Banking and Financial Market Services

          Like individuals, business firms need banking services. The business world operates on credit, and banks supply the needed capital, or funds, to worthy businesses. In addition, business firms need safe depositories for their money and other valuables, and they need checking facilities to make their payments easier. Most firms seek a line of credit (an approved amount of money that can be borrowed) to ensure that their financial needs are met in daily operations. And, of course, bankers advise business firms about financial matters and help to solve general management problems.          To finance their operations, large firms sell stocks and bonds, and even smaller firms are more and more turning to the sale of securities to provide investment capital. Huge, powerful brokerage and security firms handle such sales and administer the payments of bond interest and stock dividends. Stock markets, bond markets, and commodity exchanges provide many financial services to business firms and individuals.
         All kinds of business firms -- from farming, fishing, lumbering, and mining to factories, wholesalers, retailers, and service firm -- need financial services. We shall see how the banking and financial industry operates to serve business.

The Transportation Industry

          Transportation is another key segment of the business world. Without transportation, raw materials cannot move to factories; products cannot move from factories to wholesalers and retailers; and people cannot move from place to place to conduct business or to satisfy other desires.         Our huge transportation industry includes railroads, shipping lines, airlines, trucking lines, pipelines, trains, subways, streetcars, bus systems, taxis, and private vehicles. Many businesses operate in each of these areas, competing for customers and products to transport. Each firm seeks to make a profit from its operations, and each represents the investments of many people or governmental units.
          The billions of dollars invested in the transportation industry can be visualized by noting that one modern airplane may represent an investment of about $35 million. Even one bus may cost more than $100,000. Low-cost transportation for people is considered so essential in our cities that many bus and subway systems are subsidized by government or are owned and operated by the cities or counties involved. We shall look more closely at how business uses the transportation industry.

Manufacturing and Construction Industries

          The term manufacturing refers to the production of specific products used by industries or consumers. The term construction refers to the building of permanent or semi permanent additions to the land: factories, office buildings, homes, bridges, tunnels, street, and highways. Thus, when General Motors of Ford Motor Company builds automobiles, it is in the manufacturing business; and when Rockefeller Center's directors want to build another skyscraper, they deal with the construction industry.
          Manufacturing and construction industries are an essential segment of the business world. Their investment in plants and equipment totals many billions of dollars, and they employ millions of workers of all types. The construction industry is often used to measure the state of our economy, because changes in demand for its services are larger and more noticeable then are the changes in demand for basic goods and services.
          Manufacturing and construction industries make up the second key segment of our business world. They convert raw materials into products used by other industries and consumers. As we have noted, a manufacturer may perform only one stage of the total process; for examples, an aluminum factory converts ore into sheet aluminum, which becomes a raw material for the manufacturer of aluminum windows. We will examine the main concerns of manufacturing in Production.