CLASSIFICATION OF BUSINESS

THREE MAIN SECTORS

- PRIMARY SECTOR.
- SECONDARY SECTOR.
- TERTIARY SECTOR.

PRIMARY SECTOR

- Involves extraction of natural resources.

- Only sector make direct use of natural resources.
- Eg: natural gas, minerals, oil,Farming,Fishing,Forestry,Mining.
- Provide raw materials for secondary sector.
- Oil extracted used to produce petrol.

SECONDARY SECTOR

- Assembling and manufacturing takes place.

- Raw materials are turned into products and services to be used by customers.
- Re ning.
- Construction.
- Manufacturing.
- Eg ,food canning ,furniture making.

TERTIARY SECTOR

- Provide support services to be used by customers.

- Transport services, advertising storage.
- Shops, banks, cinemas.

How the sectors depend on each other

- Primary ,secondary and tertiary sector often depend on each other.

- Eg: oil extracted from underground (primary sector).
- Oil re ning - secondary sector.
- Oil supply -tertiary sector.

CHAIN OF PRODUCTION

The production and supply of goods to the nal consumer involves activities from primary,
secondary and tertiary sector.
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CHANGING IMPORTANCE OF BUSINESS CLASSIFICATION

LDC(least developed country):

small industrial sector and lower standard of living compared to other countries
Eg: Vietnam,Zimbabwe.

MDC(most developed country):

- High level of industrialisation.

- People have high average incomes
- Higher standard of living
Eg: Japan, Norway.

INDUSTRIALISATION

- The growing importance of secondary sector and reduced importance of primary sector
business activity.
- The emerging economies of India and china.
- Primary sector cant provide employment all people.

DE-INDUSTRIALISATION

The growing importance of tertiary sector and reduced importance of secondary sector
Eg: UK, USA

CHANGES IN CONSUMER

- Higher incomes -consumer demand better quality and wider choice of products.
- Better education - consumers expect better products ,know about variety of products
through e-commerce.
- More leisure time- people work less hours so demand for leisure activities, cinemas,
 BUSINESS ENTERPRISE IN PRIVATE AND PUBLIC SECTORS

- Mixed economy - an economy where the resources are owned and controlled by both
private and public sectors.

- Private sector- the part of the economy that is owned and controlled by individuals and
companies for pro t.

- Public sector - the part of the economy that is controlled by state or government.
- In private sector organisations are owned and controlled by individuals or group of
individuals.
- E.g. Sony Tata corporation
- In public sector companies organisation are owned by a country and controlled by state
government
- Eg public telecasting channels
- SABC in South Africa
- In mixed economy decisions about what to produce ,how to produce and whom to
produce are made by both private sector and public sector

PRIVATE SECTOR DECISIONS

- Consumer choices help business to decide the best way of producing their products.
- Business only produce the goods and service that consumers want so that they can
make pro t.
- Business decide the way of producing goods.
- Business produce products which they can earn pro t.
- Some times the product is not affordable for all customers.

PUBLIC SECTOR DECISIONS

- The public sector in many countries produce goods and services that all people in
population need.
- Eg: electricity, roads education and health care.
- Govt takes decision about how to produce these goods and services.
- Products are produced based on providing good quality service to public rather than
making pro t.
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