Industrial Organization

Industrial Organization

Business is classified in two categories one is industrial organization and the other is commerce. We can distinguish between industry and commerce in a way that Industry converts one product into another whereas commerce is a service that deals with sales and purchase. Industries and commerce are interdependent on each other. Industries include conversion of resources into useful products. The activities performed during conversion are all part of industry.
In economics, industrial organization is a field that builds on the field of firm by examining the structure of firms and markets. It adds real world complications to the perfectly competitive model. These complications could be transaction costs, limited information and barriers to entry of new firms that may be associated with an imperfect competition. It analyses determinants of firms and markets organization and behavior as between competition and monopoly including government actions.

Types of Industries

Industries can be classified into two types; primary industries and secondary industries. Primary industries deal with production and reproduction from natural resources. When we talk about production we categorize it in extractive industries and in case of reproduction we call it genetic industries. Hence primary industries are further classified in extractive and genetic industries. The extractive industries utilize earth, water and soil to form products. Examples of such industries are farming, mining and fishing. On the other hand genetic industries reproduce resources such as breeding of cattle or formation of nursery by reproduction of various plants.
Secondary industries utilize the products of primary industries to form its final product. Thus the products of primary industries become the raw material of secondary industries.

Classification of Industry

Secondary industries are further classified in two types; manufacturing industries and construction industries. Manufacturing industries include analytical industries, in which one material is separate into a number of products. Such as oil refining industries. Crude oil form by primary industries but when that oil is further process by analytical industry it forms diesel and petrol. Which are an outcome of secondary industry.

Another example of secondary industry is synthetic industry where two products mix to form a new product; examples are paint and fertilizers. Next is processing industry which takes successive steps to reach the final product, example is sugar mills. Finally we have assembling industry in which different parts bring together. And assemble to form a new product such as production of car, TV and watches. Unlike synthetic industry which combines its raw materials chemically assembling. Industry has product which can  break down to its raw materials. Construction industry makes construction of dams, building, roads, and bridges possible.

Impact of Industrial Organization

Industrial organization has also had significant impact on anti tans law and competition policy. Assessment of this subject has differed over time. This subject has a theoretical side and a practical side. According to textbook on one plane the field is abstract based on a set of analytical concepts about competitions and monopoly.