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Types of Business According To Activities: (WEEK 5)

This document discusses three major types of businesses according to their activities: service companies, merchandising companies, and manufacturing companies. Service companies provide intangible services using employees. Merchandising companies buy finished goods and resell them, earning revenue from sales. Manufacturing companies buy materials and convert them into products. Each type has advantages like absence of inventory for services or ability to standardize production for manufacturing, and disadvantages such as maintaining human capital or managing inventory.

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Mark Domingo Mendoza
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132 views

Types of Business According To Activities: (WEEK 5)

This document discusses three major types of businesses according to their activities: service companies, merchandising companies, and manufacturing companies. Service companies provide intangible services using employees. Merchandising companies buy finished goods and resell them, earning revenue from sales. Manufacturing companies buy materials and convert them into products. Each type has advantages like absence of inventory for services or ability to standardize production for manufacturing, and disadvantages such as maintaining human capital or managing inventory.

Uploaded by

Mark Domingo Mendoza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TYPES OF

BUSINESS
ACCORDING TO
ACTIVITIES
(WEEK 5)

OCTOBER 4,2020
INTRODUCTION

A business is an In this chapter, we will


organization that discuss the different
converts inputs or types of business
resources such as according to activities,
material, labor, and their business
overhead into outputs requirements, and their
which are usually either advantages and
goods or services. disadvantages.
THREE MAJOR TYPES OF BUSINESS

SERVICE COMPANIES MERCHANDISING MANUFACTURING


COMPANIES COMPANIES
Service companies are firms that
SERVICE generally use their employees to
C O M PA N I E S provide intangible products or
services to customers.
These services include professional
skills, advice, expertise, and other
related products.
(e.g. accounting firms, law firms,
trucking services, entertainment, etc.)
Pays
O P E R AT I N G Cash on employees
hand and other
CYCLE OF expenses
SERVICE
C O M PA N I E S Receives
payment Performs
from services
customers
MERCHANDISING
C O M PA N I E S
• Merchandising companies sell tangible
products. This type of business buys
finished or almost finished goods from
their suppliers and resell the same to
customers.
• Primarily earn revenues from the sale of the
goods of merchandise, also known as sales
revenue or sales.
TWO TYPES OF
M E R C H A N D I S I N G C O M PA N I E S

Wholesaler is a
merchandising company that Retailer is a merchandising
company that sells goods
sells goods to retailers. directly to customers.
M A N U FAC T U R I N G
C O M PA N I E S

Manufacturing companies or simply


manufacturers, buy materials, convert
them into products, and then sell the
products to other companies or to
the final consumers.
O P E R AT I N G
CYCLE OF
MANUFAC -
TURING
CO M PA N I E S
A D VA N TA G E S & D I S A D VA N TA G E S
TYPE ADVANTAGES DISADVANTAGES
Service • Absence of inventory • Inability to standardize
• No production facilities services
• Maintaining human capital
Merchandising • Visible products • Managing inventory
• Less conversion, time, and
effort
Manufacturing • Quality control • Generally needs production
• Visible products facilities
• High conversion costs
• Cost of quality control
• Managing inventory
TYPES OF
BUSINESS
ACCORDING TO
ACTIVITIES
(WEEK 5)

OCTOBER 4,2020

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