Product Distribution Systems

          As products move from factories to retail stores, they follow various routes called channels of distribution. We already noted that our transportation system is essential in distributing products. It's easy to see that factories must move products to wholesalers, who move them to retailers, who move them to final consumers. This is a well-known channel of distribution. But there are also many other intermediaries, or middlemen, involved in the distribution process for particular products. Some take title to merchandise, while others perform the distribution function without actually purchasing products. Some distributors supply services to retailers, while others supply only products. The millions of retailers in our country look to these sources to buy their products. They compare the products, prices, services, and quality of suppliers in the distribution system. We shall investigate the details of this process.

The Insurance Industry

          By this point the complexity and interrelatedness of the business world must be clear to you. To protect themselves against the many risks of operating in such a world, business firms rely on insurance. Today's insurance industry has assets that total billions of dollars--an amount so significant that society has instituted government regulation of the insurance industry's investments and financial reserves.
          Total employment in the insurance industry is now approaching 2 million people. But contrary to popular belief, only about one-third of these employees are salespeople. The companies that sell insurance maybe stock companies (owned by stockholders) or mutual companies (owned by policyholders). They offer property insurance, automobile insurance, public liability insurance, life insurance, health insurance, marine insurance, fidelity bonds (to protect business against dishonesty of employees), and surety bonds (to ensure performance of contracts). A complete description of the operations of insurance companies would require several textbooks, but we shall review the highlights of this industry.

Education Institutions and Professional Training Programs

          The business would we are describing could not be operated by primitive peoples. It demands the talents and dedication of millions of skilled employees. Many workers obtain their skills through training on the job, but the business world also needs thousands of professionally trained engineers, accountants, medical personnel, attorneys, and professors. These are not found easily. Business must depend on our colleges and universities, training institutes, technical schools, and trade schools to provide employees who can make the business world function. The professions are constantly developing through new research, laws, techniques, and experience. It is the responsibility of professors in our educational institutions to keep abreast of such developments and to include them in the training of new professional employees. Let's consider some of the contributions that the professions make your business.