Scope of Business
Business has a very wide scope. It included large number of activities.
These activities may be grouped under two broad categories. i.e. Industry
and Commerce.
Industry- The term industry refers to that part of business activity
which directly concerns itself with production, processing or fabrication
of services. In industry, raw materials are converted into finished
products, which can be used for consumption. Some industries
manufacture consumer goods while others manufacture capital goods.
Various types of industries are:
a. Primary industries engage in the products of primary goods, rice,
cotton, fish etc. i.e. agriculture, fishing etc.
b. Genetic industries involve breeding and reproduction of plants and
animals for the purpose of scale. Poultry, plant nurseries,
sericulture etc.
c. Extractive industries extract valuable minerals, ores etc. from the
natural elements like soil, water and air. These industries are
concerned with the discovery and utilization of natural resources
such as minerals and forests.
d. Manufacturing industries concern with the conversion of raw
material into finished goods. The products of primary and
extractive industries such as Cotton, iron ore, crude oil, etc. are
used as a raw material in these industries.
e. Construction industries concern with the construction work like
construction of bridges, dams, canals, roads, harbors building etc.
These industries do not operate in factory building but at the site
allotted.
f. Service industries produce intangible goods i.e. goods which can’t
be seen or touches e.g. transport, insurance, banking etc. These
services are essential and useful for the expansion of business.
Commerce- Commerce involves all those activities which
facilitate transfer of ownership and movement of goods from the
centers of production to the centers of consumption. In other word
it involves all forms of trade and services that assist trading.
Commerce incudes trade and aids to trade.
Trade means buying and selling of goods and services, it involves
transfer of ownership of goods from the seller to consumer.
i.
ii.
Import trade involves buying of goods from a seller of another
country, e.g. a buyer from India purchases good from a seller
of China.
Entrepot trade means when goods are imported from one
country and then reexported to some other countries. e. g. an
Indian trader may buy goods from Bangladesh and then sell
it to Pakistan.
Aid-to trade constitutes anther component of commerce. It includes
various agencies which are useful for the conduct of trading
activities.
i.
ii.
Warehousing- There is a time gap between production and
consumption. However, goods, which are produced at one time
are not consumed at the same time. Hence it becomes
necessary to make arrangement for storage or warehousing.
Agricultural commodity like wheat and rice are seasonal in
nature but are consumed throughout the year. On the other
hand, goods such as Umbrellas and Woolen cloth are produced
throughout the year but are demanded only during particular
seasons. Thus, goods need to be stored in warehouses till they
are demanded.
Transport- There is a place gap from the place of production
to the place of consumption. Goods are produced in one part
of the country and consume in other parts of the nation.
Transport fills the place gap. It meets out the gap between
producer and consumer. It helps the manufacturing to expand
iii.
iv.
v.
vi.
their markets from local to regional, regional to national and
national to global.
Communication facilitates transfer of information. It involves
transfer of messages from one person to another and from one
place to another. It can be oral/ writing form of information.
Oral through telephone or personally. Written will be letter,
fax, e-mail etc.
Insurance reduces the problem of risks. Business is subject to
risks and uncertainties. Risks- due to fire, theft, accident or
any other natural calamity. Insurance companies who act as
risk bearer cover risks.
Banking solves the problem of payment and facilitates
exchange between buyers and sellers. Lending and of
borrowing the funds are the traditional functions of the
banks.
Mercantile such as brokers commission agents, underwriters,
insurers etc. They are the intermediaries who form a link
between the buyers and the sellers. They do not carry
business in their own name.