Class iñca ion of bu sil es

Busine ss activ1ty in tt I m of 1 1, n r
second a1y and te rt1a y, e c to1
Aims(1 .2 . 1t
Bv the en d 0{ Hw, .,_~ hon v~, '1,, 1J<1
• Vnd('n;t and 1he ba\t\ (l1 b1 ,-.11~, ' 1,\~,,f ,,., "~~ (1\ ,ng p •Ampl-~ t r) ''1.11 1, .... ,p th-.. d Mvf ,. ;>i ¡,r .,-
• Und0n.\,3nd thc- r('.t~on, t1~ H,c- d~•f'9 .n,po, ta-~ " " ' l>\H.alM.\ ,t~~ f w ~t• v, , ,., ~ • ~ ,r, ,,.,.,u
and lt'\, mdw, tn~l"l"d , ~in1, "('\

. ....... ,. . .. . . . . ..

There are three d ífferen t sectors in which businesses

operate: primary, seco ndary and tertiary sectors .

[ - • ] ~- --- - - ~ Second~ ],------•~i Tert,ary 1

The primary sector is made up of businesses that

extract ra w materials from the land or sea ready to be
used by oth er industries.

For exam p le, Saudi Arameo is the world's largest oíl

produ ce r, with up to S1 billion revenue each day.

Th e secondary sector takes the raw materials and

transform s th em into a product . This can be sheets of
meta l, t ou ch screens, bottles or clothing . A factory that
makes a product, and the construction industry that
produces a b ui ld in g, are also in this sector.

For examp le, o íl extraction is then refined (changed/

cleaned up) and event ually sold at petrol stations .

The tertiary sector sel Is f inished produ cts and

services to the consumer.

For example, Chinese fast-food retailer Manf adu and

the world's largest department store, Shinsegae in
South Korea, are both in this sector. The tourism and
entertainmen t industries are also tertiary.
The number of em 1 . ·
P oyees in each of these secto rs díff ers from
country to country. Here are a few examples:

USA
0rozl l Nopal

r~
3%

J
/O Primary O Secondary O Tertiary

Source : Central lntelligence Agency

lt is very important for a country to have businesses in at least

one sector that are doing well. Sorne countries have the majority
of employment in one sector. As countries develop, they aim
to change the structure of their economy. This will involve
developing the tertiary sector, creating more retail outlets and
other industries, which increase money being spent. Developing
countries are often mainly primary and secondary producers,
and so - through investment in airports, tourism venues, and
events such as the Olympics - they try to move into the tertiary
sector. This helps to boost the countries' revenue and allows
them to employ in all three sectors. However, many developing
countries also try to increase other sectors, as this will help to
secure the long-term production of goods and services.

CASESTUDY lndonesia's growth is mobile

Indonesia is the fastest growing South Asían economy. With a

population of 250 million, its GDP is nearly $1 trillion. lt is the
third largest mobile phone market in the Asia Pacific region,
where 25% of the current population has a mobile phone. This
figure is expected to increase to 50% by 2020. This will enable
payment platform websites such as eBay, Alibaba and Priceline to
help consumers access goods from around the world, supporting
lndonesia's growth for years to come.
 1
[ Coc,1 l. 1 q' ,~ n Af11c

Co ca -col a w 111 P.l)· $ 3 11:, t,11 110•, f\\f 1hr- ,~nh r h~<' t nu~,
h tnO"v..,

s1ak e o f ~4 S n ,n Cix ~ ( 1"J.'3 lh vr, ~ge, l\ f n< ,) Th,, n-, 0

01 ..,A w,fl ~'' "
( nia
Coc a -co ld ga,n H'ltrl" 'd~ed ~H<-., , 10 coun t nc-~ s.uch as l.3n 1 1
a -col a t o o,.., n
Ghan a and Nami bia Th r-t t~ •~ aho po t~ntrn l for Ccx
new bottl rr""g fac d 1t1~~ m Zamb ca , Ef Sa lvad or and Hond ur1._l\
w,11 he lp
Oper at mg its own ~econ dary ~~c t or bo tt hng fact orie~
u<l •on
the comp an) to have m creas e-d contr of m,er ,ts whole prod
pron~ ~s

eea;;+ Evaluation

find out how th e em p loym {'nt Hruc t wt' 1n thc

, Using your own co unt ry or one you have chosen,
in that coun try over t he pd\t 1O yc ,H,
prrm ary, secon d ary and tertia ry sectors has chan ged
than 100 words , wh, ch e xplt1 rn~ wh\' your
You sh oul d th en w rite a short state ment , of no more
ry, secondary and t erti ary sect or, Th,,
cho >en coun try h as that parti cular balan ce of prima
unde rstan d your po int s.
state ment sh ou ld be very clear, so that other s can fully
may have to convi n ce sorn e o f you r cl d~Sm .Jtt·, .
' Be rea d y t o read your state ment to the class . You
so reall y emph asise the key point s.
:
Finally, in pa irs or smal l group s, discuss the follow ing ques tions
ge?
• Why does the numb er of peop le in each secto r chan
try?
• Wh at does th is mean for the econ omy of the coun

TapT ip,
. . . . . . .wle
.Kno ... ...ck
. . ...che
. . .. . . .dge ..... .... ..... ................. ....... ...... ..
You ishoutd be abíe to
O Define the term primary sector.
(2)
g,ve a 1¡nge· of dtffe rent
cian1pli.-1, to, etch "'f
O lden tify two businesses that operate in the tertiary
sector.
(2) t he ~e,to,, You -.hotJld atso
bt' ~blf 10 91w <'Xampl<'s

o Explain two key diffe rence s betw een the prim ary
and seco ndar y secto rs .
(6)
o f coun tr iN t h-it operd't ~
ma,nly tn one of the three
sN tOí \ .
Total 10 marks
 l ·- .,.~
cir 00U"1 ' l}¡..c 1( 1· t(\~ .,..
, ' ~ • t1 •• .., 1, ,,., 1 h,, •Ji~ ,,
ihf •.4 0c "' F ·lSl - ~ ti
,,,,... , ~,1 :c,~-Onllr.l
~ :lO.:.:es

El-=tT-o"lc
Th,s 1!1 ,:m onl1n< pi.lea 8lecl
Sonl\• P"QI.~- ts ar o 1,rt1y
th a1 t"J llo w s bu yors 3nd
L. Olff.... eype. ,l\. .ltl..lbl\' ,r1 ol bt4cll, ma,t!-,C
sellors 10 inioract For
0 )(8mp lo , Reátf1 ~hoppmg
or c Bay
j
1 ofmatllela lht''f ,)! ( 1 lllog.tl lnd
uncomrnon For e•AtfT\pkl
drU\)5

Physlcal
Thls is where customers
can actually go and seo the
products they are buying.
For axample, a
shopping centre .

Oft en , the government will influence the market by creatíng

rules and laws that structure the way in whích buyers and
sellers meet and interact . The government can do this by :

• imposing a ban on certain products, so there is no market

for them
• putting a tax (extra charge) on certain goods or services to
limit their supply and demand (for example, cigarettes)
• supplyi ng them itself - for example, governments often supply
medical care so that everyone has an equal chance of using it .

The level of government intervention determines in wh ich type

of economy the busínesses and customers operate.

Here the government has no role Here th e buyers, sellers and

at all. lt is only the buyers and government all have an influence.
sellers who determine the price This type of economy is common
and make trading decisíons. in nearly all countries .

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r,
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•

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i H • .

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21
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~ m n1o ,~r 0 0
cou nt r 1r-, o, C.,m ·, qc,,,1 ,._ 1n q 1, f' p•>\~()r
t o pt•o pl( "'
dcvc >lop m g < min t r w, .,n <1 1 p 1fuc r' ri fnl>,11 pn1o
r r t li
The I Pa '- on ,, h\ ht •'-"'< ''"('\" h ., , l1 \\Jt h d rf ( ,,1
0n t qf ),111, •> m..1 1111 r
duc to th f2lt1 ,1q <trn c ,\ p ,t,11r lt11'11 cd
1 1 ,,rnp 1n , <.111h .-J '· HP <Jr
M ic rn<.of t h~h , htlr C'ho ldct \ l hc\C \h,11 ch
ol df't c. exp N t rl rr•t 11 ' n
on 1hc- 1 1f"IVC"~1mc-n 1 (m on <!\ thpv hJvC'
pa1d t o bu\ ~h<11c i;;)
' º t h r~c corn pan ,e'> \1 nve (try h~rd ) t o makC' l,'3rgc pro f rt \ rllld
A ch<tnty 01 not fo1 -pro f 1t o rgan isat1 on tries
to put all of 1t<-
mon ~v into pro1e< t s that help ach 1evc ,t-s a1m
. Publ1c cntt ' rprr¼ '\
~u ch as t he Nat ,ona l H ealth Serv1ce 1n the
UK are se t up by thc
gov ernm ent to run orga rnsa t ions for th e peo
ple; th eref orc t hcy
do not h ave to mak e a prof it .

Pri , atQ and pub lic ent erp rise s in a 1111xed

r 10 "l'l\.1

A mix ed eco nom y has both pub lic and priv

ate sect or
ente rpris es. The maj ority of a mixe d econ
omy will be
priv atel y own ed busi ness es, with the gov
ernm ent regu latin g
(mo n ,i t o r ing) indu strie s thro ugh polic ies
(law s and regu latio n s).
W ithin a mix ed econ omy , the gov ernm ent
will ofte n run th e
edu cati on, hea lthc are and milit ary.

~ lnd ian go ver nm en t ha ve the po we r

_______
.....,
Toe lndia n gove rnm ent set up the Gho garp
alli lnteg rate d Pow er Co .
Ltd to help supp ort lndia's ener gy system . Base
d in New Delhi, th e
orga nisa tion prov ides elec tricit y for milli ons
of peop le . Th e gove rnm ent
set it up so that mor e peop le coul d access this
service for a reas onab le
pr ice . As the gove rnm ent does not aim to mak
e large prof its, th ey can
lowe r thei r prices . This shows how , in a mixe
d econ omy, th e
gov ernm ent can inter vene to run publ ic sect
or busin esses to prov ,d e
good s or services for the publ ic.

Nati ona lisa tion is the proc ess by whic h the

gov ernm ent t akes
ove r a priv atel y run busi ness or indu stry .
Dur ing the recess 1on
of 2009 , man y coun tries used gov ernm ent
mon ey to supp or t
thei r ban king indu stry but with out taki ng
it over fully .
Nat iona lisa tion usua lly occu rs whe n an imp
orta nt busi n ess o r
indu stry star ts to fail. This m ay mea n th e
lo ss of thou san d s
of jobs and a larg e amo unt of inco m e thro
ugh t ax . lf the
gov ernm ent wan ts to stop this hap pen ing,
they t ake over
the busi ness .
For exa mpl e, the Japa nese gov ernm ent put
1 trilli on Yen
($12.5 billio n) into TEPCO (Tok yo Elec tric Pow
er C?m pany ). This
indu stry has hist oric ally bee n a prív ate one,
so th1s gov ernm ent
 , 1C"f \'( nttr, n and ri"-' , t~:,h~ ,\it"")f, 1 f!n,, ,H ,, , uu • v u~<-
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go vcirrrn < rt { .,r, < h ur· ri , UH < on'l ♦>il"i I t~,1.1 ni rt1..,01hnq
poh<,e , ,,n,1 .-,ni~

E) ♦Mili,•
ft:l(i.r, ¡ t\ tvvo bU '- r.c- 1 ~C \ tf" vCA.r c(.'ul)\f 1 ()n(' , b().~ 11d ~ • fr () n 1• 1.~ J>'-1bfK ~f': •o, 1nd (Pv: '

1h< 01 l\,.ltr !..C'ílt'.>f H o v. do 1hc- J 1m\ ., ,od ob,<Vt,..,,.~ c, f thC\t' 1,.\-f'.l btn n i"-.~-~ d f ' n
d!oV1-n ·n two <O!¡¡mrv on~ f 0< s1m t! Mrt1<'1. ctnd one f or d 1Hc,cr-< t'"'
H c- n carry o ut t{!\.C<lrch in t o J so(fal e n t erpn~ in )Our arca \.\ 11~.; dOt."1 th - t ,,11---w-,1 d "1

t• , •m!I .,.r-d ob,C"c t ive-s d1 fier fr om tho~e of larg e private enlNPJ tWt'

Di'>c U!.\ ¡our f 1nd 1ng~ as a class an d se e w hat general conclu'5 10n.,. ) ou t t) í' dr , ,., n-wn ~- t • ~ Ulta

gr c>UP'i 10 o~a1e a claH di splay b ased o n your r esear ch You wdl nl..'C'd t t, et, n , J bouc ~.,~, hc,t •
~ rgan,.c- ~our 1m din gs an d h ow t o u se im ages. capt 1o ns a n d h cad1r,?1 t o g ooo ettt~ct

.~.l:.?.~.1-~.~8.~.~~~~-~-· - ... .. ..... ..... .... ...... ..... ...... ...... ......... .... ....... .. .
Savages 1s a lead ,ng clo thin g bra nd th at se ll s m ain ly in 1t s own cou ntr y t low,,,".'· , ~ :, toa • ''"J t
ex.p ~n d ,n t o new markets . To d o th is, Ali , it s ow ner. wa nt s t hc bu \ 1n c·~\ to bt>tunu.• ., pub~- :m ' t:\.!
company (Ple) . Ali is keen t o expand th e busi ness while maint a,n,n g th c• rxr 1·11,· nl rw;·pcit 1Bon n<:
hai. cr ea t ed w,th h, s ma n age m ent ski ll s, h igh -q uali ty prod ucH and hJppy 1· mplo'I• '- -,

O Expl ain why Ali is operating in the private sector.

O ldentify two differences between the public and private \ ector. (2l

O Explain two benefits of Ali's business be<omíng a PLC. (4)

O Explain why a government may nationali se an indunry o, busine11 (-4 )

To t « f 14 ~ •1
Top Tip
Make sure you can hnk the dtfferent typf's of ✓ f f .n OU1f ~ ff'M' ú tt t, t K l \ l~t

busínesses w•th th~ pobftc o, pravattt sector You

buttN~ ~•••t1 ~ tr n of lN ptt,na 'W
\é4,°"°-•• y HwJ ce- u..,, w, 11)11
should be abfe to explain the different a,ms and ,....,t\M to,, f"- CN"9•"9
✓ 1 (•11 t" i p+.¡,n, 0 \#
ob,ectives busmeues have ctnd how these ,elate 1,01,><)• t 4n.:< c,f l,u\ ,n~, <14:n •IK,tltel\
to the s~ctor ,n which th~y ope,ate. i••~~,,~ biJ11M,,. r.itf'•Pttw, 1, b#lween t hf
1 Cóf\
p,1\ a tt' "~ to, ,.,14 m~ ~l.lbl•< ,.._ to, in a m,,t-d
'- <OOOín)'