Scope Of Business OR Components Of Business

The scope of business is very wide. If covers activities related to production, distribution of goods and services with an aim to earn profit. The business activities are usually divided into two parts. (a) Industry and (b) Commerce. On the basis of this division some writers define business as the sum total of all the activities of industry and commerce which are guided by profit motive. We now describe in brief, the two components of business; industry and commerce.

Meaning of industry

(a) Industry

The term ‘industry’ refers to that part of business activity which is concerned with the extraction, - production or fabrication of products. The products which are raised, produced, or processed by an industry may either be used by the final consumer or by another concern for further production. if the goods produced by an industry are consumed by the final customers these are named as consumers goods’ (cloth for instance), If the goods are used for further production of wealth (for instance, machinery) they are called producers or capita goods. In case, the goods produced by an industry are further processed not finished product by another concern (yam, plastic, etc.) the goods are named as intermediate goods.

Types of Industry

The industry by types of activity is classified as under:

(i) Extractive industries

Extractive industries as the name suggests are those industries which extract, raise or produce raw materials from above or below the surface of the earth. Mining, fisheries, forestry, agriculture are some of the examples of extractive industries.

(ii) Genetic industries

Those industries which are engaged in reproducing and multiplying certain species of animals and p and selling them in the market for profit are named as genetic industries. These include cattle breeding farms, poultry farm, plants nurseries. Etc.

(iii) Constructive Industries

Constructive industries as the name signifies are engaged in the constructor of building, canals, bridges, darns, roads. etc...

(iv) Manufacturing Industries

Manufacturing industries are those which are concerned of converting raw material or semi-finished products into finished products. The Bata Shoes Company, the Kohi-noor Textile Mills, etc. are the manufacturing industries.

(v) Service Industries

These industries are engaged in the creation of intangible goods which cannot be seen or touched. The provision of services of Professionals such as doctors, lawyers etc., are examples of service industries

(b) Commerce

Commerce is a very important part of business. It is concerned with the buying and selling of goods. It includes all those activities which are related to the transfer of goods from the place of production to the ultimate consumers. In the words of Thomas, “Commercial occupations deal with buying and selling of goods, the exchange of commodities and the distribution of the finished goods”. Commerce can be classified into two categories, (a) Trade and (b) Aids to trade.

(a) Trade

Trade means buying and selling of goods. It is the exchange of goods and services among buyers and sellers in which both the parties (sellers and buyers) are benefited

Types of Trade

Trade may be classified as (a) internal trade (b) External trade (c) Who trade and Retail trade:

(a) Internal trade

The buying and selling of goods within the boundary of a country is called internal trade.

(b) External trade

When there is any purchase and sale of goods between two countries, it is called foreign trade

(c) Wholesale trade

Wholesale trade involves the purchase of goods in large quantities from producers and their resale to retailers. The retailer sells Those goods to consumers.

(d) Retail trade

Retailing consists of all the activities which are related to sale of goods and services to the final consumers here goods are sold in small Quantities to the consumers

(b) Aids to trade

The activities which facilitate in the purchase of goods and services are called aids to trade the aids which are essential for the expansion of the trade is (i) Transport (ii) Insurance iii) Ware housing (iv) Banking. (v) Advertisement and (vi) Mercantile agents.

(i) Transport

The different means f transport e.g., railways, ships, airlines etc. help in carrying goods from the places of production to centers of consumption. Transport thus ensures movement of goods and services from one place to another. It not only widens the market of goods but also increases mobility of labor and capital.

(ii) Insurance

Insurance is another important aid to trade. The risk, of damage of goods due to fire, flood, earthquake or other causes is covered by insurance The insurance companies make good the loss of commodities due to file, floods etc to the traders on payment of insurance premiums. Insurance thus helps in the expansion of trade.

(iii) Warehousing

Warehousing is a kind of storage. Nowadays most of the goods are produced in anticipation of demand. They are stored in sate places and are released as and when demanded in the marl Warehousing thus helps in overcoming the barrier of time and creates time utility.

(iv) Banking

. The commercial banks play an important role n financing the various trade activities, the finance the traders for stock holding and transportation of goods. They also assist the buyers and sellers of goods in receiving and making payments, both at the national and international level. The finance or credit is provided to the traders in the form of cash credit, overdrafts and loans.

(v) Advertisement

Selling of goods is the most Important and difficult problem for the manufacturer- Advertisement about the product through newspapers, magazines, radio, television etc has greatly helped the consumers in choosing the goods of their tastes. The consumers come to know about the quality and price of the good in a short time and pick up the product that suits them Advertisement thus has increased the sale of goods.

(vi) Mercantile agents

There is a long chain of middlemen (wholesalers, retailers, brokers) who act as agents between the producers and the consumers. They bring the sellers and buyers of goods together and help them in completing transactions of goods. These agents act for commission. The mercantile agents thus have greatly helped in the distribution of goods from the producers to the consumers.