Drug Store and Business Management notes
we are about to view a drug store and business management notes of the whole chapter including first to last the most chapter is yet to come.
After Diploma in Pharmacy, a person has two options. hey may either work as a pharmacist in any government hospital/dispensary/private nursing home or he may start his own drug store (retail or wholesale trading in drugs and medicine )
To run a well business activity and its organization in his own line.to achieved this the Pharmacy council of India has introduced a new subject named, ” Drug store and business management ” in this revised curriculum of its new Education Regulation of 1991.
the syllabus is divided into two parts part 1 related two COMMERCE and part two related to ACCOUNTANCY.
The commerce part deals with
- business organization
- channel of distribution
- inventory control
- sales promotion
- banking and finance
- drug house management
The accountancy deals with
- accounting concepts and conventions
- recording of business transaction
- financial statements and their analysis
- budgeting etc
COMMERCE– The production of goods and services for the satisfaction of human wants is the main objective of an industry
Definition of commerce – commerce is the aspect of business activity which is concerned with the distribution of goods and services produced by industry, commerce serves as a valuable link between the producer and the consumer.
nowadays, commerce consists of a complex well-developed system of transport, insurance, warehousing and other allied activities that facilitate trade.
TAKING THE GOODS AND SERVICES TO THE PEOPLE FOR WHOM THESE ARE PRODUCED IS THE AIM OF ALL THE COMMERCIAL ACTIVITIES.
COMMERCE IS THE ASPECT OF BUSINESS ACTIVITY WHICH IS CONCERNED WITH THE DISTRIBUTOR OF GOODS AND SERVICES PRODUCED BY THE INDUSTRY.
COMMERCE IS THE VALUABLE LINK BETWEEN THE CONSUMER AND THE PRODUCER.
hindrances faced by a producer in passing on its goods and services to the consumer
1.HINDRANCE OF PERSON: IT IS REFER TO THE PROBLEM OF CONTACT BETWEEN PRODUCERS AND CONSUMERS, THIS HINDRANCE ( DIFFICULTY ) IS REMOVE BY THE TRADE
, THEREFORE THIS HINDRANCE OF PLACES REFERS TO THE PROBLEM OF DISTRIBUTORS OF GOODS AT DISTANT PLACES WITHOUT LOSS. COMMERCE REMOVES THIS DIFFICULTY BY TRANSPORTATION.
2.HINDRANCE OF EXCHANGE: THE GOODS PRODUCES BY VARIOUS INDUSTRIES ARE EXCHANGED BY THEM FOR MONEY, WHICH IS THE COMMON AND ACCEPTABLE MEDIUM OF EXCHANGE. BUT THE MAJOR PROBLEM IS THE MODE OF PAYMENT,
AS ALSO WHEN AND WHERE IT WILL BE DONE. COMMERCE SOLVE THIS HINDRANCE BY MEANS OF SERVICES RENDERED BY BANKS AND OTHER FINANCIAL INSTITUTIONS.
3.HINDRANCE OF PLACE: THE PRODUCER HAS TO SEND HIS GOODS TO THE CONSUMER SITUATED FAR AND NEAR. COMMERCE OVERCOME THIS HINDRANCE BY PROVIDING VARIOUS MEANS OF TRANSPORTATION OF GOODS BY RAIL, ROAD, WATER, OR AIR SAFELY FROM THE PLACE OF PRODUCTION TO THE PLACE OF CONSUMPTION.
TRANSPORT AGENCIES, SUCH AS RAILWAYS, AIRLINES, SHIPPING COMPANIES, PUBLIC CARRIES ETC, ARE ALL COMMERCIAL UNDERTAKING.
4.HINDRANCE OF TIME: IT BECOMES NECESSARY TO MAKE ARRANGEMENTS FOR THEIR STORAGE SO THAT IT CAN BE MADE AVAILABLE AS AND WHEN NEEDED BY THE CONSUMER. WAREHOUSING IS AN IMPORTANT FUNCTION OF COMMERCE.
5.HINDRANCE OF KNOWLEDGE: THE PRODUCER WHO ARE ENGAGED IN THE PRODUCTION OF TOP QUALITY AND REASONABLY PRICED GOODS MAY NOT BE ABLE TO FIND POTENTIAL CUSTOMERS, BECAUSE THEY DO NOT KNOW ABOUT THEIR GOODS AND ITS USEFULNESS.
FOR THIS REASON, ADVERTISING AND PUBLICITY CAN ALSO BE INCLUDED AMONG FUNCTIONS OF COMMERCE. THEREFORE, AGENCIES ENGAGED IN ADVERTISING AND PUBLICITY ACTIVITIES ARE COMMERCIAL UNDERTAKING.
6.HINDRANCE OF RISK DAMAGE OR SPOILAGE: DURING TRANSPORTATION OF GOODS FROM THE PLACE OF PRODUCTION TO THAT OF CONSUMER, IT MAY GET SPOILED OR DAMAGE DUE TO MISHANDLING.
THIS DIFFICULTY IS OVERCOME BY THE COMMERCE BY PROVIDING A USEFUL SERVICE AS PROPER AND SAFE PACKAGING OF GOODS SO THAT THE SAME COULD BE SAFELY TRANSPORTED AND STORED.
7.HINDRANCE OF RISK OF LOSS: COMMERCE OVERCOME THIS HINDRANCE BY PROVIDING INSURANCE COVER OF THE GOODS DURING ITS TRANSPORTATION AND STORAGE. THERE ARE VARIOUS TYPES OF INSURANCE, NAMELY FIRE, MARINE AND GENERAL.
THE GOODS CAN BE INSURED AGAINST A SPECIFIED RISK ON PAYMENT OF A SMALL PREMIUM.
drug store and business management notes
BRANCHES OF COMMERCE
ON THE BASIS OF ABOVE HINDRANCES, THE ACTIVITIES OR FUNCTIONS OF COMMERCE MAY BE GROUPED AS
ACTIVITIES REVOLVING AROUND TRADE SUCH AS :
- ADVERTISING AND PUBLICITY
THE WORD TRADE MEANS BUYING AND SELLING AND EXCHANGE OF GOODS. IT DOES NOT, HOWEVER, INCLUDE FUNCTIONS LIKE TRANSPORTATION, INSURANCE, BANKING, ETC.
THE TRADE IS GENERALLY CLASSIFIED INTO THE FOLLOWING TWO BROAD CATEGORIES ARE AS FOLLOWS –
1 ) INTERNAL TRADE
IT IS ALSO CALLED HOME TRADE AND CONSISTS OF SALE AND EXCHANGE OF GOODS WITHIN THE BOUNDARIES OF A COUNTRY. THIS MAY BE >
LOCAL TRADE: THE GOODS ARE PURCHASED AND SOLD AT A PARTICULAR PLACE.
STATE TRADE: THE GOODS ARE TRADED ONLY IN A PARTICULAR STATE.
INTERSTATE TRADE: THE GOODS ARE BOUGHT AND SOLD FROM ONE STATE TO ANOTHER STATE.
THE PAYMENTS INVOLVED IN BUSINESS TRANSACTIONS ARE MADE IN THE NATION”S OWN CURRENCY DIRECTLY OR THROUGH INTERNAL TRANSPORTATION SYSTEM OWNED BY THE STATE GOVERNMENTS, CENTRAL GOVERNMENT OR BY PRIVATE AGENCIES. THE INTERNAL TRADE IS CARRIED ON THE FOLLOWING BASIS :
WHOLESALE TRADE: THE WHOLESALER SERVES AS A LINK BETWEEN THE PRODUCER OR MANUFACTURER OF GOODS AND THE RETAIL TRADERS. IN PHARMACEUTICAL TRADE, THE WHOLESALERS ARE CLASSIFIED INTO FOUR CATEGORIES –
SUPER DISTRIBUTORS OR SUPER STOCKISTS
WHOLESALE DEALERS OR SUBSTOCKISTS
CLEARING AND FORWARDING AGENTS
RETAIL TRADE: THE RETAILER SUPPLIES THE REQUIREMENTS OF CONSUMERS IN SMALL QUANTITIES AS PER THEIR NEEDS. HE SERVES A LINK BETWEEN THE WHOLESALER AND THE ACTUAL CONSUMER.
IN PHARMACEUTICALS TRADE, THE CHEMIST PLAYS THE ROLE OF A RETAILER. THUS A RETAIL CHEMIST IS AN OUTLET FOR PROVIDING DRUGS OR HEALTH CARE SERVICES TO THE PATIENTS.
2. INTERNATIONAL TRADE OR FOREIGN TRADE
EXTERNAL TRADE MEANS THE EXCHANGE OF GOODS AND SERVICES BETWEEN CITIZENS, BUSINESS FIRMS OR GOVERNMENT OF DIFFERENT COUNTRIES.
WHEN GOODS ARE SOLD BY ONE COUNTRY TO ANOTHER THE PAYMENTS ARE REQUIRED TO BE MADE IN THE CURRENCY OF THE COUNTRY CONCERNED. FOREIGN TRADE IS CONDUCTED MOSTLY ON WHOLESALE BASIS AND IS SUBDIVIDED INTO –
- Import Trade: when a trader of one country purchases goods from the traders of other countries, it is called import trade.
- Export trade: when a trader of one country sells goods to the trader of other countries, this is called export trade
- Entrepot trade: when a trader purchases goods from one country and sells the same goods to another country, it is called entrepot trade or re-export trade. London and Singapore have a considerable amount of re-export trade.
MANY PHARMACEUTICAL COMPANIES ARE MARKETING THEIR PRODUCTS TO OVERSEAS COUNTRIES. WHILE EXPORTING PHARMACEUTICALS PRODUCTS TO OTHER COUNTRIES AMONG OTHER THINGS, THE FOLLOWING CONDITIONS MUST BE SATISFIED:-
- International standards for formulation are maintained.
- International standards for packaging are also maintained.
- The export items must be cleared by the food and drug authority (FDA) of the country concerned.
- Clinical data of pharmaceuticals product is provided.
FOREIGN TRADE HAS THE FOLLOWING ADVANTAGES –
- FOREIGN EXCHANGE:– A COUNTRY IS ABLE TO EARN VALUABLE FOREIGN EXCHANGE BY EXPORTING ITS GOODS TO OTHER COUNTRIES.
- DIVISION OF LABOUR:- INTERNATIONAL TRADE HAS FORCED THE COUNTRIES TO MINIMISE THE COST OF PRODUCTION OF ITS GOODS. IT HAS RESULTED IN the DIVISION OF LABOUR AND SPECIALISATION. THE QUALITY OF GOODS ARE AVAILABLE IN THE INTERNATIONAL MARKET AT A VERY REASONABLE RATE.
- BENEFITS TO CONSUMERS: A VARIETY OF GOODS OF BETTER QUALITY ARE AVAILABLE TO THEM AT REASONABLE PRICES. IT LEADS TO a RAISE IN THEIR STANDARD OF LIVING.
- INCREASE IN GOVERNMENT INCOME: THE GOVERNMENT IMPOSES IMPORT AND EXPORT DUTIES ON THE IMPORT AND EXPORTS. BY THIS WAY GOVERNMENT IS ABLE TO EARN A LOT OF REVENUE FROM INTERNATIONAL TRADE.
- AVAILABILITY OF ALL TYPES OF GOODS: ALL TYPES OF GOODS CAN BE MADE AVAILABLE VERY EASILY FROM OTHER COUNTRIES WHICH ARE NOT AVAILABLE IN OUR COUNTRY.
- ENCOURAGEMENT TO INDUSTRIALISATION: INDUSTRIAL DEVELOPMENT OF A COUNTRY LARGELY DEPENDS UPON THE INTERNATIONAL TRADE, BECAUSE of CREDITS DEMAND.
drug store and business management notes
FOREIGN TRADE HAS FOLLOWING DISADVANTAGES
- MUTUAL DEPENDENCE: THE DEPENDENCE IN TRADE ON OTHER COUNTRIES SOMETIMES CREATES SERIOUS PROBLEMS.
- EXPLOITATION: ALL COUNTRIES ARE DEPENDENT ON EACH OTHER IN INTERNATIONAL TRADE. THERE IS NO COUNTRY IN THE WOLRD WHICH CAN MEET ALL ITS REQUIREMENTS ON ITS OWN. THIS DEPENDENCE LEADS TO THE EXPLOITATION OF DEVELOPING COUNTRIES BY THE DEVELOPED COUNTRIES.
- SHORTAGE OF GOODS IN COUNTRY: TO EARN MORE PROFITS, SOMETIMES THE TRADERS PREFER TO SELL THE GOODS TO OTHER COUNTRIES THAN IN THEIR OWN COUNTRY. THIS LEADS IN a SHORTAGE OF GOODS WITHIN THE COUNTRY.
- BAD EFFECT ON ECONOMY: ONE COUNTRY AFFECTS THE ECONOMY OF OTHER COUNTRY THROUGH INTERNATIONAL TRADE.
- FEAR OF DUMPING: THE DEVELOPED COUNTRIES START SELLING THEIR PRODUCTS AT A VERY LOW PRICE, AS A RESULT, THE INDUSTRIES IN THE UNDERDEVELOPED COUNTRIES CLOSE DOWN. AFTER THAT THEY START CHARGING HIGHER PRICE.
- LOSS OF FOREIGN TRADE IN WARTIME: DURING WARTIME FOREIGN TRADE BECOMES VERY DIFFICULT.
ACTIVITIES REVOLVING AROUND TRADE
THE VARIOUS ACTIVITIES PERTAINING TO TRADE ARE:-
Banking removes the hindrance of finance and credit. Modern techniques of production require a huge investment in plant and machinery. A lot of funds are needed to run a business smoothly.
The banking system provides the following services to its customers:-
- It provides loans and advances for the purchase of raw materials and machinery
- It also provides overdraft facilities. A firm is permitted to overdraft against its current account on payment of a reasonable interest rate.
- It acts as an agent for its customers as regards collections of bills, cheque, dividends, etc.
It provides foreign exchange, issuing letters of credits, etc. thus giving assistance in foreign trade.
The transport means the movement of goods and persons from one place to another. Transport is the physical means whereby goods are moved from the point of production to the place where they are required for consumption. The transport system removes the hindrance of the place.
Assembling and dispersion of goods are done with the help of one or the other mode of transport. It is an important part of commerce as it helps in removing the hindrance of distance. The road, rail, river, canal, ocean, and air transport, all contribute to commerce by enabling goods to be sent where and when they are required.
Air transport is used at the time of emergency or for import and export of goods from one country to another country.
Insurance removes hindrances of risk. Any business activity entails various types of risks. In lots of payments of a premium, the insurance company promises to compensate the insured party in the event of suffering a specified loss. In business, the suffered as a result of fire, theft, floods, accidents, loss of goods in transit, etc. insurance is of the following types:-
Warehousing removes hindrances in time. Warehouses are places meant for the storage of products. Storage facilities are provided by three types of warehouse:-
Private warehouses are owned by big business concerns or wholesalers for the storage of their own stock. Public warehouse is operated by business firms which provide facilities to the general public for certain charges.
The storage of goods is necessary due to the following reasons ;
- To maintain stability in price.
- To ensure the availability of goods throughout the year in spite of the fact that the same grows or is produced only during a particular season eg. tincture orange is manufactured when orange is available.
- There is always a time gap between the production of goods and its subsequent sale. To ensure the continuous availability of goods in the market, its proper storage is essential.
- Certain goods, such as drugs, chemicals, perishable foods, etc, are required to be properly stored to prevent their destruction or damage.
- The storage is necessary to take advantage of bulk buying.
drug store and business management notes
Packaging removes the hindrance of spoilage etc. the products after manufacture, are required to be packed properly to protect the same from spoilage, breakage, and leakage during handling and transportation.
Proper packaging is also essential according to the drugs and cosmetic act and rules, 1945. Moreover, proper packaging also avoids deterioration of the product it also ensures the supply of products of the right quantity, right quality, and weight to the consumers.
ADVERTISING AND PUBLICITY
Advertising and publicity take care of the hindrance of knowledge. The main object of advertising and publicity is to create, sustain, and increase the demand for goods produced by the manufacturers. The expenditure on advertising and publicity is borne by the producer, the wholesaler, and sometimes by the retailers also in order to boost its sales.
The majority of pharmaceutical products are ethical products and their direct advertisement is prohibited according to the drugs and magic remedies ( objectionable advertisement ) act.
The word economy is derived from two Greek words “ Oikos “ ( household ) and “ nemein “ ( management ). Thus economic means management of the household. economic deals with the proper use and allocation of resources for the fulfillment of various human wants and maintenance of growth and stability.
In order to understand the elements of economics the following aspects of economics may be taken into consideration :
Different types of economic activities
People are engaged in different kinds of economic activities to earn money which is called occupations. The occupation is generally adopted by human beings and is classified into the following three groups.
BUSINESS: business means that economic activity is primarily done with the purpose of earning profit. Trading, banking, insurance, manufacturing are business activities.
PROFESSION: profession means an occupation that involves the rendering of personal services of a specialized nature based on professional education, training, and knowledge. Physician, pharmacist, lawyer, accountant, etc.
EMPLOYMENT: employment means a personal service rendered by a person to an organization under a contract of employment or services. An employee is required to perform the duties which are assigned to him by his employer. He receives wages of salary, allowance, and other benefits of his services.
An economic system denotes the economic relationships which arise in the community from the organization or mode of production and distribution. The economic system should be simple and easy for human beings to satisfy their wants.
Types of economic systems
There are three economic systems:-
- CAPITAL SYSTEM: In the capital system, there is freedom of every kind. The producers are free to acquire any property and produce any product. The consumer is also free to use any products and in any amount to satisfy their wants. In this system, the means of production and distributions are generally in the hands of private owners who operate them to earn the profit.
- SOCIAL SYSTEM: int his system the large and basic industries are owned and controlled by the government. Sometimes the distribution is also controlled by the government.
- MIXED ECONOMY: the activities of both the system are used. It means some economic activities are controlled by the government and some of the economic activities are kept open for the public.
LIMITATIONS OF ECONOMICS
- It is not a complete study of all human activities. Only those activities which are concerned with money are studied.
- It studies the activities of only those human beings who are members of society.
- studies the real activities of human beings and not the fictitious one.
- It is a measuring rod of money to assess human motives. But this measuring rod lacks accuracy. So, it cannot measure accurately the human motives.
drug store and business management
Management is the art and science of organizing and directing human efforts applied to control the forces and utilize the materials of nature for the benefits of man.
Managements is a science because it proves, predicts, defines, measures, and utilize knowledge. At the same time it is an art because it feels, guesses, describe, expresses, communicates, and practices. It also a profession because it requires skill and knowledge and the development of a positive mental attitude.
When the principles and practices of management are applied to the pharmaceutical industry and drug store, it is known as pharmaceutical management.
LEVELS OF MANAGEMENT
There are three levels of management :
Top-level management –
top-level management of a company consists of the board of directors and managing director.
Top management is the ultimate source of authority that frames the politics for the enterprise.
It performs the following functions.
- Laying down the overall objectives and broad policies of the enterprise.
- Organizing the business into various departments and divisions.
- Appointing department managers.
- Issuing guidelines for heads of the department.
- Coordinating the work of different departments.
- Making plans for the long-term stability of the business.
- Middle-level management – they are responsible for the top management for the efficient functioning of their departments. In small enterprises, there is one layer of middle management but in big enterprises, there may be senior middle-level managers and junior middle-level managers.
Board of directors and chief executive – top management
Departmental heads branch managers – middle-level management
Supervisors superintendent sales/section officers – lower-level management
lower-level management –
the level includes supervisions, foremen, superintendent, sale officers, accounts officers, etc. they issue orders and instructions and guide day to day activities. They also represent the grievances of the workers to higher-level management.
Lower level management performs the following functions :
- Planning of day to day work.
- Assignment of jobs and issuing orders and instructions.
- Supervising and guiding workers.
- Maintaining close personal contacts with workers to ensure discipline and teamwork.
- Evaluating operating performance.
- Communicating the grievances and suggestions of workers to higher authorities.
- Importance of management
- It helps in the optimum utilization of all types of resources to achieve the best possible results.
- helps to increase proficiency in handling business.
- It helps to reduce the cost of production and increases output.
- helps to utilize the services of talented persons who are employed in the organization to achieve the planned target.
- helps to make stable and progressive growth of the organization in the changing environment.
Functions of management
drug store and business management notes
The following are the main functions of management :
PLANNING: The planning is an intellectual or mental exercise requiring imagination and judgment. Planning helps to do things in an orderly manner.
It helps in the proper utilization of resources.
Planning aims at achieving the desired results. It involves forecasting of future problems and events and selecting an appropriate course of action to handle the anticipated problems and events.
For example –
- Selection of a proper site.
- Items to be manufactured.
- Obtaining the required license from drug administration to manufacture the selected items.
- Arranging necessary finance for starting the business.
- Sale of goods manufactured by the factory.
ORGANISING – it is to organize the enterprise by grouping similar activities together with a view to attaining the planned objectives. It is one of the important functions of management.
in order to start a pharmaceutical industry, the activities involved in it, such as purchasing, production, quality control, stores, distribution, marketing, administration, and finance.
The process of organizing involves the following steps :
- Identify the activities necessary to achieve the objectives.
- Grouping the activities into manageable units.
- Assigning duties or tasks to appropriate individuals.
- Delegating necessary authority to individuals and fixing responsibilities for results.
- Defining the authority responsibility relationships among individuals.
drug store and business management notes
STAFFING – the various activities such as selection, communications, participation, counseling, training, compensation, dismissal, etc.. for example, to run a syrup section of the pharmaceutical factory, a minimum of four persons are required. One for the weighing of raw material and mixing them in proper quantity in water to make syrup. Two persons are needed for filling the syrup in bottles and then sealing and labeling it. One person is needed for testing.
Staffing consists of the following activities.
- Manpower planning, i.e. determining the number and quality of employees required in an organization.
- Recruitment, selection, and replacement.
- Training and development.
- Appraisal, promotion, and transfer.
- Employee remunerations etc.
DIRECTING – once the plans are formulated, the organization’s structure is created and competent persons are appointed at various posts, the enterprise is ready to start work. directing involves issuing orders and instructions, motivating and leading subordinates, harmonizing organizational goals with the interest of employees.
The manager has the responsibility of guiding and supervising their subordinates in the following ways.
- By issuing orders and instructions
- By guiding and teaching the subordinates as regards the proper method of work
- Supervising the subordinates to ensure that their performance conforms to the laid down standards.
CONTROLLING – there should be an adequate control so that predetermined planned objectives are achieved. Strict control on the activities of the subordinates may some times lead to loss of all initiative and enthusiasm on the part of workers.
For example, the area manager of the pharmaceutical house can achieve his sale target if he calls the meeting of a medical representative under him, once in a week to solve their problems and issue new instructions.
COORDINATING – all other activities not essential to the main objectives must be discarded. It is important to ensure that the different departments work in coordination.
It is essential that everybody in the organization understand the main objective of the business and works towards there achievements in active operations with others.
A well-coordinated enterprise must satisfy the following conditions :
- Each department or division should be precisely informed of its share in the common task.
- Each department should work in harmony with other departments.
The working scheduled for various departments should be constantly attuned to circumstances.
The basic features of coordination are as follows:-
- It is a continuous process.
- It is an orderly arrangement of group efforts.
- Its purpose is to secure the unity of actions towards common objectives.
drug store and business management notes
The term industry refers to that part of business activity that relates to the production processing of products. The goods are called consumer goods if uses by the final consumers and producers goods or capital goods if used in the production of goods.
for example, tablets, capsules, syrups, injections, lotions, and various other formulations are consumers’ goods. On the other hand, an engineering concern manufacturing, say, machine tools, and pharmaceuticals machinery is said to be making production goods.
The industry may be divided into four distinct types on the basis of:-
- Types of goods produced.
- Size and amount of investment.
- Capital employed.
- Official classifications of industry.
Classifications on the basis of types of goods produced
Extractive industries-this industries are engaged in activities where the wealth is obtained from soil, air, or water or obtained from beneath the surface of the earth by the various extracting process. The products of the extractive industries are meant for producing finished goods by another manufacturing industry eg, fishing, mining, hunting, agriculture, etc.
Genetic industries– These industries involve in producing and multi-playing certain species of plants and animals for the purpose of earning profit from their sale, for example breeding farms, poultry, kennels, nurseries.
Construction industries– These industries involve in the construction of buildings, roads, dams, bridges, canals, etc. the product made by these industries are not meant for sale in the market, but they are erected, built at a fixed site.
Manufacturing industries-These industries are engaged in the conversion of raw material or semi-finished products into finished products. For example, the pharmaceuticals industries is a manufacturing industry because it converts basic drugs into various pharmaceuticals formulations.
Analytical industries: these industries are engaged in the manufacturing of products by analyzing and separating different elements from the same material. For example, fractional distillation of crude oil in oil refinery industries.
Synthetic industries: in these industries various ingredients are put together and combined in the manufacturing process so as to manufacture a new product. For example, benzoic acid was used to be prepared from benzoin by heating the resin in iron vessels.
Processing industries: in these industries, the raw material is processed through different stages of production resulting in the final product. For example, drugs and pharmaceuticals industries, textile industry, and the paper dusty.
Assembly line industries: in these industries, different instruments or components part already manufactured are assembled to make some useful products. For example, television, computers, cars, scooters, x-ray machines, ECG machines, etc.
Classification based on size and investment
Industries are also classified into the following two categories on the basis of size and investment
Light industries -These industries involve small capital investment and have a short duration production cycle. These because of less costly machinery requires for the manufacture of its products. For example, industries involved in the production of collapsible tubes, closures, rubber caps, tin containers, etc.
Heavy industries-Those industries that need big capital investment and also involve a longer production cycle are covered under heavy industries. For example, iron, steel industry, ship, building, automobiles, etc.
Classification based on the capital employed
Industries are also classified as large or small scale according to the capital employed, the number of workers employed, machinery and tools used, and the value of their product. Generally, an industry is said to be a small scale industry if the capital involved is not more than Rs 10 lakhs in plant and machinery.
Official classification of industries
For the purpose of licensing, the government has made a standard classification of industries as given under the first schedule to the industries Act, 1951. These industries are classified according to the type of products produced by them. For example, drugs and pharmaceuticals, medical and surgical appliances, soaps, cosmetic, and toilet preparations.
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