Business, Industry, Trade, and Commerce.

A critical discussion into business, industry, trade, and commerce.

Fabrice Tshiyoyi Banyingela

Your student ID number: R2308D16950940

Module Name: Theories of Management

Module code: UU-MBA-712-ZM

Date: 18 February 2023

A business is an organization engaged in commercial, industrial, or professional activities for the economic production of goods or services through the satisfaction of human needs. The fundamental concept of human existence is centered around business which can be for-profit or non-profit and can range from sole proprietorships to large corporations. Business is referred to as an industry where goods and services are produced by the seller, and commerce involves buying from others and making them available to consumers. Therefore, industries are groups of companies that produce similar products (goods) or services based on their primary business activities. They are classified into sectors and can grow or shift with time as innovations emerge. The Johannesburg Stock Exchange categorizes companies in South Africa using the Industry Classification Benchmark (ICB), classifies companies into 10 industries, 19 supersectors, 41 sectors, and 114 subsectors, with the six key economic sectors being Mining, Transport, Energy, Manufacturing, Tourism, and Agriculture.

Business and industry are vital for community support, social and economic development, and improving living standards. They generate goods, services, employment, innovation, and income, contributing to government revenues for public services like education and healthcare. Both large corporations and small businesses significantly contribute to economic development through various pathways. Industrialization on the other hand fosters technological advancements leading to increased productivity, efficiency, trade specialization, and lower costs, elevating living standards, and facilitating global connectivity through the expansion of new modes of transport, enabling rapid import and export processes.

The terms industry, trade, and commerce are interconnected with each component relying on the other for its objectives and forming the backbone of business operations. Industry produces goods and services, while commerce ensures the smooth functioning of business transactions, supports trade by facilitating the movement of goods, and helps the industry make decisions about production and market conditions through market research by creating a place and time utility.  As an integral part of commerce, trade supports industry and maintains commerce flow, serving as the nucleus of commerce. Trade involves the exchange of goods and services between buyers and sellers, either domestically or internationally.

Industries are classified into four categories, including: (1) Primary industries can be either wasting or non-wasting. Non-wasting primary industries, such as agriculture, forestry, and fishing, generate renewable or recyclable byproducts while wasting primary industries like mining, petroleum refining, and meatpacking generate non-renewable byproducts and environmental issues, such as livestock farming in developing countries. (2) Manufacturing industries transform raw materials into finished products using machines and manpower, producing consumer or producer goods like textiles, chemicals, sugar, and paper. (3) Construction industries involve the construction of buildings, bridges, roads, dams, and canals, constructing goods at one location, unlike other industries where goods can be produced and sold elsewhere. (4) Service industries produce intangible goods, which are useful in sectors like banking, advertising, transportation, insurance, hotels, and cleaners.

Industry, commerce, and trade are interconnected and mutually beneficial, with industries influencing commerce by providing goods and services, and driving innovation, while commerce and trade support industry by distributing goods and services, fostering collaboration between producers and consumers, encouraging competition, and fostering innovation. For example, the COVID-19 pandemic has severely impacted various sectors, including food services, manufacturing, airline, and hospitality, causing supply chain disruptions, production shutdowns, and workforce reductions. Industries relied on personal interactions and due to limited trading, commerce failed to thrive, sales were significantly lower than normal, and industries' production was reduced. The consequences of these closures include job losses, economic impact, financial strain on businesses, shift in consumer behavior, and sector-specific impacts.

To counter these consequences, businesses must adapt to changes in consumer behavior, implement measures to support affected workers, and stabilize supply chains and production processes. To avoid business closures during periods like the late pandemic, it is crucial to adapt or anticipate new changes in consumer behavior, such as online purchasing. So, industries, commerce, and trade must implement a mitigation strategy that includes adapting to these changes, supporting affected workers, and stabilizing supply chains and production processes.

Commerce is the large-scale exchange of goods and services, involving buying and selling products. It includes trade and aids to trade, which can be home or foreign (Aremu & Mukaila, 2015). Trade involves the buying and selling of goods, with aids like banking, transportation, warehousing, insurance, and advertising facilitating the process. It can be categorized into domestic and foreign trade. Domestic trade involves buying and selling goods within a country, with wholesale selling to traders and retail selling to consumers. Foreign trade involves the exchange of goods and services between countries, facilitated by foreign currency, unlike domestic trade where local currency is used. Another form of trading is called re-exporting or entrepot. It involves importing goods into one country and exporting them to another country or another, such as re-importing defective goods due to unsatisfactory quality or being bound by a contract. Aids to trade include: (1) the banking system, addresses finance issues for businessmen by facilitating smooth transactions, providing short-term and long-term funds, and facilitating loan advances through overdrafts, cash credit, and discounting of bills of exchange, thereby reducing the risk of carrying large amounts of cash. (2) Communication and transport reduce the geographical distance between production and consumption centers through land, water, and air. Effective communication, including oral and written, is crucial for finalizing sales terms and establishing contact between businessmen, producers, and consumers, using modern means like telephone, email, and teleconference. (3) Warehousing stores goods for later sale or distribution, ensuring production and consumption at the right time, especially for seasonal commodities like wheat and umbrellas. (4) Insurance companies act as risk bearers, reducing trade risks such as fire, theft, and accidents. They spread these risks over a larger number of people, with premium rates based on risk types and coverage periods. (5) Advertising bridges knowledge gaps and information difficulties, facilitating the exchange of goods and services through mass communication through various media like radio, newspapers, magazines, TV, internet, and Billboard. Hence, resources and skills are needed to run a successful business.

Business activities involve dealing with various organizations including governments, which regulate industry, commerce, and trade through legislation, taxation, market stabilization, consumer protection, and international trade agreements. These regulations aim to ensure fair business practices, product safety, financial security, environmental protection, competition, and privacy. So, understanding business language can alleviate stress and ensure fair competition and understanding. The formal study of business is crucial for personal, and professional growth, and offers insights into various business areas like accounting, finance, marketing, and product development. Entrepreneurs like Mark Zuckerberg and Steve Jobs created global companies with little to no experience, but gaining a formal qualification should be considered. It helps in understanding how departments link and collaborate to achieve business goals, aligning them towards a common mission. Some of the reasons you should get a formal study of business include: (1) Enhancing critical communication skills by writing compelling files, pitching, and emailing. Work with students worldwide on challenging projects, analyzing, and responding to conflicting opinions, and understanding the art of creating your point. (2) equipping individuals with the fundamentals of accounting and budgeting, ensuring confidence and readiness to drive enterprise performance ahead. This helps make informed investment decisions and achieve higher ROI. (3) Exploring entrepreneurship to launch your dream businesses. This requires creativity, innovation, and strong execution. A commercial business college can enhance entrepreneurial capabilities, allow idea testing, and even help students meet their future business partners. (4) Enhance management skills, enabling you to manage operational logistics and complex initiatives. Analyzing business challenges helps you address issues and prioritize resources, using analytical techniques and mission control tools. Studying business is essential for relevance, global participation, and preparing for the future.

These skills are essential for success in various business settings, fostering entrepreneurship, enhancing project management capabilities, and promoting structured knowledge sharing. Business education also helps students understand market behavior, make informed investment decisions, and test their ideas in various sectors. It also promotes a structured approach to knowledge sharing, ensuring employees have a common understanding of the subject.

Business is any activity aimed at profit, with businessmen possessing effective business leadership skills. Business activities can be categorized into industry and commerce, with industry focusing on material processing and production, and commerce involving the distribution of goods and materials. Commerce includes trade and aids to trade, such as transportation, warehousing, insurance, advertising, and banking, which facilitate trade. In today's globalized, competitive business landscape, businesses must adapt to market changes and emerging technologies to remain relevant and contribute to society. Sustainability and adaptation are crucial for the future of business, as industry, commerce, and trade are essential components of any economy.  

 

 

References

Hazel H. (2022). “The Role of Business and Industry.” EOLSS.

https://www.eolss.net/sample-chapters/c14/E1-34-08.pdf. Accessed: 18 Feb. 24   

 

Soumya S. (2018). “How Industry, Commerce and Trade are interrelated to each other.” Preserve Articles.

https://www.preservearticles.com/education/how-industry-commerce-and-trade-are-interrelated-to-each-other/21216. Accessed: 18 Feb. 24    

 

Gaurav A. (2011). “What is Industry? Meaning - Classification Types of Industries” Kalyan City.

https://kalyan-city.blogspot.com/2011/03/what-are-aids-to-trade-in-commerce.html. Accessed: 18 Feb. 24 

 

Gaurav A. (2011). “What Are Aids To Trade In Commerce?” Kalyan City.

https://kalyan-city.blogspot.com/2011/03/what-are-aids-to-trade-in-commerce.html. Accessed: 18 Feb. 24 

 

Roxie O. (2019). “Six reasons why you should study business.” Hult Blog.

https://www.hult.edu/blog/reasons-to-study-business.  Accessed: 18 Feb. 24 

 

 

 

 

 

 

 

 

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