Unit 1 Chapter 2
Classification of businesses
Learning Objectives:
Understanding the stages of economic activity – primary,
secondary and tertiary, why they are important and
recognising the different types of economy
Any thing you may tell
about this picture?
What
about
this
picture?
And finally…
Starter activity
In pairs, look around the room and choose any object
Write down as many raw materials used to make product as
you can
Discuss…
Where did those materials come from?
How were those materials transformed into the product
chosen?
How did the product end up at school?
Business sectors
All businesses can be broadly grouped according to the sector of industry
TASK
they fall into. There are three main types...
Think of a raw material, eg wood,
PRIMARY SECTOR – Businesses in the first stage of production that
cocoa,
involve extraction of raw materials etc…
(eg) farming, oil extraction, quarry,
fishing.
Write down three businesses, one
in each
SECONDARY SECTOR –sector ofthethe
Businesses in secondeconomy, that
stage of production
convert raw materials
useinto theproducts
raw(eg) phone manufacturing
material you have companies
chosen
Eg: Corn:
TERTIARY SECTOR Corn
– Businesses farmer
in the final (primary),
stage of production are
businesses that provide services (eg) restaurants, cinemas, distribution
Kelloggs companies(secondary), Carrefour
(tertiary)
These sectors form a CHAIN OF PRODUCTION which provides customers with finished goods
Chain of Production
The business sectors form a chain of production which
provides customers with finished goods of services
What do you
notice about
the chain of
production?
Trends in business activity
In the past, Britain was more dependent on the primary and
secondary sectors for income and jobs. Now, however, the largest
sector in the UK is the tertiary sector.
Value of goods and services produced in the UK (as a %)
Since
In which1950,
sectorsthe
has
UK economy
business has
production
changed
declined/grown?
dramatically
What with
types of jobs
greater
would be in each
dependence on
sector?
tertiary
Why sector
has this
industry
happened?
Sectors of the economy exercise
• Choose three countries of differing development levels (eg:
Spain, China, Haiti
•Find GDP information – total GDP and percentage per
sector
•Work out sector size in degrees (360 * %)
•Draw using a protractor and colour in
•Stick in your books
•Why do you think each country is different?
Importance of Economic Sectors
We usually compare sectors of a country’s economy by looking
at % of people employed in each sector
Or by the value of output of goods and services and the
proportion this is of the total national output
Complete the boxes below with examples of each industry…
Developing countries – More people
Developed countries – more
employed in primary and secondary
industries people employed in tertiary
-> people tend to live in rural areas sector
so less demand for services like -> Eg: ...., ..... and ....
insurance, etc.
-> Eg: ...., .... and ....
Changes in sector importance
Countries like the UK, USA, Spain, Germany have de-industrialised
since the 1970s
-> decline in manufacturing or secondary industry
-> more people working in tertiary (service) industries like banking,
tourism, etc.
Countries like China, Brazil, India have industrialised since the 1980s
-> growth of secondary industry
This has happened because… (read p14 and write three reasons
below)
1.
2.
3.
Types of Economy
There are 3 types… Planned Market
Mixed
Nearly every country has a mixed economy now. That means it has
public and private sectors.
The private sector contains businesses not owned by the government.
So when you are asked if a business
There are some government controls in place but the business will
is public or private sector, ask
decide what to produce, how to produce and the price. yourself…
Is it owned and controlled by the
The public sector – government owned/controlled businesses
government?
and
organisations. decides what to produce and how much consumers have
to pay, but some goods and services are free (school, healthcare).
Yes -> Public sector
No -> Private sector
Money for these comes from the taxpayer.
Businesses in the public sector?
Which businesses do you think are usually in the public sector?
Health, education, defence, public transport, water supply,
electricity/gas supply
Why do you think those businesses are usually public sector?
Because those services are vital to society
and not always profitable. Entrepreneurs are
not likely to start a business that isn’t going to
make a profit
Mixed economies – recent changes
LO - What is capital? Capital is money invested
- Understanding privatisation and why governments might want into
by owners to the
‘privatise’ certain industries business for the purpose
- Efficiency of private v public sector of the business’ operations
In recent years, govs have sold off public sector Who is more efficient? Public or Private
businesses – this is called ‘privatisation’ sector?
The benefits of this are:
Firstly, the public sector has no
1)Raises finance for public projects marketing costs and can take
2)Reduces gov expenses – passes cost onto advantage of economies of scale due to
private sector the size of the gov.
3)Private sector can invest more capital
4)Can improve product quality as private sector However, no competition means quality
faces competition is lower, waste is high and workers
become complacent in jobs for life.
However, the drawbacks are: Think of civil servants in Spain!
1)Might lead to worker lay-offs as private sector
Private sector controls costs in order to
tries to control costs achieve profit objectives but can suffer
2)Less focus on social objectives from diseconomies of scale if too large
Activity
Read the case study on p13
Complete Activity 2.2
Finish for homework if not complete in class
Homework Answers (4th Ed.)
a) Businesses that provide services to either other businesses or consumers, for
example, travel/tourism and IT services (such as repair and programming).
b) Botswana has very large reserves of natural products such as diamonds and gold; it
has a very small secondary sector due to lack of capital. India has relatively limited
natural resources but has invested heavily in secondary sector production such as
steel and cars.
c) Output in agriculture is low value. Output in much secondary and tertiary production
has higher added value.
d) Output, jobs and incomes will all fall. Over specialisation on just one or two products,
especially natural products which can ‘run out’, leaves a country too
reliant/dependent. The government could try to encourage more investment in
secondary/tertiary sectors.
Homework Answers (4th Ed.)
a) Business that provide services to either other businesses or consumers – for
example travel/tourism and IT service (such as repair and programming)
b) PNG has large reserves of natural products such as copper, gold, oil as well as
timber from forests; it has a small secondary sector due to lack of capital. India
has relatively limited natural resources but has invested heavily in secondary
sector production such as steel and cars
c) Output in agriculture is low value. Output in much secondary and tertiary
production has higher added value.
d) Output, jobs and incomes will all fall. Over-specialisation in just one or two
products especially natural products which can run out leaves a country too
reliant/dependent and government could try to encourage more investment in
secondary/tertiary sectors
Written assignment – Exam practice questions!!
Answer exam style question 1 Ade’s Engineering
Company (AEC) at end of chapter 2.
Use the answer structure on Frog
Submit on Frog. Late entries will get detention.
This will form part of your assessment so make
sure you put in serious effort and hand in on
time. No excuses!