Write short note on types of business services.
Answers
Business organizations come in different types and different forms of ownership.
3 Types of Business
There are three major types of businesses:
1. Service Business
A service type of business provides intangible products (products with no physical form). Service type firms offer professional skills, expertise, advice, and other similar products.
Examples of service businesses are: salons, repair shops, schools, banks, accounting firms, and law firms.
2. Merchandising Business
This type of business buys products at wholesale price and sells the same at retail price. They are known as "buy and sell" businesses. They make profit by selling the products at prices higher than their purchase costs.
A merchandising business sells a product without changing its form. Examples are: grocery stores, convenience stores, distributors, and other resellers.
3. Manufacturing Business
Unlike a merchandising business, a manufacturing business buys products with the intention of using them as materials in making a new product. Thus, there is a transformation of the products purchased.
A manufacturing business combines raw materials, labor, and factory overhead in its production process. The manufactured goods will then be sold to customers.
Hybrid Business
Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills customer orders (service).
Nonetheless, these companies may be classified according to their major business interest. In that case, restaurants are more of the service type – they provide dining services.
Forms of Business Organization
These are the basic forms of business ownership:
1. Sole Proprietorship
A sole proprietorship is a business owned by only one person. It is easy to set-up and is the least costly among all forms of ownership.
The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them.
The sole proprietorship form is usually adopted by small business entities.
2. Partnership
A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits of the business among themselves.
In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited partners.
3. Corporation
A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock.
The owners (stockholders) enjoy limited liability but have limited involvement in the company's operations. The board of directors, an elected group from the stockholders, controls the activities of the corporation.
In addition to those basic forms of business ownership, these are some other types of organizations that are common today:
Services that provides assistance to the business in running its day to day activities are called Business services. Mainly these services are banking, insurance, transportation, communication and warehousing.
Explanation: Following are business services discussed briefly:
1.Banking- Banking plays an integral part for every organization as it accounts for all the payments and transactions. A business has daily expenses and other miscellaneous payments which need to be done on time, that can be only possible because of services provided by the banks.
2. Insurance- Future is very unpredictable, no body can see the future. similarly in a business no one knows what unforeseen thing that can affect the business. So as to secure the consequences, insurance provides the service to secure the risk. Risk could be anything eg. theft,natural calamities, fire,etc.
3. Transportation- Business has several requirements like, raw material, supply, distribution etc., which are expected to be on time for the convince of the work. To meet day to day requirements, reaching customers, transportation is must. It creates time utility.
4. Communication- It is also an integral part. As through communication people knows about the product and service that company is providing. It helps in reaching out the customers and grab the market share.
5. Warehouse- It creates the place utility. To meet the requirements of the consumer company has to keep the stock and to load it warehousing facilities are available. It keeps the stock for any emergency demand.