Classification of Business Activities ( Part 1) - Industry

Business activities may broadly be classified into two categories: 

1. Industry – Industry involves the production of goods and materials 

2. Commerce – Commerce is concerned with the distribution of goods and services.

 

Industry and Its Types  

Industry means the production of goods for sale by the application of human or mechanical power. It is concerned with changing the form of goods from any stage from raw material to finished product. Thus, Industry creates utilities for the satisfaction of human wants and to earn profits. 

Examples of Industry- Converting cotton into cloth, breeding cattle, constructing houses. 

Industry involves in the production of consumer goods and producer goods. Consumer goods are produced for direct use by people e.g. bread butter, cloth, spices etc. Producer goods or capital goods are required for the production of consumer goods e.g. raw materials, machinery, equipment, plastic, rubber, aluminum, etc. 

 

Characteristics of Industry 

 

1. Economic Activity – Industrial activities are economic activities because their purpose is to earn money. 

2. Production- Industry involves production of various types of goods and services to satisfy human wants. 

3. Wide scope - The scope of industrial activities is very wide. Advancements in science and technology have created many new industries such as information technology industry. 

4. Creation of utility - Industry creates utility by converting raw materials into useful products which can be used to satisfy human wants. 

5. Economic Development - Industries accelerate the pace of economic growth by making productive use of natural and man-made resources. It generates employment, increases national income and earns foreign exchange. 

6. Part of Business - Industrial activities give rise to other business activities such as trade and aids to trade. 

 

Types of Industry 

Industries may be divided into three broad categories: 

1. Primary Industries - Industries which provide basic raw materials from natural sources are called Primary industries. These are of two types: 

1. Genetic Industries - These industries are concerned with breeding (reproducing and multiplying) of certain species of plants and animals with the object of earning profits from their sale. Examples – Plant nurseries, poultry farms, cattle breeding farms, dairy farming, fish hatcheries. 

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3. Extractive Industries – These industries are engaged in extracting useful materials from soil, air, water and from beneath earth's surface. Produce of extractive industries may be used either as finished products or as raw materials. Extractive Industries provide raw materials to manufacturing and construction industries. Examples – Agriculture, mining, oil exploration, fishing and hunting. 

2. Secondary Industries - Industries which use the materials provided by primary industries are called secondary industries. Secondary Industries may be further divided as follows: 

1. a) Manufacturing Industries - These industries are concerned with the processing or transformation of raw materials and semi-finished products into finished products. Such industries change the shape and form of materials produced by genetic and extractive industries. Example – iron ore extracted through mining is converted into steel. Engineering, cement, sugar, textiles, jute, etc. 

Manufacturing industries may be further divided into four categories: 

1. Analytical industry analyses and separates different elements from same raw material. e.g., In an oil refinery, crude oil is refined and several petroleum products are obtained. 

2. 2.Synthetical industry combines two or more materials to form a new product. E.g., cosmetics, soap, cement, fertilizer, paint, etc. 

3. 3.Processing Industry processes a material through various stages for manufacturing finished products. E.g., Cotton passes through the spinning, weaving, dyeing, bleaching and printing processes in cotton textile industry. 

4. 4. Assembling industry assembles different component parts to make a new product. E.g., Manufacture of radios, TV sets, watches and automobiles. 

(b) Construction Industries: These Industries are engaged in the construction, erection and fabrication of buildings, bridges, roads, dams and canals, etc. They utilize the products of manufacturing industries such as bricks, steel, cement, etc. Engineering and architectural skills are an important part in construction industries. 

   C) Tertiary Industries: These are concerned with providing support services to primary and secondary industries as well as activities relating to trade. These may be considered as part of commerce because as auxiliaries to trade these activities assist trade. Examples – Transport, banking, insurance, warehousing, communication, packaging and advertising.

 I will upload the 2nd part i.e. Commerce in the next post.Until then keep reading..😊