Industry

# What is Industry? Meaning:

The production side of business activity is referred as industry. It is a business activity, which is related to the raising, producing, processing or manufacturing of products. The products are consumer's goods as well as producer's goods. Consumer goods are goods, which are used finally by consumers. E.g. Food grains, textiles, cosmetics, VCR, etc. Producer's goods are the goods used by manufacturers for producing some other goods. E.g. Machinery, tools, equipments, etc. Expansion of trade and commerce depends on industrial growth. It represents the supply side of market.

Definitions:
1. The manufacturing or technically productive enterprises in a particular field, country, region, or economy viewed collectively, or one of these individually. A single industry is often named after its principal product; for example, the auto industry. For statistical purposes, industries are categorized generally according a uniform classification code such as Standard Industrial Classification (SIC). 2. Any general business activity or commercial enterprise that can be isolated from others, such as the tourist industry or the entertainment industry.

Classification / Types of Industries: 1. Primary Industry:

Primary industry is concerned with production of goods with the help of nature. It is a natureoriented industry, which requires very little human effort. E.g. Agriculture, farming, forestry, fishing, horticulture, etc.

2. Genetic Industry:
Genetic industries are engaged in re-production and multiplication of certain spices of plants and animals with the object of sale. The main aim is to earn profit from such sale. E.g. plant nurseries, cattle rearing, poultry, cattle breeding, etc.

3. Extractive Industry:
Extractive industry is concerned with extraction or drawing out goods from the soil, air or water. Generally products of extractive industries come in raw form and they are used by manufacturing and construction industries for producing finished products. E.g. mining industry, coal mineral, oil industry, iron ore, extraction of timber and rubber from forests, etc.

4. Manufacturing Industry:
Manufacturing industries are engaged in transforming raw material into finished product with the help of machines and manpower. The finished goods can be either consumer goods or producer goods. E.g. textiles, chemicals, sugar industry, paper industry, etc.

5. Construction Industry:
Construction industries take up the work of construction of buildings, bridges, roads, dams, canals, etc. This industry is different from all other types of industry because in case of other industries goods can be produced at one place and sold at another place. But goods produced and sold by constructive industry are erected at one place.

6. Service Industry:
In modern times service sector plays an important role in the development of the nation and therefore it is named as service industry. The main industries, which fall under this category, include hotel industry, tourism industry, entertainment industry, etc.

In other wordsIndustry- It refers to the production of an economic good or service within an economy.
A basic category of business activity. The term industry is sometimes used to describe a very precise business activity (e.g. semiconductors) or a more generic business activity (e.g. consumer durables). If a company participates in multiple business activities, it is usually considered to be in the industry in which most of its revenues are derived.

Industrial sectors:
There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction, and manufacturing; the tertiary sector, which deals with services (such as law and medicine) and distribution of manufactured goods; and the quaternary sector, a relatively new type of knowledge industry focusing on technological research, design and development such as computer programming, and biochemistry. A fifth, quinary, sector has been proposed encompassing nonprofit activities. The economy is also broadly separated into public sector and private sector, with industry generally categorized as private. Industries are also any business or manufacturing. Industries can be classified on the basis of raw materials, size and ownership.
y y y

Raw Materials: Industries may be agriculture based, Marine based, Mineral based, Forest based. Size: It refers to the amount of capital invested, number of people employed and the volume of production. Ownership: Industries can be classified into private sector, state owned or public sector, joint sector and co-operative sector

Industry in the sense of manufacturing became a key sector of production and labour in European and North American countries during the Industrial Revolution, which upset previous mercantile and feudal economies through many successive rapid advances in technology, such as the steel and coal production. It is aided by technological advances, and has continued to develop into new types and sectors to this day. Industrial countries then assumed a capitalist economic policy. Railroads and steam-powered ships began speedily establishing links with previously unreachable world markets, enabling private companies to develop to then-unheard of size and wealth. Following the Industrial Revolution, perhaps a third of the world's economic output is derived from manufacturing industriesmore than agriculture's share. Many developed countries and many developing/semi-developed countries (People's Republic of China, India etc.) depend significantly on industry. Industries, the countries they reside in, and the economies of those countries are interlinked in a complex web of interdependence. Industry is divided into four sectors. They are:

Sector

Definition This involves the extraction of resources directly from the Earth, this includes farming, mining and logging. They do not process the products at all. They send it off to factories to make a profit. This group is involved in the processing products from primary industries. This includes all factories those that refine metals, produce furniture, or pack farm products such as meat. This group is involved in the provision of services. They include teachers, managers and other service providers.

Primary

Secondary

Tertiary

Quaternary This group is involved in the research of science and technology. They include scientists.

As a country develops people move away from the primary sector to secondary and then to tertiary. There are many other different kinds of industries, and often organized into different classes or sectors by a variety of industrial classifications. Industry classification systems used by the government[which?] commonly divide industry into three sectors: agriculture, manufacturing, and services. The primary sector of industry is agriculture, mining and raw material extraction. The secondary sector of industry is manufacturing. The tertiary sector of industry is service production. Sometimes, one talks about a quaternary sector of industry, consisting of intellectual services such as research and development (R&D).

Market-based classification systems such as the Global Industry Classification Standard and the Industry Classification Benchmark are used in finance and market research. These classification systems commonly divide industries according to similar functions and markets and identify businesses producing related products. Industries can also be identified by product: chemical industry, petroleum industry, automotive industry, electronic industry, meatpacking industry, hospitality industry, food industry, fish industry, software industry, paper industry, entertainment industry, semiconductor industry, cultural industry, poverty industry
y y

labor-intensive industry - capital-intensive industry light industry - heavy industry

Commerce
# What is Commerce? Meaning:
Commerce is a branch of business. It is concerned with the exchange of goods and services. It includes all those activities, which directly or indirectly facilitate that exchange. Commerce looks after the distribution aspect of the business. Whatever is produced it must be consumed, to facilitate this consumption there must be a proper distribution channel. Here comes the need for commerce which is concerned with the smooth buying and selling of goods and services.

Definition of Commerce:
According to James Stephenson, "Commerce is an organized system for the exchange of goods between the members of the industrial world." In a broader sense, "Commerce is that part of business which is concerned with the exchange of goods and services and includes all those activities which directly or indirectly facilitate that exchange."

Commerce -While business refers to the value-creating activities of an organization for profit,
commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any country. Thus, commerce is a system or an environment that affects the business prospects of an economy or a nation-state. We can also define it as a second component of business which includes all activities, functions and institutions involved in transferring goods from producers to consumers.

History:
Some commentators trace the origins of commerce to the very start of communication in prehistoric times. Apart from traditional self-sufficiency, trading became a principal facility of prehistoric people, who bartered what they had for goods and services from each other. Historian Peter Watson dates the history of long-distance commerce from circa 150,000 years ago. [1] In historic times, the introduction of currency as a standardized money facilitated a wider exchange of goods and services. Numismatists have collections of these monetary tokens, which include coins from some Ancient World large-scale societies, although initial usage involved unmarked lumps of precious metal. [2] [3] The circulation of a standardized currency provides the major disadvantage to commerce of overcoming the "double coincidence of wants" necessary for barter trades to occur. For example, if a man who makes pots for a living needs a new house, he may wish to hire someone to build it for him. But he cannot make an equivalent number of pots to equal this service done for him, because even if the builder could build the house, the builder might not want the pots. Currency solved this problem by allowing a society as a whole to assign values and thus to collect goods and services effectively and to store them for later use, or to split them among several providers.
Today commerce includes a complex system of companies that try to maximize their profits by offering products and services to the market (which consists both of individuals and other companies) at the lowest production cost. A system of international trade has helped to develop the world economy but, in combination with bilateral or multilateral agreements to lower tariffs or to achieve free trade, has sometimes harmed thirdworld markets for local products (See Globalization).

Difference between Commerce and Business:

The words commerce and business have similar connotations and there is a tendency of people to talk about these terms in the same breath as if both were same. However, there are differences in the two concepts which will be highlighted in this article. Commerce is an abstract idea that refers to activities of buying and selling of goods and services whereas business is more physical in the sense that it can be owned by a person. A person can own a business but he certainly doesnt own commerce. Similarly a company does business with its clients and not commerce though the activities of the company come within the purview of the broader term commerce. Commerce is much closer in meaning to trade and trade related activities such as communication, transportation, insurance, and so on. On the other hand, business is an activity that is undertaken with the sole motive of making profits. If one tries to represent trade, commerce and business through Venn diagrams, trade and commerce appear to be subsets of business which is the largest circle containing both trade and commerce. Commerce is thus a part of all the activities that are carried out in the name of business such as planning, advertising, selling, buying, marketing, accounting and supervising manufacturing etc. Commerce is just the buying and selling part of business thus being smaller in scope than business. The difference between these two terms is also reflected in the relative importance of the courses of commerce and business. Whereas a student

studying commerce is just a simple arts graduate, a student studying business holds a professional degree that opens doors of many more opportunities. In brief: Business vs Commerce Commerce and business are words with similar meaning but they also differ from one another While business can be an entity, commerce refers to trade and trade related activities. Commerce focuses on buying and selling part of a business whereas there is much more to a business than just buying and selling.

Trade
# What is Trade? Meaning and Nature:
Trade refers to buying and selling of goods and services for money or money's worth. It involves transfer or exchange of goods and services for money or money's worth. The manufacturers or producer produces the goods, then moves on to the wholesaler, then to retailer and finally to the ultimate consumer. Trade is essential for satisfaction of human wants, Trade is conducted not only for the sake of earning profit; it also provides service to the consumers. Trade is an important social activity because the society needs uninterrupted supply of goods forever increasing and ever changing but never ending human wants. Trade has taken birth with the beginning of human life and shall continue as long as human life exists on the earth. It enhances the standard of living of consumers. Thus we can say that trade is a very important social activity.

Different Types of Trade:

Trade can be divided into following two types, viz., 1. Internal or Home or Domestic trade. 2. External or Foreign or International trade

1. Internal Trade
Internal trade is also known as Home trade. It is conducted within the political and geographical boundaries of a country. It can be at local level, regional level or national level. Hence trade carried on among traders of Delhi, Mumbai, etc. is called home trade. Internal trade can be further sub-divided into two groups, viz.,
1. Wholesale Trade : It involves buying in large quantities from producers or manufacturers and selling in lots to retailers for resale to consumers. The wholesaler is a link between manufacturer and retailer. A wholesaler occupies prominent position since manufacturers as well as retailers both are dependent upon him. Wholesaler act as a intermediary between producers and retailers. 2. Retail Trade : It involves buying in smaller lots from the wholesalers and selling in very small quantities to the consumers for personal use. The retailer is the last link in the chain of distribution. He establishes a link between wholesalers and consumers. There are different types of retailers small as well as large. Small scale retailers includes hawkers, pedlars, general shops, etc.

2. External Trade
External trade also called as Foreign trade. It refers to buying and selling between two or more countries. For instance, If Mr.X who is a trader from Mumbai, sells his goods to Mr.Y another trader from New York then this is an example of foreign trade. External trade can be further sub-divided into three groups, viz.,
1. Export Trade : When a trader from home country sells his goods to a trader located in another country, it is called export trade. For e.g. a trader from India sells his goods to a trader located in China. 2. Import Trade : When a trader in home country obtains or purchase goods from a trader located in another country, it is called import trade. For e.g. a trader from India purchase goods from a trader located in China. 3. Entrepot Trade : When goods are imported from one country and then re-exported after doing some processing, it is called entrepot trade. In brief, it can be also called as re-export of processed imported goods. For e.g. an indian trader (from India) purchase some raw material or spare parts from a japanese trader (from Japan), then assembles it i.e. convert into finished goods and then reexport to an american trader (in U.S.A).

In other words-

Trade- is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade. Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations. Retail trade consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Wholesale trade is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services. Trading can also refer to the action performed by traders and other market agents in the financial markets.

What is the difference between business and trade?

Business is a term used for all the activities performed by a business enterprise. This includes three basic activities of buying, manufacturing and selling. In addition a business may carry out additional activities such as product design, advertising and financing. Based on this basic meaning, the word business may also be used in several related ways such as a firm or enterprise in business activities, the overall state or performance of such firm (for example, "how is business?"), and group of firms or their activities connected with a common product (for example, automobile business). In contrast, trade refers only to the buying and selling activities, which form a part of business activities. The word trader is often used to describe business firms, such as wholesalers that are primarily engaged in buying and selling activities. Also the word trading is used more often to describe buying and selling activities involving large quantities between traders rather than selling to retail customer. Usually import and imports and exports involve buying and selling of large quantities between traders, and therefore it is more common to use term trading for such activities.