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

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

What is the company spin?

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 such a globalized economy as today’s.

However, there are ways to simplify these productive and economic activities, to make them more understandable. The concept of business turnaround helps a lot in this sense, because allows us to classify and distinguish the different ways of functioning that this type of organization has .

We can understand what the company’s business is by means of this definition: the cycle of activities that goes from investment 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 expenditure and profit is produced.

More briefly, 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 buying the necessary materials and the personnel capable of working on them, and the process of obtaining income from this activity, are conditioned by the type of market and business in which this organization has been located.

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

Types of Business Turnaround

Although there are different ways to distinguish between business turns, the main classifications establish these main categories: commercial, industrial, and services .

On the other hand, it is perfectly possible for the same company to have several business turns on the go and to develop in a more or less independent way. We’ll see how this works later on.

However, what we know today as business turnarounds are not options that any organization can choose from regardless of its context. Business turnarounds are a product of the historical development of human societies, and so is the relative importance that one or another turn has in a given region or country.

They neither exist in a vacuum (a series of social and technological advances have had to be made for them to emerge) nor do they have any value in themselves, beyond that which economists, citizens, politicians, businessmen, etc. can give them.

Let’s take a closer look at what the company’s business is all about.

1. Industrial company

Companies in the industrial sector are dedicated to creating value-added products from the processing of raw materials (extracted from the natural environment). That is to say, that they 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 area of work: selling to the final consumer, or selling to another entity that participates in one of the productive links.

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

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

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Agricultural enterprises

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

Manufacturing companies

Manufacturing companies are engaged in processing products to give them added value by modifying them or combining them with other elements . For example, an automobile producer belongs to this category, as does a paint factory, a brick factory, etc.

Extractive companies

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

2. Service company

Companies in this category do not earn money by providing specific products, but by carrying out actions that benefit the customer. These services can be offered to people or other organizations .

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

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

3. Trading company

The commercial business is dedicated to bringing together sellers and buyers , i.e. the value added is based on the possibility that there is an exchange of money for goods or services.

The organizations working in this field can be classified, in turn, in these categories:

Wholesalers

Most companies buy and sell large lots of goods, so they often focus on selling not to the final consumer, but to other intermediaries .

Retailers

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

Commissioners

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

Organizations with more than one activity

As we anticipated before, an economic entity can be involved in more than one of the company’s business lines. In this case, we can distinguish between the main activity, the secondary activity, and the auxiliary activity .

Main activity

This part of the business 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 one , and that is of an exploratory type; many times, it is invested in these shares assuming high probabilities of not obtaining profitability, in order to diversify the economic activities of the company and give it stability. If a secondary activity fails, the rest can continue to allow the organization to continue to exist or even grow.

Ancillary activity

These activities are a necessity to maintain some productive process of the two previous ones . For example, if a video game company creates a game in which a peripheral device is needed that is attached 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. E.; Powers, M. (2013). Principles of Financial Accounting. Financial Accounting Series. Cengage Learning.
  • United Nations. (2008). International Standard Industrial Classification All Economic Activities.