Firm and industry these two words are misunderstood by the people in the world. People used these words enormously but they think they know the exact meaning of these words. In this article, we talk about the major difference between the firm and industry, their features, and where it is used in economics. Let’s start with a discussion about what these words mean it. where it is used or where not?
The economy of every country depends on the production of goods in the industry. How much industry gained profit every year.
What is a firm?
The firm is a small business that cooperates, adjusts their selves, elaborates their partnership to gain profit. It is the way of professional service providing to the people. A firm can be operated by a small group of people that is called a partnership firm or their choice to work without collaborating with others.
In a firm, a small business is located in one area or present in more than two or three locations when operating. It depends on the people who proceed with the firm according to their own rules.
The word firm relating to many things like business in law, accounting, graphic designing, accounting, consulting. There is a lot of small business come under this word firm. In some countries, it is considered as the law firm that provides justice to innocent people.
Firm work under the major industry, firm provide supplies to these big industries in the world. Business always starts from a small level when it’s gain importance it will become company and different company turn into a major industry in the world. It is a key step to establish a good and dominant business.
For example, a cement industry these firm made and supplies these to companies these companies work under the cement industry. The firm can be a partnership or without a partnership depends on the choice of the owner of that business.
What is the industry?
In the world, all the developed countries have strong production in the industry. Their industries evolve with time. New types of machinery, use of technology, new instruments increase their production to a great level and become a developed country in the world. In industry different firms work or small businesses to cooperate to become a part of major industries. The economy of every country depends upon the hoe much production in industries.
There are different industries in the world some are profitable industries like real estate, electrical industry, civil industry, the accounting industry, the insurance industry, banking industry. This industry provides goods and services to the country’s economy through companies and firms. The retail industry made a product but they directly sell it to the customers. The service industry provides service to companies. The whole sales industry sells other industry products to other companies.
Revolution in the industry is gained importance in the 18th century. Through revolution different countries become developed because they adopt changes in the industry. Revolution made a good products quantity and quality vise.
The major difference between firm and industry is in the industry a large group of firms and small businesses and companies work under a large industry. They cooperate, partnership with each other. While the firm is a small business work within the industry. The economy depends on the industry. The industry covers all the major share of the country’s economy. The industry comprises production units, all individuals, firms, and small businesses, retails, and wholesale production to produce a good product and made the country developed in the world.
Comparison between industry and firm:
There is a lot of differences between firm and industry. The firm is a separate unit work under the rules and regulation of the industry. While the industry in a sense made of several different firms is actually a sub-unit of the economy.
- Different kinds of firms work under the industry.
- There are many firms that made a company and different companies supply the material to the industry.
- A firm is a kind of company while the industry is the whole unit.
- A firm is a small business that works under an industry. The industry work under the unit of community.
- Every industry work under the rules and regulation made by the economy of the country.
- All firms work under companies and companies work under industries so auto automatically all rules and regulations followed by these firms and companies.
- A firm is a separate unit that runs the business within the industry.
- The industry is based on several firms and companies that sell common services and products.
- Different kinds of firms and companies made the major industry.
- The industry is made up of several firms that sell the same product.
- The industrial production unit is mainly involved to produce a good service.
- Infirm there is the involvement of trades, services buyer and consumer.
- The main example of the firm is restaurants, hotels, pharmacy, bakeries there are so many examples of firms.
- There are so many examples of the industry are the food industry, cement industry, glass industry, fashion industry, steel industry, ores industry, fuel industry.
- The firm is a small business that works mainly on a partnership.
- Industry work as a whole unit.
- Industry work on a large-scale enterprise, while firm work on a small but organized enterprise.
- There is a strong need to follow rules and regulations to make strong the industry.
- The firm needs to stabilize its business. When the firm is stabilized then the industry will also become stabilized.
Implementation:
Different firms work within the industry for the production of the same service. Between firms, there is a lot of competition occurs. Due to these competitive prices of the goods decrease in return customer become happy with the products.
If you want to start a small business you need to do homework about the statistics, micro, and macro features of the industry. It is very important to understand how supply and demand work in every industry.
Supply and demand have a major effect on the prices of the product. When the supply is higher than the demand of the consumer it will definitely low the prices of the product. The competition between industries will become less.
In order to maintain the competition, there is a need to low the prices of the product. In the industry supply is higher than production will become higher. the output of the industry will increase. In firms, the supply means the total invention in the industry.
It will help to gain profits in the business you should cut the prices before your competitor realize it. when cut down the prizes you will have gain profit in a short time. Demands and supply of the industries changes frequently you should regularly analyze the trends of supplies in the industries.
Similarly, carefully look at the demands of the industries. When demands are low then should find yourselves in a difficult situation. Carefully examine the trends of changes in the industry. When the demands are higher than supply increase the price of the product to gain profit. In this way, you become a stabilized market share in the market.
Industries made a competition between firms and companies. Sometimes it is annoying but at the same time, it will become beneficial to the customer satisfaction increase.
The connection between industries:
All industries use the inputs or outputs of the various firms to change them to a finished service by using the manufacturing service. For example, food industry cheese production by the industries is only possible when milk is obtained from animals so this is the input from the industries to produce cheese as output.
Types of industries:
There is a lot of industries present in the world. They can be creaturized into different categories. Some are below given. Let’s start.
Manufacturing vs construction:
This category tells about which kind of product the industry made whether it is final products, or input, or raw material. Those industries that produce a finished product that ends up on the customer’s hands directly are called manufacturing industries. For example, the pizza industry, cheese industry.
While those companies produce an intermediate product and that product is used by the other companies to change into a final product called the construction industry.
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Durable and non-durable industry:
Durable and non-durable industries depend upon the lasting of the product. Durable industries are those industries that produce goods that last for a long period of time. For example, the car industry, plan industry, petroleum industry.
Non-durable industries are those industries that produce their product that does not long for a long time. For example, the cheese industry, beverage industry, food industry. The agriculture industry that produces their product but if their product does not store properly it will damage the whole industry.
Domestic industry and oversees industry:
This type depends on whether the industry produces goods in a certain country perimeter.
Domestic industries manufacturing the products within the country’s border. For example, the coal industry in us is related to the coal production within the industry.
Oversees industries are those industries that are not located in the country’s border. For example, all coal industry located outside the united states is called a foreign industry.
Heavy and light industry:
This type depends on how much need is requiring to set up the business
Light industry is the industry that requires a low level of business to set up. For example, restaurants, hotels. The light industry comprises labor production.
Heavy industry is that industry that produces large-scale production on an intensive scale. It needs a large investment for production. For example, the machinery industry is a type of heavy industry.
Features of firms:
These are some important features of firms are:
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Partnership:
In the firm partnership is present between the two or more parties. The competitors sign the agreement. The agreement may be oral, written, it always becomes clear agreement there is no ambiguity present there.
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Profit-sharing:
In the agreement, there is include an important clue is that profit sharing. When the firm gained profit, it is divided to all members while loss occurs it will be applicable to all partners to play their part.
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Agency transfer:
in the partnership, it necessarily follows the rules. One partner cannot send their interest outside the firm without the permission of others partners.
- Mutual relation: In the firms’ agreement is based on the mutual relation, confidence, mutual trust of the partners. When the trust is broken the agreement does not hold validity.
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Conclusion:
The main result of this article is that the main difference between the firm and industry is that different firms made the whole industry. On the other way, the industry is made up of several firms and companies that work on the same service or product. The industry is the sub-section of the economy of the country.