CLASSIFICATION OF BUSINESSES
Stages of economic (business) activity
- There are three main stages (sectors) of economic activity:
➢ Primary sector
➢ Secondary sector
➢ Tertiary sector
- The primary sector extracts and uses the natural resources of the Earth to produce
raw materials used by other businesses.
- Activities in this sector include farming, fishing, forestry and extraction of natural
materials.
- The secondary sector involves taking the materials and resources provided by the
primary sector and converting them into manufactured or processed goods.
- Activities in this sector include building and construction, aircraft and car
manufacturing, computer assembly, food processing, etc.
- The tertiary sector provides services to consumers and other sectors of industry.
- Activities in the tertiary sector include transport, banking, retail, insurance,
hospitality, beauty care, legal services, healthcare, etc.
Relative importance of economic sectors
- In each country, the three 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 and the proportion this is to the total
national output.
- In developing countries, the primary sector employs more people than the other
sectors.
- The level of output in the primary sector will also be higher than in other sectors.
- Countries that started up manufacturing industries are likely to employ more
workers in the secondary and tertiary sector.
- The level of output will be higher in the secondary and tertiary sectors than in the
primary sector.
- In economically developed countries, many manufactured goods are bought in from
other nations.
- Most of the workers will be employed in the service sector.
Stages of economic (business) activity
- There are three main stages (sectors) of economic activity:
➢ Primary sector
➢ Secondary sector
➢ Tertiary sector
- The primary sector extracts and uses the natural resources of the Earth to produce
raw materials used by other businesses.
- Activities in this sector include farming, fishing, forestry and extraction of natural
materials.
- The secondary sector involves taking the materials and resources provided by the
primary sector and converting them into manufactured or processed goods.
- Activities in this sector include building and construction, aircraft and car
manufacturing, computer assembly, food processing, etc.
- The tertiary sector provides services to consumers and other sectors of industry.
- Activities in the tertiary sector include transport, banking, retail, insurance,
hospitality, beauty care, legal services, healthcare, etc.
Relative importance of economic sectors
- In each country, the three 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 and the proportion this is to the total
national output.
- In developing countries, the primary sector employs more people than the other
sectors.
- The level of output in the primary sector will also be higher than in other sectors.
- Countries that started up manufacturing industries are likely to employ more
workers in the secondary and tertiary sector.
- The level of output will be higher in the secondary and tertiary sectors than in the
primary sector.
- In economically developed countries, many manufactured goods are bought in from
other nations.
- Most of the workers will be employed in the service sector.
