WHAT IS A BUSINESS SEGMENT?
Every company has small sections and subsections to keep track of the workflow. As the term ‘segment’ suggests, the business segment represents the segments and division in a company. These divisions are recognized based on products, services, and geographical location.
Most of the time, the management of companies divide the company into segments. These segments or subsections streamline the whole process right from production to revenue generation. If a company faces some problems, the management can look into these segments to find the eye of the problem. Also, the business segments make it easier for the company authorities to analyze the company’s performance as a whole.
The term segment explains the divisions of a company, which has its own set of operations. These divisions have distinct products and services which are separate from the company’s mainline products and services. Every particular division carries out the activities and generates revenue on its own.
WHAT IS BUSINESS SEGMENT REPORTING?
Segment reporting is essential for public-held entities; it may not require for private companies. The segment reporting is a report in the disclosures, which mentions every working division or segment of the company with its financial statements.
The segment reporting shows a clear picture of the company’s condition and performance. In a public-held entity, the segment reporting in the disclosure shows the overall performance of a company in a year. Also, it shows the assets and liabilities of a company, which helps the management make important company decisions.
EXAMPLES OF BUSINESS SEGMENT:
Most of the companies have multiple segments generating huge profits. For example, say there is a company that manufactures women’s clothing. Now they have decided to produce men’s clothing as well. If they were able to sell their new product and generate revenue, it would be considered as a new business segment.
Another example would be Amazon, a leading technology company has three major segments, North America Segment, international segment, and Amazon Web Services segment (AWS). These segments in Amazon, helps the company management analyze the performance and make the future decision.
Let us take Apple Inc, one of the most renowned and recognized brands all around the globe. The company Apple Inc. designs and manufactures computers, mobiles, tablets, laptops, headphones and so much more. Now, based on these very products, the management can look into the business segments and gauge the company’s performance. Also, it helps them to improve and expand into new fields.
The business segments are created by the companies to expand and channel their work. Every new product or service which is capable enough to generate its revenue is considered a section. The business segment also includes business segment reporting, which is an insight it the company performance. It demonstrates the whole picture of the company and helps the management make road maps for the future.