Thebusiness industry differs. And it is common to distinguish business by sector or industry. The definition of industry, it is a group of business which is related to its main activity. For instance, grocery selling or car manufacturing. This industry is regarded as a small industry that can be grouped into larger sectors like the manufacturing sector in general.
An individual business will also be classified into an industry based on its main activity. One example is a small financial services arm that provides finance to their customers by helping them to buy new cars. This business also runs a manufacturing business.
Yet, the financial service is only around 10% of the overall activity, while car manufacturing will be 80%. Then, this business cannot be classified as a financial service industry, but as a car manufacturing industry.
How to Classify Industry
The business industry can be classified into four different types. We have primary, secondary, tertiary, and also quaternary industries. The primary industry involves raw materials like farming, mining, and fishing. While the secondary industry is manufacturing like making steel and cars. The tertiary industry is an industry that provides services like nursing and teaching. The last one is the quaternary industry that involves the development and research industry like IT.
The industrial system needs inputs, processes, and also outputs. Inputs are the raw materials needed to make products. It can be buildings, labor, machinery, and capital. While processes are all things within the factory. It can be research and design, or something you need to make certain products. The last one is output, which is something that leaves the factory, like profit, waste, and of course finished products.
Classifying Business Industry
Thus, you can separate industries into three main categories, which are manufacturers, retailers, and also service companies. Companies may provide different products and services to their customers, and sometimes one company may fit more than one of the categories. For instance, you have restaurants. It is both service and manufacturers companies, because they prepare the meal, and serve it to customers. You may also find retailers that perform both as a retailer and as a manufacturer because they sell their products.
Manufacturers’ main duty is producing goods and selling them to end-users or retailers. Some examples of the manufacturer are soft drink bottlers, auto manufacturers, farms, oil refineries, and also bakeries.
Manufacturers themselves need long-lived assets for their business industry, like raw materials and factories loaded with equipment. For example, if you’re an auto manufacturer, you need steel, or if you’re a farming manufacturer, you need seeds. The manufacturers also need employees or laborers to pay. Here, there will be miscellaneous costs to pay to run the factories.
Many companies are performing as manufacturers and retailers. One example is oil and gas companies. This company sometimes owns refineries that produce gasoline, and also gas stations that sell the gas. Some bakeries also do the same, they bake and sell their products.
Yet, others choose to sell their goods to retailers, like soft drink bottlers which produce and bottle drinks, then sell their products to supermarkets or convenience stores. In this case, the retails directly sell to end-users.
Retail companies will buy products to sell them to customers. They will buy at a low price and sell it for a higher price. Some of the businesses which are included in this industry are supermarkets, department stores, convenience stores, mail-order catalogs, internet retailers, and also auto dealers.
Retailers create distribution channels to distribute their products to end-users or customers. Mail-order catalog or Internet retailers, for instance, will pack and ship their products to the customers, while a supermarket or convenience stores will let customers pick the products they desire and take it home by themselves.
Retailers must know the needs of their customers and also the type of products bought by them. Another example is clothing retailers. This company needs to predict which styles and colors their customers mostly like to stock and sell saleable inventories.
This type of business will do things directly to the customers. Service companies have a wide range of products like banks and accounting firms, power utilities, hospitals, and medical doctors, internet, cellphones, and TV providers, dog walkers, and also universities.
This business earns money by providing specific services to their customers. They usually rely on having technology or highly skilled laborers like hospitals and universities. Cell Phone providers and power utilities also do the same. They need services and technologies that other competitors don’t match. As a business industry, they may sell several products. Like the university, they may sell supplies and books. Yet, you cannot say that they are retailers, their main business is still the same, giving service