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Chapter: 11th Commerce : Chapter 3 : Classification of Business Activities

Kinds of Industries

Industry refers to economic activities, which are connected with conversion of resources into useful goods.


Industry refers to economic activities, which are connected with conversion of resources into useful goods. The production side of business activity is referred as industry. Generally the term industry is used for activities in which mechanical appliances and technical skills are involved. These include activities relating to producing or processing of goods as well as breeding and rising of animals.

The term industry is also used to mean group of firms producing similar or related goods. For example, cotton textile industry refers to all manufacturing units producing textile goods from cotton. Similarly, electronic industry would include all firms producing electronic goods, and so on. Further, in common parlance, certain services like banking and insurance are also referred to as industry, say banking industry, insurance industry etc.


Kinds of Industries

Industries may be classified into two broad categories,

A. On the Basis of Activities and

B. On the Basis of Size


A. On the Basis of Activities

Industries may be divided into three wide categories namely 1. primary industries,

2. secondary industries and 3.tertiary industries.


1. Primary Industries

Primary industry is concerned with production of goods with the help of nature. It is a nature-oriented industry, which requires very little human effort,  For example Agriculture, farming, forestry, fishing, horticulture, etc. These industries may be further sub divided as follows:


(i) Extractive Industries

These industries extract or draw outproducts from natural sources. Extractive industries supply some basic raw materials that are mostly products of geographical or natural environment. 

Products of these industries are usually transformed into many other useful goods by manufacturing industries. Important extractive industries include farming, mining, oil drilling, hunting and fishing operations.


(ii) Genetic Industries

These industries remain engaged in breeding  plants  and  animals  for   their use in further reproduction. The seeds, nursery companies, poultry, diary, piggery, hatcheries, nursery, fisheries, apiary etc are classic examples of genetic industries.


2. Secondary Industries

These are concerned with using the materials which have already been extracted at the primary stage. These industries process such materials to produce goods for final consumption or for further processing by other industrial units. For example mining of an iron ore is a primary industry, but manufacturing of steel by way of further processing of raw irons is a secondary industry. Secondary industries may be further divided as follows:


(i) Manufacturing Industries

These industries are engaged in producing goods through processing of raw materials and thus creating form utilities. They bring out diverse finished products, which we consume or use, through the conversion of raw materials or partly finished materials in their manufacturing operations. Manufacturing industries may be further divided into four categories on the basis of method of operation for production.

a. Analytical Industry which analyses and separates different elements from the same materials, as in the case of oil refinery.

b. Synthetic Industry which combines various ingredients into a new product, as in the case of cement.

c. Processing Industry which involves successive stages for manufacturing finished products, as in the case of sugar and paper.

d. Assembling Industry which assembles different component parts to make a new product, as in the case of television, car, computer, etc.


(ii) Construction Industries

These industries are involved in the construction of building, dams, bridges, roads, as well as tunnels and canals.


3. Tertiary industries or Service industries

They do not produce goods. These industries produce utility services and sell them at a profit. They help trade, industry and commerce. This term also includes auxiliaries to trade like banking, insurance, warehouse, advertisement etc.

Classification of Tertiary Industries

i. Personalised service: Individuals and private institutions selling their services to others. E.g. plumber, servant maid, etc.

ii. Public Service: Government hospitals, schools, police, Government offices, etc. provide services to the people on behalf of the Government without profit motive.

iii. Distributive Service: Transportation, warehousing, logistics, salesmanship, etc. come under this type of service.

iv. Financial Service: Banking, factoring, accounting, and insurance, etc. are grouped under this type of service.

v. Quaternary Service: Professional or specialised skills and high technology are used to provide this type of service. E.g. Software development, Auditing, Research and Development, etc.

vi. Quinary Service: New ideas are generated, new technologies are evolved, new policies are implemented by selected individual experts. Their decisions influence nations, international institutions, etc. i.e., Inventors.


B. On the basis of Size


On the basis of size or scale of operations industries may be classified as follows

1.        Micro Industries

2.        Small Industries

3.        Medium Industries and

4.        Large Industries


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11th Commerce : Chapter 3 : Classification of Business Activities : Kinds of Industries |

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