TYPES OF INDUSTRIES AND BUSINESS ORGANIZATIONS
manufacture too much or too little.
LEARNING OBJECTIVES
At the end of this chapter, the learners will be able to;
1. distinguish the different services and products
of business and industry in the locality;
2. identify the types of industry
3. differentiate between agribusiness,
manufacturing, retail and service industries;
4. enumerate the different types of business
organizations; and 5. cite advantages and
disadvantages of business organization
INDUSTRY
INDUSTRY is a classification that refers to
groups of companies that are related based on their
primary business activities. In modern economies, there
are dozens of industry classifications, which are typically
grouped into larger categories called sectors, with
individual companies being classified into an industry
based on their largest sources of revenue.
TYPES OF INDUSTRY
1. AGRIBUSINESS INDUSTRY
Agribusiness is defined as the business sector
encompassing farming and farming-related commercial
activities. Agribusiness involves all the steps required to
send an agricultural good to market: production,
processing, and distribution. It is an important
component of countries with arable land, since
agricultural products can be exported. Agribusiness
treats the different aspects of raising agricultural
products as an integrated system.
Market forces have a significant impact on the
agribusiness sector. Changes in consumer taste alter
with what products are grown and raised.
Countries with farming industries face consistent
pressures from global competition.
2. MANUFACTURING INDUSTRY
Manufacturing is the creation and assembly of
components and finished products for sale.
TYPES OF MANUFACTURING
1. Make to Stock (MTS). This strategy is based on
demand forecasts, so it makes the most sense when
demands can be predicted with reasonable accuracy.
Companies can lose money with this strategy if they
2. Make to Order (MTO). It allows customers to order
products built to their specifications. Companies
alleviate inventory problems with MTO, but customer
wait time is usually longer.
3. Make to Assemble (MTA). It is a hybrid of the two:
companies stock basic parts based on demand
predictions, but do not assemble them until customers
place their orders and can offer customization.
3. RETAIL INDUSTRY
Retail refers to individual investors who buy and sell
securities for their personal account, and not for
another company or organization. It is known as an
"individual investor" or "small investor." Retail investors
buy in much smaller.
4. SERVICE INDUSTRY
The service industry is that part of the economy that
creates services rather than tangible objects.
Economists divide all economic activities into two broad
categories, goods and services. Goods-producing
industries are agriculture, mining, manufacturing, and
construction; each of them creates some kind of
tangible object. Service industries include everything
else - banking, communications, wholesale, and retail
trade, all professional services such as engineering,
computer software development, and medicine,
nonprofit economic activities, all consumer services,
and all government services, including defense and
administration of justice. A servicedominated economy
is characteristic of developed countries. In less-
developed countries, most people are employed in
primary activities such as agriculture and mining.
BUSINESS ORGANIZATIONS
Prospective entrepreneurs need to identify the legal
structure that will best suit the demands of the venture.
The necessity for this derives from changing tax laws,
liability situations, the availability of capital, and the
complexity of business formation. When examining
these forms of business organizations, entrepreneurs
need to consider a few important factors like how easily
the form of business organization can be implemented,
the amount of capital required to implement the form
of business organization, and legal considerations that 4. Flexibility.
might limit the options available to the entrepreneur.
5. Relative freedom from governmental control and
TYPES OF BUSINESS ORGANIZATIONS regulation.

According to Kuratko (2012), the three primary legal 6. Possible tax advantage.
forms of organization are sole proprietorship,
DISADVANTAGES OF PARTNERSHIPS
partnership, and corporation.
1. Unlimited liability of at least one partner.
A. Sole Proprietorship
2. Lack of continuity.
Sole proprietorship is a business that is owned and
operated by one person. The enterprise does not exist 3. Relative difficulty in obtaining large sums of capital.
apart from its owner. This individual has a right to all of
the profits and bears all of the liability for the debts and 4. Bound by the acts of just one partner.
obligations of the business. The individual also has 5. Difficulty of disposing partnership interest.
unlimited liability, which means that his or her business
and personal assets stand behind the operation. C. CORPORATION

ADVANTAGES OF SOLE PROPRIETORSHIP A corporation is an artificial being, invisible, intangible,

and existing only in contemplation of the law. As such, a
1. Ease of formation. corporation is a separate legal entity apart from
2. Sole ownership of profits. individuals who own it. A corporation is created by the
authority of state laws and usually is formed when a
3. Decision making and control vested in one owner. transfer of money or property by prospective
shareholders (owners) takes place in exchange for
4. Flexibility.
capital stock (ownership certificates) in the corporation.
5. Relative freedom from governmental control.
ADVANTAGES OF CORPORATIONS
6. Freedom from corporate business taxes.
1. Limited liability.
DISADVANTAGES OF SOLE PROPRIETORSHIP
2. Transfer of ownership.
1. Unlimited liability.
3. Unlimited life.
2. Lack of continuity.
4. Relative ease of securing capital in large amounts.
3. Less available capital.
5. Increase ability and expertise.
4. Relative difficulty in obtaining long-term financing.
DISADVANTAGES OF CORPORATIONS
5. Relatively limited viewpoint and experience.
1. Activity restrictions.
B. PARTNERSHIPS
2. Lack of representation.
A partnership is an association of two or more persons
3. Regulation.
who act as co-owners of a business for profit. Each
partner contributes money, property, labor, or skills, and 4. Organizing expenses.
each has a share in the profits as well as the losses of
the business. 5. Double taxation.

ADVANTAGES OF PARTNERSHIPS D. MULTINATIONALS

1. Ease of formation. A multinational corporation is a corporation that has

manufacturing or service operations in a number of
2. Direct rewards. different countries. Other large corporations are
multinational in scope. A multinational is, in effect, a
3. Growth and performance are facilitated.
citizen of several countries at one time. As such, a
multinational is subject to the laws of, and is likely to
pay taxes in, each country where it has operations.
Multinationals are important because they have the
ability to move resources, goods, services, and financial
capital across borders.

ADVANTAGES OF MULTINATIONALS

1. Help spread new technologies.

2. Help generate new jobs in a country.

3. Produce tax revenues.

DISADVANTAGES OF MULTINATIONALS

1. Political influence in host nation.

2. Can exploit the economy of host nation.

3. Take away jobs.

E. CONGLOMERATES

A conglomerate is a firm that has at least four

businesses, each making unrelated products, none of
which is responsible for a majority of its sales. A
corporation may become so large through merger and
acquisitions that it becomes a conglomerate.
Diversification is one of the main reasons for
conglomerate mergers.

ADVANTAGES OF CONGLOMERATES

1. Helps the company in diversification.

2. Enough opportunities for growth.

3. Increases the number of customers.

DISADVANTAGES OF CONGLOMERATES

1. Chances of mismanagement for lack of experience.

2. Shifting of focus from its core business.

3. Difficulty in merging cultural value