Business Activities Types & Examples | What is Business Activity? – Video & Lesson Transcript | Study.com

Video Transcript

Business Activities

If you do a quick scan of ‘business activities’ on a search engine, you’ll come up with more than 382 million explanations of what that means. Luckily, the definition of business activities for this lesson can easily be defined in the following way: business activities are any actions taken by a company for the purpose of making money. Pretty simple, huh?

In the arena of business activities, there are three types or classifications. Let’s take a closer look.

Types

Business activities, while ultimately all connected in their pursuit of economic success, have been broken down into three types to explain their place in the business world. They include:

1. Industry

Industries are marked on the basis of the products manufactured or produced. You’ve probably heard about the automotive industry, the restaurant industry, or the apparel industry – all named in a sort of self-explanatory fashion that should give you some idea what each of those industries produces. The automotive industry is concerned with all things dealing with vehicles; the restaurant industry provides a variety of lunches and dinners to hungry diners; and the apparel industry is focused on the buying and selling of clothing items for men, women, and children.

Inside of an industry are various components such as design, production, manufacturing, and processing, but each industry is focused on their particular products or services. Ultimately, in industry, the goal is to produce products that consumers will accept and purchase, to make that industry money.

2. Commerce

While industry focuses on making and manufacturing products, commerce works to take those products and get them in the hands of consumers. Commerce, as a part of business activities, focuses on the activities that facilitate the selling of goods. That might include:

• Transportation, or getting products from one place to another through road, rail, air, or sea
• Banking, or financial assistance to help produce and distribute goods
• Warehousing, which serve as the middle men and helps in distributing goods
• Marketing and advertising, or educating consumers and promoting products to increase awareness

Using these various categories, commerce is able to provide the manufactured goods to the right customers at the right time. Commerce encompasses both trade and auxiliary services. When all of those pieces work together, goods are efficiently distributed to the appropriate places.

3. Trade

Inside of commerce, the process of getting goods to consumers can be classified as trade. Trade, simply, is the act of providing goods and services to consumers in exchange for money.

The various aids to trade also function as a part of commerce and could include:

• Transportation
• Communication
• Warehousing
• Insurance
• Banking
• Advertising, and
• Sales

Since trade is concerned with the buying and selling of goods to consumers, the various aids to trade help to not only get the products to the consumers but offer supporting services to ensure their smooth transition from a manufacturer to store shelves.

Relationship

Think of the relationship between industry, commerce, and trade as three interconnected circles. Trade is the buying and selling of goods produced by a variety of industries, which are then transported and distributed by commerce. Each component is dependent on the others. Without produced goods, there’s no need for commerce or trade. Without commerce to move the products, no trade occurs. Without consumers to buy products in trade, products are produced and distributed for no purpose. All three work together to ensure that produced goods can be sold and be profitable.

Lesson Summary

Business activities are those actions focused on helping a business make money. Inside of business activities, the various types can be broken down into industry, which is separated based on the type of product being produced; commerce, which works to get products into the hands of consumers; and trade, which is focused on the actual buying and selling of the produced products. In commerce, aids to trade include important auxiliary services such as transportation, warehousing, and marketing, which gets products to consumers and helps them to learn more about them. All three components are interconnected and cannot function independently – produced goods require the efforts of commerce to get them in the hands of interested consumers.