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Business Sector Classification Overview

The document outlines the classification of businesses into three sectors: primary (extracting natural resources), secondary (manufacturing goods), and tertiary (providing services). It highlights the differences between developed and developing countries in terms of sector importance and discusses factors influencing changes in sector relevance over time. Additionally, it explains mixed economies, the roles of private and public sectors, and the implications of privatization.

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2 views1 page

Business Sector Classification Overview

The document outlines the classification of businesses into three sectors: primary (extracting natural resources), secondary (manufacturing goods), and tertiary (providing services). It highlights the differences between developed and developing countries in terms of sector importance and discusses factors influencing changes in sector relevance over time. Additionally, it explains mixed economies, the roles of private and public sectors, and the implications of privatization.

Uploaded by

hrrchen18
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Unit 2 | Classification of businesses

Primary sector: of industry extracts and uses the natural resources of Earth to produce raw materials
used by other businesses
- farming, fishing, forestry and the extraction of natural materials (oil & copper ore)
Secondary sector: of industry manufactures goods using the raw materials provided by the primary
sector
- building and construction, aircraft and car manufacturing, computer assembly, bread baking
Tertiary sector: of industry provides services to consumers and the other sectors of industry
- transport, banking, retail, insurance, hotels and hairdressing
Developing Countries: where the primary sector is the most important, as more employees and
output are produced than in secondary and tertiary sectors

Developed Countries: where the output of the tertiary sector is often higher than the other two
sectors combined.
- De-industrialisation: occurs when there is a decline in the importance of the secondary
sector
Reasons for changes in the relative importance of the three sectors over time:
- when sources of some primary products become depleted
- developed economies are losing competitiveness to newly industrialised countries
- due to the rise in living standards, consumers spend more of their income on services such as
travel and restaurants than on manufactured goods
3 sectors of the economy are compared by:
percentage of the country’s total number of workers employed in each sector
or
value of output of goods and services
Mixed economy: has both a private sector and a public (state) sector
- private sector: businesses not owned by the government
aim to make a profit
- public sector: government (or state) owned and controlled businesses and organisations
decide how and what to produce
aim to provide services to customers
Privatisation: selling public sector businesses (owned and controlled by the government) to private
sector businesses
Advantages Disadvantages

- costs can be controlled because the - increased unemployment as private


private sector’s main objective is profit sector businesses may want to cut costs

- more efficient use of capital - less likely to focus on social objective


capital: money invested into a
business by the owners

- competition between private sector


businesses will help improve product
quality

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