Business line: what is it, types, characteristics and classification

The turn of the company is the concept that is used to designate the type of productive and economic activities that companies have. That is, it serves to classify the different areas of work and business of an organization of these characteristics, although there are several criteria from which to make this classification.

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

• Related article: "Classification of companies, with explanation and examples"

What is the business line?

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 a world with an economy as globalized as it is today.

However, there are ways to simplify these productive and economic activities, to make them more understandable. The concept of turning the company helps a lot in this regard, because allows us to classify and distinguish the different ways of functioning that these types of organizations have

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We can understand what the turn of the company is through this definition: the cycle of activities that goes from investing in resources and personnel to work, to obtaining income through trade with what is produced or generated, and which is defined by the type of business in which this dynamic of spending and profit is produced.

In a more summarized way, the business line is the type of activity a company engages in 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, and The process of obtaining income from this activity is conditioned by the type of market and business in which this activity has been located. organization.

But since this explanation alone may seem too abstract and general, let's see what the main twists of the company are to better understand the concept.

Types of business line

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

On the other hand, it is perfectly possible that the same company has several business lines underway and developing in a more or less independent way. We will see how this works later.

Of course, what we know today as business turns are not options that any organization can choose from regardless of its context. And it is that business lines are a product of the historical development of human societies, and so is the relative importance that one or another line of business has in a given region or country.

They neither exist in a vacuum (a series of social and technological advances have had to take place for them to emerge) nor have value for themselves, beyond what economists, citizens, politicians, businessmen, etc.

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

1. Industrial turning company

The companies of the industrial sector are dedicated to creating products with added value from the processing of raw materials (extracted from the natural environment). That is participate at some point in the production chain that leads to the creation of manufactured products suitable for sale.

There are two ways of obtaining income in this field of work: selling to the final consumer, or selling to another entity that participates in any of the productive links.

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

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

Agricultural companies

This part of the industrial business turn is focused on livestock, agriculture and fishing, and therefore have a great importance in meeting the subsistence needs of the population in general.

Manufacturing companies

Manufacturing companies They are dedicated to processing products to give them added value by modifying or combining them with other elements. For example, a car manufacturer belongs to this category, as well as a paint factory, a brick factory, etc.

Extractive companies

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

2. Turning services company

The companies that belong to this category do not earn money by contributing specific products, but by carrying out actions that benefit the customer. These services can be offered to individuals or other organizations.

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

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

3. Business line company

The commercial business line is dedicated to connect sellers and buyersIn other words, the added value is based on the possibility that there is 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

Majority companies buy and sell large batches of merchandise, so that it is very common that they focus on selling not to the final consumer, but to other intermediaries.

Retailers

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

Brokers

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

• You may be interested: "Strategies used by online stores so that we end up buying"

Organizations with more than one activity

As we anticipated before, an economic entity can be involved in more than one of the lines 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 profits that is complementary to the first, and which is exploratory in nature; Many times, investments are made in these shares assuming high probabilities that profitability will not be obtained, to diversify the economic activities of the company and give it stability. If one secondary activity fails, the rest can continue to allow the organization to continue to exist or even grow.

Auxiliary activity

This activities They are a necessity to maintain a productive process of the previous two. For example, if a video game company creates a game that requires a peripheral device that is coupled to the controller, the production and sale of that product is an auxiliary activity.

Bibliographic references:

• 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. (January 2000). Total Factor Productivity: A Short Biography. National Bureau of Economic Research.
• Needles, B. AND.; Powers, M. (2013). Principles of Financial Accounting. Financial Accounting Series. Cengage Learning.
• United Nations. (2008). International Standard Industrial Classification All Economic Activities.