Types of Economic Activities

Types of Economic Activities

Economic activities are undertaken to earn money. Generally, people engage themselves in such activities on a regular basis and are said to be engaged in their occupation. Occupations may be classified into three categories based on the following:

A. Employment

B. Profession

C. Business

A. Employment

It refers to the occupation in which people work for others and get remuneration in the form of wages or salaries. The one who is employed by others are called employees and the one who employs others is called employer.

Managers, Clerks, Bank officials, Factory workers etc., are examples of employees.

Characteristics

There is a contract existing between the employer and the employee. Employee performs according to assigned task. Remuneration is given to employees for delivering value of services. An employee must abide by the rules and regulations of the organization.

B. Profession

Professions are those occupations which involve rendering of personal services of a special and expert nature. A profession is something which is more than a job. It is a career for someone who is competentin their respective areas. It includes professional activities which are subject to guidelines or codes of conduct laid down by professional bodies. Those engaged in a profession are called professionals and they earn income by charging professional fee.

Characteristics

There should be a systematic body of knowledge. There should be formal acquisition of knowledge by the members. There should be a code of conduct governing the conduct and behaviour of professionals. Service motive should be uppermost in the minds of people rendering professional service.

C. Business

Business refers to  any human activity undertaken onaregular basis with the object to earn profit through production, distribution, purchase and sale of goods and services.

Business may be defined as “an activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit”. 

According to James Stephenson business refers to “Economic activities performed for earning profits.”

According to H.Haney, “Business may be defined as a human activity directed towards producing or acquiring wealth through buying and selling of goods”.

Business activities are connected with raising, producing or processing of goods. Industry creates form utility to goods by bringing materials into the form which is useful for intermediate consumption (i.e., further use of material in order industry) or final consumption by consumers. 

Classification of Business activities

Business activities are classified on the basis of size, ownership and function.

1. Activities on the Basis of Size

On the basis of size, business activities may be broadly grouped into two categories.

a. Small Scale

Small scale units require less capital. They employ small number of workers and produce the goods on small scale. Example: Manufacturing textiles in handlooms or power looms.

(i) Extraction of edible oil from seeds like groundnut, sesame, through treditional wooden churner.

b. Large Scale

Large scale units require huge capital. They employ large number of workers and produce the goods on large scale.

Examples

·           Manufacturing Textiles in a large Textile mill. Example. Raymonds, Ramraj Cotton

·           Extraction of edible oil from oil seeds in oil mills. Example. Suffola, Sunflower

2. Activities on the Basis of Ownership

On the basis of ownership business activities may be broadly grouped into three categories.

a. Private Enterprises

An enterprise is said tobe a private enterprise where it is owned, managed and controlled by persons other than Government.

·           Sole proprietorship. Example - Sundar Stationeries

·           Partnership firms. Example - Ramesh Bros.

b. Public Enterprises

An enterprise is said to be a public enterprise where it is owned, managed and controlled by Government or any of its agencies or both. Public enterprises may be organized in several forms such as,

·           Departmental undertaking - Public Works Department (PWD)

·           Public Corporation - Oil and Natural Gas Corporation (ONGC)

·           Government Company - State Trading Corporation (STC)

C. Joint Enterprises

An enterprise is said to be a joint enterprise where it is owned, managed and controlled by Government and private entrepreneurs. Example - Maruti Suzuki

3. Activities on the Basis of Function

On the basis of functions, business activities may be broadly grouped into two categories.

a. Industry

Industry includes all those business activities which are connected with raising, producing or processing of consumer goods. Example - bread, butter, cheese, shoes, or capital goods like machinery.

b. Commerce

It establishes a link between the producers and consumers of goods and maintains a smooth and uninterrupted flow of goods from producers to consumers.