Scope of Business

  SCOPE OF BUSINESS

Scope outlines the time and cost of a business project.

Industry-

          Industry is concerned with the production and processing of goods. This type of business units are called industrial enterprises which produce consumer goods as well as machinery and equipments. The word "Industry" refers to that part of business activities which is apprehensive 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 ultimate 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 consumer's goods e.g. clothes. If the goods are used for further production of wealth they are called producer's or capital goods. In case the goods produced by an industry are further processed into finished products by another concern they are called as intermediate goods. ie Plastic.

 

Types of Industry: Industries are divided into two broad categories:

(i) Primary industries-

                        Primary industries include all those activities which are connected with extraction, producing and processing of natural resources. These industries may be further sub-divided into two types: (a)extractive and (b) genetic.

On the basis activity industry is further classified into various types are as under

a. Extractive Industries-

                       Extractive industries are those industries which extract, raise or Fabricate raw materials from above or beneath surface of the earth. i.e. Mining, fisheries forestry, agriculture. Extractive industries are concerned with the extraction of materials from the earth, sea and air such as mining, farming, fishing and hunting etc. Products of these industries are used either directly for consumption such as food grains, fruits and vegetables or as raw materials such as cotton, sugar-cane, etc.

b. Genetic Industries -

                        Those industries which are engaged in reproducing and multiplying certain species of animals and plants and selling them in the market for profit are named as genetic industries. i.e Cattle breeding farms, poultry farms, plant nurseries. Main products are milk, wool, butter, cheese, meat, egg, fish, seeds of plants, etc.

(ii) Secondary industries- 

   Secondary industries are concerned with the materials which have already been produced at the primary stage. For example, mining of iron ore is a primary industry, but manufacture of steel is a secondary industry

a. Service Industries-

                        Service industries are usually engaged in the manufacturing of intangible goods which cannot be seen or touched by naked eye. The service of professionals such as doctors, lawyers is examples of service industries.

Commerce -

It includes all the activities which are connected to the transfer of goods from the place of production to the ultimate consumers. Commerce is the sum total of al the activities connected with the placing of the product before the ultimate consumer. It provides the necessary link between the producer and the consumer of goods. Commerce is defined 'as activities involving the removal of hindrances in the process of exchange. Commerce includes all those business activities which are undertaken for the sale or exchange of goods and services and facilitates their availability for consumption-and use through trade, transport, banking, insurance, and warehousing. Thus commerce includes trade and auxiliaries to trade, that is transport, banking, insurance and warehousing.

The main characteristics of commerce are as follows:

(i) Commerce is the sum total of activities which facilitate the availability of goods to consumers from different producers.

(ii) It aims at ensuring proper distribution of goods.

(iii)It adds different type of utilities to the goods by making goods available at the right time and the right place to the people who need them.

(iv) It includes trade and auxiliary to trade.

The whole ranges of commerce activities are classified are as under:

A) Trade-

                      The process of buying and selling of goods is called Trade. It is the exchange of goods and services among buyers and sellers in which both the parties are benefited.

 Trade is classified into two types.

a. Internal Trade:

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

1- Wholesale Trade -

                          The process of purchase of goods in huge quantity from producers and their resale to retailers is known as wholesale trade. The retailer then further sells these goods to the final consumers.

2- Retail Trade -

                        The retailer sale the goods and services to the ultimate consumers is known as Retail Trade.

b. External Trade:

                         The purchase and sale of goods between two countries are called external trade. It is also called foreign trade.

 There are two types of external Trade.

 i. Import Trade-

                         An import is a good or service brought into one country from another. The word "import" is derived from the word port," since goods are often shipped via boat to foreign countries. Along with exports, imports form the backbone of international trade; the higher the value of imports entering a country, compared to the value of exports, the more negative that country's balance of trade becomes.

ii. Export Trade-

                          An export is a function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation's gross output. If used for trade, exports are exchanged for other products or services in other countries. Exports are one of the oldest forms of economic transfer and occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies. Most of the largest companies operating in advanced economies derive a substantial portion of their annual revenues from exports to other countries.

B) Auxiliaries to Trade-

                           The activities which help in the purchase of goods and services are called aids to trade. The aids which are compulsory for the development of the trade are as follows

1. Transport

                           Transport or transportation is the movement of people, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline and space. The field can be divided into infrastructure, vehicles and operations. Transport is important because it enables trade between people, which is essential for the development of civilizations.

                      Transport infrastructure consists of the fixed installations including roads, railways, airways, waterways, canals and pipelines and terminals such as airports, railway stations, bus stations, warehouses, trucking terminals, refueling depots (including fueling docks and fuel stations) and seaports 

2. Insurance

                     Insurance is a contractual arrangement that provides for compensation by an insurer to an insured part if a specify set of circumstances occurs. 1These circumstances could be accident, personal injury, death, loss or damage to property or any other number of instances that can compensated for Financially.

                     How does the insurance company operate? The insurance company operates by collecting small contributions from many people who are exposed to risks. This money collected is used to settle those who fall victim of such risks. These contributions which the insurance company collects are called premium.

3. Warehousing

                       Warehousing is the act of storing goods that will be sold or distributed later. While a small, home-based business might be warehousing products in a spare room, basement, or garage, larger businesses typically own or rent space in a building that is specifically designed for storage. Warehousing is a kind of storeroom.

4. Banking

                         Banking can be defined as the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn a pro fit. However, with the passage of time, the activities covered by banking business have widened and now various other services are also offered by banks. The banking services these days include issuance of debit and credit cards, providing safe custody of valuable items, lockers, ATM services and online transfer of funds across the country/world. The commercial banks play a vital role in financing the different trade activities.

5. Advertisement

                          Advertising is nothing but a paid form of non-personal presentation or promotion of ideas, goods or services by an identified sponsor with a view to disseminate information concerning an idea, product or service. The message which is presented or disseminated is called advertisement. In the present day marketing activities hardly is there any business in the modem word which does not advertise. However, the form of advertisement differs from business to business.