What are the types of business organization?

A business entity may be described as an organization engaged in the activity of using economic resources or inputs to produce and offer goods or services to those who may need it (customers) often for sale where payment is expected in money or for other goods and services.
There are different types and forms of business organizations:

  • Service Business

A service type of business is a business organization which provides goods that are not physical or goods that are intangible (products which have no physical form). These types of businesses specialize in the provision of specialized skills professional, expertise and advise: for example, an investment firm or your bankers can advise you on how to invest your money, the best means of insuring your goods, how you can manage your expenditure as an organization or as an individual. A lawyer can help you in negotiating your business deals, and such similar services. Examples of service businesses include: schools, repair shops, hair salons, banks, accounting firms, and law firms.

  • Merchandising Business

Merchandising businesses are businesses which are involved mainly in buying and selling. These business buy products at wholesale prices and sell them at retail rates, with the intention of making profit. This profit or profit margin because they often sell the products they buy at a higher price than they bought them. A merchandise business unlike the manufacturing business sells product without changing its form. Distributors, convenient stores, and other similar “buy-and-sell” setups are examples of Merchandise Business.

  • Manufacturing Business

Unlike a merchandising business, manufacturing businesses procure goods or products with the aim of transforming into new products before offering them for sale. One can think of a chocolate producing company who purchases raw cocoa beans from a cocoa farmer for use as raw material in the production of the chocolates. It must be noted that manufacturing businesses sometime buy semi transformed products as well. An example will be when a sugar producing company buy a sugar cane syrup instead of raw sugar cane for use in sugar production. Typically, a manufacturing business will combine raw materials, labor, and factory overhead in its producing goods which will then be sold to customers.

  • Hybrid Business

Hybrid businesses describes businesses whose activities can be classified into more one of the business types describes earlier. Consider a restaurant for example: A restaurant puts several ingredients together to make a meal, which can be classified as manufacturing; they sell a bottle of chilled beer, which can be termed as merchandising, and fill your orders which is in fact as service. However, a restaurant can be classified into its major business interest which is providing catering services.

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