Organisation of Commerce and Management · Ch 1 — Introduction of Commerce and Business
Classification of Industries
Classification of Industries
Classification of Industries
Industry — the branch of business concerned with producing or processing goods — is broadly classified into Primary Industries and Secondary Industries, based on how far removed the activity is from nature's raw material.
Primary Industries are concerned with the production of goods with the help of nature — they are basic, extractive, or reproductive in character, and they supply raw material to secondary industries. Primary industries are further divided into two categories:
- Extractive Industries — these extract, draw out, or produce goods from the soil, water, air, or beneath the earth's surface (e.g. mining, quarrying, fishing, farming and agriculture, forestry). Their output usually becomes the raw material for secondary/manufacturing industries.
- Genetic Industries — these are engaged in breeding and rearing of living organisms — plants and animals — for the purpose of further reproduction and multiplication (e.g. plant nurseries, cattle breeding farms, poultry and fish hatcheries). Genetic industries are distinct from extractive industries because their focus is on MULTIPLYING living stock, not merely drawing out an existing natural resource.
Secondary Industries take the raw material supplied by primary industries and convert it into a more useful, finished or semi-finished form. Secondary industries are further divided into:
- Manufacturing Industries — these convert raw material or semi-finished goods into finished products ready for consumption or further use (e.g. converting cotton into cloth, converting iron ore into steel and then into machinery). Manufacturing industries create "form utility."
- Construction Industries — these are engaged in the construction, erection, or fabrication of buildings, dams, bridges, roads, and similar fixed structures, using materials supplied by other primary/manufacturing industries.
Primary vs. Secondary Industry, at a glance
| Basis | Primary Industry | Secondary Industry |
|---|---|---|
| Relation to raw material | Extracts/produces the raw material itself | Uses raw material already extracted/produced |
| Sub-types | Extractive, Genetic | Manufacturing, Construction |
| Example | Mining, farming, fishing, cattle breeding | Textile mills, steel plants, construction firms |
| Dependence | Largely dependent on nature | Dependent on primary industry's output |
A primary industry that draws out or produces goods directly from the soil, water, air, or beneath the earth's surface — e.g. minin …
A primary industry engaged in breeding and rearing living organisms (plants or animals) for reproduction and multiplication — e.g. plant nurseri …
A secondary industry that converts raw or semi-finished material into a finished, more useful product — cr …
A secondary industry engaged in erecting fixed structures such as buildings, dams, bri …