Business line of business: what it is, types, characteristics and classification.

A classification of the company's line of business; activities that can be used to obtain profits.

The line of business is the concept used to designate the type of productive and economic activities that companies have. that the companies have. That is to say, it is used to classify the different areas of work and business of an organization of these characteristics, although there are several criteria on the basis of which this classification can be made.

In this article we will see in detail what exactly are the business lines and what are their main characteristics, with some examples.

What is the business line of business?

Everything that has to do with the business world can seem very complex, full of factors to take into account, elements involved and changes in the market. And this is partly true, especially in today's globalized economy.

However, there are ways to simplify these productive and economic activities, to make them more understandable. The concept of the company's line of business helps a lot in this sense, because it allows us to classify and distinguish the different types of companies. it allows us to classify and distinguish the different ways in which these types of organizations function..

We can understand what a company's line of business is by means of this definition: the cycle of activities that goes from the investment in resources and personnel to work, to the obtaining of income through trade with what is produced or generated, and which is defined by the type of business in which it produces this dynamic of expense and profit.

In a more summarized way, the business line is the type of activity in which a company engages in order to try to make a profit..

For example, if a company sells computers, both the process of purchasing the necessary materials and the personnel capable of working on it, as well as the process of obtaining income from this activity, are conditioned by the type of market and business in which this organization is located.

But as this explanation alone may seem too abstract and general, let's see what are the main business turns to better understand the concept.

Types of business lines

Although there are different ways to distinguish between business lines, the main classifications establish these main categories: commercial line of business, industrial line of business, and service line of business..

On the other hand, it is perfectly possible that the same company may have several lines of business in operation and developing and developing in a more or less independent manner. We will see how this works later on.

However, what we know today as business lines are not options from which any organization can choose regardless of its context. Business lines are a product of the historical development of human societies, as is the relative importance of one or another line of business in a given region or country.

They do not exist in a vacuum (they have had to undergo a series of social and technological advances for them to emerge), nor do they have value in themselves, beyond the value that economists, citizens, politicians, businessmen, etc. may give them.

Let us see in more detail what the company's turns are.

1. Industrial companies

Industrial companies are engaged in the creation of value-added products from the processing of raw materials (extracted from the natural environment). In other words participate at some point in the production chain that leads to the creation of manufactured products suitable for sale..

There are two ways of earning income in this area of work: by selling to the final consumer, or by selling to another entity that participates in one of the production links.

When the product is sold directly to the consumer (e.g., a new mattress), it is part of consumer goods, while when it is sold to other companies that will further process it (e.g., a plank of cut wood) or use it to process other products (wood cutting machine), we speak of production goods.

On the other hand, industrial companies can be divided into the following activities.

Agricultural and livestock companies

This part of the industrial business line is focused on livestock, agriculture and fishing, and therefore they have The importance of the agricultural sector in meeting the subsistence needs of the population at large population in general.

Manufacturing companies

Manufacturing companies are engaged in processing products to give them added value by modifying them or combining them with other elements.. For example, an automobile manufacturer belongs to this category, as does a paint factory, a brick factory, etc.

Extractive companies

These industrial business organizations are engaged in extracting natural resources (e.g. are dedicated to extracting natural resources (non-living beings) from those places where they are available in nature, regardless of whether they are renewable resources or not.regardless of whether they are renewable or non-renewable resources. For example, mining, oil extraction or energy generation activities are included in this category.

2. Service business

Companies in this category do not earn money by providing specific products, but by performing actions that benefit the customer. These services can be offered to individuals or to other organizations..

For example, here we find the education, health, leisure, etc. sectors.

This is one of the most changeable and flexible business lines, because it can generate services that are practically unlimited in their variety: new needs for innovative or creative services are always emerging.

3. Commercial business

The commercial line of business is dedicated to connecting buyers and sellersIn other words, the added value is based on the possibility of an exchange of money for goods or services.

The organizations that are dedicated to this field can be classified, in turn, in these categories:

Wholesalers

Most companies buy and sell large lots of merchandise, so they often focus on selling not to the final consumer but to other intermediaries. they often focus on selling not to the final consumer, but to other intermediaries..

Retailers

Retailers usually sell merchandise in small units, and are usually in direct contact with the final consumer, with whom they trade.

Commission agents

Commission merchants do not buy what they sell to the customer; they only keep a commission of the only take a commission from the proceeds if they make a sale, so their involvementThey only keep a commission on the profits if they make a sale, so their involvement in the production chain is less than in the two previous ones.

Organizations with more than one activity

As we anticipated before, an economic entity can be involved in more than one of the turns of business. In this case, we can distinguish between the main activity, the secondary activity and the auxiliary activity..

Main activity

This part of the business line is the core of the organization and is the main source of income.

Secondary activity

The secondary activity is a way of obtaining income that is complementary to the first one, and is of an exploratory nature.It is often invested in these activities assuming a high probability of not obtaining profitability, in order to diversify the company's economic activities and give it stability. If a secondary activity fails, the rest may continue to allow the organization to continue to exist or even grow.

Ancillary activity

These activities are a necessity to maintain some productive process of the two previous ones.. Por ejemplo, si una empresa de videojuegos crea un juego en el que se necesita un aparato periférico que se acopla al mando, la producción y venta de ese producto es una actividad auxiliar.

Referencias bibliográficas:

• Boyle, D. (2006). The Little Money Book. The Disinformation Company.
• Davies, G. (2002). Ideas: A History of Money from Ancient Times to the Present Day. Cardiff: University of Wales Press.
• De Soto, G. (2006). Fragmented: the Demise of Unionized Construction. Lulu.com. p. 64.
• Hulten, C.R. (enero de 2000). Total Factor Productivity: A Short Biography. National Bureau of Economic Research.
• Needles, B. E.; Powers, M. (2013). Principles of Financial Accounting. Financial Accounting Series. Cengage Learning.
• United Nations. (2008). International Standard Industrial Classification All Economic Activities.