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UNIT-2 TYPES
OF BUSINESS ACTIVITY
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Vertical
integration backwards is with the business in
the same industry but at a different stage of production: towards the raw
material.
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Conglomerate
integration is with firms in a different
industry.
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Horizontal
integration will offer more economies of scale
and reduces average costs
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Integration
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Conglomerate integration is also known
as diversification
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Vertical integration forwards is with a
business in the same industry but towards the consumer.
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Horizontal
integration is with a business in the same
industry at the same stage of production.
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1. Primary production:-Industries that extract and exploit
the natural resources of the earth.
Examples:
Mining, agriculture, forestry and fishing
2. Secondary production:- Industries that manufactures goods
made from the raw materials provided by the primary sector.
Examples: Car production,
computer assembly, food canning and steel making.
3. Tertiary production:- Industries that provide services
to consumers and other sectors of industry.
Examples: Travel agents,
banking, insurance, health services and transport.
4. De-industrialisation:- Relative decline in the importance
of a country’s secondary sector.
5. Public sector:- The sector of the economy in which organisations
are owned and controlled by the state (government).
Examples: In most mixed
economies, health services and railway services are in the public sector.
6. Private sector:- The sector of the economy in which organisations
are owned and controlled by individuals.
Examples: In most mixed
economies, retailing and farming businesses are in the private sector.
7. Free market economy:- All resources are privately owned.
Prices are determined by supply and demand.
8. Planned economy or command economy:-An economic system in which the
state is responsible for resource allocation.
9. Mixed economy:- An economic system which allows both the state and the
market mechanism to allocate resource.
10. Privatisation:- The sale of state owned assets such as public
corporations to the private sector.
11. Capital intensive business:- Use a high proportion of capital
equipment to produce their output.
12. Labour intensive business:- Use a high proportion of labour to
produce their output.
13. Internal growth:- Business growth achieved by expanding the existing
business.
14. External growth:- Business growth achieved by merging with or taking
over other business.
