, distributes, or provides any article or service, whichother members of the community need and are able and willing to pay for. It,therefore, includes all those activities which involve production or purchaseof goods or rendering of certain services with the object of selling them at aprofit. Business comprises all profit seeking activities and enterprises thatprovide goods and services necessary to an economic studying this unit, you will be able to: classification of business activities; INDUSTRY and its types; COMMERCE - trade and its auxiliaries; define the term e- COMMERCE ; describe the categories of e- COMMERCE ; and discuss the advantages of e- COMMERCE .

2 CLASSIFICATION OF BUSINESS ACTIVITIESThe basic cause of all productive activities is the unlimited wants of human beingand the need to satisfy them. Human wants are many and also complex in the basic requirements of human beings are three viz., food, clothingand shelter. We are consuming many other things which have to be generallypaid for. For example tooth paste and soap you use, the bread you eat, the furnitureyou use, the dress you wear, the T V you watch are some of the examples. Haveyou ever thought of how these things are made available to you? Each one ofthem has a long process behind it. The manufacturer produces goods for theconsumer.

3 Generally the manufacturer may take the help of middleman like thewholesalers and retailers to distribute the goods to the - IIntroduction toBusinessBUSINESS STUDIES32 NotesBusiness activities may be broadly classified into two categories: (i) INDUSTRY ,and (ii) COMMERCE . INDUSTRY is concerned with the production of goods andmaterials, while COMMERCE is mainly concerned with their distribution. INDUSTRYThe production side of business activity is referred as INDUSTRY . It is a businessactivity, which is related to the raising, producing, processing or manufacturingof products. The products areconsumer s goods as well asproducer s goods.

4 Consumer goodsare goods, which are used finally byconsumers. Food grains,textiles, cosmetics, etc. Producer sgoods are the goods used bymanufacturers for producing someother goods. Machinery, tools,equipments, etc. Expansion of trade and COMMERCE depends on industrialgrowth. It represents the supply side of market. The term INDUSTRY refers to thatpart of the business activity which is concerned materials like coal, iron ore, petroleum (called extractiveindustry); and converting raw materials into finished products like soap,bread, fans, machines, cement (called manufacturing INDUSTRY ); activity like buildings, dams, bridges, roads (called constructionindustry).

5 Thus, the activities of human beings engaged in extraction, production,processing, construction and fabrication of goods come under INDUSTRY . Inanother sense, INDUSTRY means a group of factories usually specializing in aparticular product line. For example, all those factories which produce cottontextiles together constitute cotton textile INDUSTRY . All the cement factoriestogether constitute cement INDUSTRY . CLASSIFICATION / TYPES OF INDUSTRIEST here are various types of industries. These are mentioned as follows:-(i)Primary INDUSTRY : Primary INDUSTRY isconcerned with production of goods with thehelp of nature.

6 It is a nature-orientedindustry, which requires very little humaneffort. Agriculture, farming, forestry,fishing, horticulture, IndustryAn Agricultural FarmMODULE - IIntroduction toBusinessIndustry and CommerceNotesBUSINESS STUDIES33(ii)Genetic INDUSTRY : Genetic industries areengaged in re-production and multiplicationof certain spices of plants and animals withthe object of sale. The main aim is to earnprofit from such sale. plant nurseries,cattle rearing, poultry, cattle breeding, etc.(iii)Extractive INDUSTRY : Extractive INDUSTRY is concerned with extractionor drawing out goods from the soil, air orwater.

7 Generally products of extractiveindustries come in raw form and they are usedby manufacturing and construction industriesfor producing finished products. miningindustry, coal mineral, oil INDUSTRY , iron ore, extraction of timber andrubber from forests, etc.(iv)Manufacturing INDUSTRY : Manufacturingindustries are engaged in transforming rawmaterial into finished product with the helpof machines and manpower. The finishedgoods can be either consumer goods orproducer goods. textiles, chemicals, sugarindustry, paper INDUSTRY , etc.(v)Construction INDUSTRY : Constructionindustries take up the work ofconstruction of buildings, bridges, roads,dams, canals, etc.

8 This INDUSTRY isdifferent from all other types of industrybecause in case of other industries goodscan be produced at one place and soldat another place. But goods producedand sold by constructive INDUSTRY are erected at one place.(vi)Service INDUSTRY : In modern times service sector plays an importantrole in the development of the nation andtherefore it is named as service main industries, which fall under thiscategory, include hotel INDUSTRY , tourismindustry, entertainment INDUSTRY , etc. COMMERCEW hile INDUSTRY is concerned with the production of goods, COMMERCE isconcerned with making the same available to those who need them.

9 In otherGenetic IndustryMining IndustryManufacturing IndustryA Building under ConstructionService IndustryMODULE - IIntroduction toBusinessIndustry and CommerceBUSINESS STUDIES34 Noteswords, COMMERCE is mainly concerned with distribution of goods. It embracesall those functions which are essential for maintaining a free and uninterruptedflow of goods. Therefore, the term COMMERCE includes trade and aids totrade . TRADEThe term trade is used to denote buying and selling. Therefore, one who buysand sells is a trader. A trader is a middleman between the producer and theconsumer. Trade may be wholesale trade or retail trade.

10 A wholesale traderpurchases in large quantities from the producers, and sells in small quantitiesto the retail traders. A retail trader is one who purchases from the wholesaletrader or sometimes directly from the producer, and sells in smaller quantitiesto the ultimate consumers. AIDS TO TRADE (AUXILIARIES TO TRADE)All activities that facilitate smooth flow of goods from manufacturing centresto the consumption centres are called aids or auxiliaries to trade. Aids to trademay be classified into five categories: (i) transportation, (ii) warehousing, (iii)insurance, (iv) advertising, and (v) banking. These are briefly explained : Selling all the goods produced at or near the production centresis not possible.