Common Types of Business that You Need to Know!
IDNBC.COM - Business is often referred to as a company or an organization that uses any economic resources to get services or products for their customers.
In this activity, the company will accept money as the payment of their goods or their services.
Typically, business comes in several different types, depending on their main focus and activities.
Here are some common types of business in the world.
Type 1: manufacturing business
A manufacturing business is a business that usually buys or gets products or raw materials from other sources.
They tend to use the content to create new products before selling them to the customers.
This type of business requires a transformation from the materials into their new products.
A manufacturing business can also sell their items to other manufacturing business, so they can create different products from the previous items.
In other words, the customers can use the products directly or modify them into new products before using them.
Usually, a manufacturing business consists of several main components, including labor, raw materials, and overhead costs during its production process.
Type 2: merchandising business
Unlike a manufacturing business, the merchandising business is a type of business that does not require a new process in the middle of the business.
They simply just buy the products using a wholesale price, and then sell the same products to their customers by raising the price, which is called a retail price.
Therefore, the merchandising business is also known as a buy-and-sell business.
Since they profit from the cost difference, they will likely gain more profits if they are able to sell the products at higher prices.
The example of a merchandising business is distributors, grocery stores, convenience stores, and other resellers, where they sell the items without changing the form.
They simply just buy the products using a wholesale price, and then sell the same products to their customers by raising the price, which is called a retail price.
Therefore, the merchandising business is also known as a buy-and-sell business.
Since they profit from the cost difference, they will likely gain more profits if they are able to sell the products at higher prices.
The example of a merchandising business is distributors, grocery stores, convenience stores, and other resellers, where they sell the items without changing the form.
Type 3: service business
Based on its name, a service business is a business that provides services for its customers as its product.
Of course, there is no physical form of products.
Instead, they will get paid by offering some professional skills or expertise.
They may also provide some advice or other similar products, depends on what they have and what they can do.
Customers will pay for the services.
A professional service business will more likely to set a higher price than the less professional service business.
The example of a business that provides services are mechanics, repair shops, banks, schools, salons, law firms, accounting firms, consultants, and many more.
A company may wish to run on more than one type of business.
This is called a hybrid market, where the company or organization can be classified into two or more types of business.
People can combine a manufacturing business with a service business.
For example, a restaurant is a manufacturer business in terms of cooking raw ingredients into meals.
At the same time, it is considered a service business when they fill their customers' orders.
Furthermore, a restaurant can also act as a merchandising business when they sell products such as wine or milk from other company without changing anything from the products.
Type 4: hybrid business
A company may wish to run on more than one type of business.
This is called a hybrid market, where the company or organization can be classified into two or more types of business.
People can combine a manufacturing business with a service business.
For example, a restaurant is a manufacturer business in terms of cooking raw ingredients into meals.
At the same time, it is considered a service business when they fill their customers' orders.
Furthermore, a restaurant can also act as a merchandising business when they sell products such as wine or milk from other company without changing anything from the products.