Introduction
Business activities are generally monetary transactions that arise during the exchange of goods and services. Business activities are of two types:
- Industry: concerned with the production of goods and services
- Commerce: concerned with the enhancement of goods and services
What is Industry?
Industry refers to those economic activities that are concerned with the production of goods and services. It includes all those activities through which raw materials are converted into finished goods. The term industry is also used to mean the group of firms that are producing similar or related goods. For example, the iron and steel industry refers to all those manufacturing firms that produce iron and steel items. Similarly, the electric industry will include all the firms producing electronic goods.
Industry Creates Form Utility
The purpose of industrial activity is to mold or convert raw materials, with the help of production processes, into goods that meet the requirements or suitability of the buyer. So, industry imparts form utility to goods.
Types of Industry
Industries may be divided into three categories:
- Primary Industries
- Secondary Industries
- Tertiary Industries
Primary Industries
Primary industries relate to all those activities connected with the extraction, production, processing of natural resources, and reproduction of living species.
These industries are of two types:
- Genetic Industry
- Extractive Industry
- Genetic Industry: The genetic industry is related to the reproducing and multiplying of certain species of animals and plants with the object of earning profits from their sale. Nurseries, cattle breeding, fish hatcheries, and poultry farms are all covered under the genetic industry. The plants are grown, birds and animals are bred, and then they are sold for profit. No doubt nature, climate, and environment play an important part in these industries, but human skill is also vital.
- Extractive Industry: The extractive industry is engaged in raising some form of wealth from the soil, climate, air, water, or from beneath the surface of the earth. These industries are classified into two categories. In the first category, workers merely collect goods already existing. Mining, fishing, and hunting fall into this category. In this category, the goods are produced using human skills, i.e., agriculture and forestry. Extractive industries supply basic raw materials, basically soil products. The products of these industries are usually transformed into many useful products by manufacturing industries.
Secondary Industries
Secondary industries process materials already produced by primary industries. For example, the mining of iron ore falls into the primary industry, but the manufacturing of steel falls into the secondary industry.
These industries are of two types: (i) Manufacturing industries and (ii) Construction industries.
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Manufacturing Industries
This industry is engaged in the processing of raw materials into semi-finished or finished goods. This industry creates form utility in goods by making them suitable for human use. Most consumer-used goods are produced by these industries. These industries supply machines, tools, and other equipment to other industries too. The products of the extractive industry are generally used as raw materials by the manufacturing industry.
Manufacturing industries produce two types of goods: (i) Consumer goods and (ii) Industrial goods.
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- Consumer goods: These are the goods that are directly consumed by consumers to meet their day-to-day needs. For example, beads, toothpaste, soap, oil, clothes, etc.
- Industrial goods: Goods that are produced for manufacturing consumer goods are known as industrial goods. For example, machinery, equipment, and tools are required to manufacture consumer goods. These are industrial goods.
Manufacturing industries can further be categorized as follows: (i) Analytical industry, (ii) Processing industry, (iii) Synthetic industry, and (iii) Analytic industry.
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- Analytical Industry: In this industry, a product is analyzed, and many other products are received as end products. For instance, by processing crude oil, we get kerosene, petrol, gas, diesel, etc.
- Processing Industry: In this industry, a product passes through various processes to become a final product. The finished product of one process becomes the raw material of the receiving process, and soon, the final process produces the finished goods. In the case of cotton textiles, cotton passes through ginning, weaving, and dyeing processes to become cloth. The sugar industry and paper industry are other examples of processing.
- Synthetic Industry: In this industry, many raw materials are brought together in the manufacturing process to make a final product. In manufacturing cement, rocks, gypsum, coal, etc. are required. Soap-making and paints are other examples of the synthetic industry.
- Assembly Industry: This industry assembles different components to make a new product, as in the case of a television, cycle, car, computer, etc.
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Construction Industry
The construction industry is engaged in the creation of infrastructure for the smooth development of the economy. It is concerned with the construction, erection, or fabrication of products. These industries are engaged in the construction of buildings. roads, dams, bridges, and canals. These industries use the products of other industries, such as cement, iron, bricks, wood, etc. Engineering and architectural skills play an important part in the construction industry. Engineering and construction firms are organized to undertake operations in the construction industry.
Tertiary or Service Industry
The tertiary or service sector deals with all those activities that smooth the flow of goods and services from the manufacturers or producers to those who use them. The service industry supplements the activities of primary and secondary industries. The service industry is the backbone of all business activities. These activities include (i) transport, (ii) banking, (iii) insurance, (iv) warehousing, and (v) advertising.
