Posted by Chester Morton / Tuesday, 9 May 2017 / No comments
Types of business organizations
TYPES OF BUSINESS ORGANIZATIONS
A business entity may be
described as an organization engaged in the activity of using economic resources
or inputs to produce and offer goods or services to those who may need it
(customers) often for sale where payment is expected in money or for other
goods and services.
There are different types and forms of business
organizations:
Service Business
A service type of business is a
business organization which provides goods that are not physical or goods that
are intangible (products which have no physical form). These types of
businesses specialize in the provision of specialized skills professional,
expertise and advise: for example, an investment firm or your bankers can
advise you on how to invest your money, the best means of insuring your goods,
how you can manage your expenditure as an organization or as an individual. A
lawyer can help you in negotiating your business deals, and such similar
services. Examples of service businesses
include: schools, repair shops, hair salons, banks, accounting firms, and law
firms.
Merchandising Business
Merchandising businesses are
businesses which are involved mainly in buying and selling. These business buy
products at wholesale prices and sell them at retail rates, with the intention
of making profit. This profit or profit margin because they often sell the
products they buy at a higher price than they bought them. A merchandise
business unlike the manufacturing business sells product without changing its
form. Distributors, convenient stores, and other similar “buy-and-sell” setups
are examples of Merchandise Business.
Manufacturing Business
Unlike a merchandising business, manufacturing
businesses procure goods or products with the aim of transforming into new
products before offering them for sale. One can think of a chocolate producing
company who purchases raw cocoa beans from a cocoa farmer for use as raw
material in the production of the chocolates. It must be noted that
manufacturing businesses sometime buy semi transformed products as well. An example will be when a sugar producing
company buy a sugar cane syrup instead of raw sugar cane for use in sugar
production. Typically, a manufacturing
business will combine raw materials, labor, and factory overhead in
its producing goods which will then be sold to customers.
Hybrid Business
Hybrid businesses describes
businesses whose activities can be classified into more one of the business
types describes earlier. Consider a restaurant for example: A restaurant puts
several ingredients together to make a meal, which can be classified as manufacturing;
they sell a bottle of chilled beer, which can be termed as merchandising, and
fill your orders which is in fact as service. However, a restaurant can be
classified into its major business interest which is providing catering
services.
