Classification Of Businesses (Copy)
1.2 Classification of Businesses
1.2.1 Economic Sectors: Primary, Secondary, Tertiary
Basis of Classification
| Sector | Definition | Examples |
|---|---|---|
| Primary | Extraction of natural resources | Farming, mining, fishing, forestry |
| Secondary | Manufacturing/processing raw materials | Car factories, construction, food processing |
| Tertiary | Services to consumers/businesses | Retail, transport, banking, healthcare |
Changing Importance of Sectors
- Developing Economies:
- Primary sector dominant (agriculture main employer).
- Example: Ethiopia → farming employs majority.
- Developed Economies:
- Tertiary sector dominant.
- Primary sector declines due to mechanisation, imports.
- Example: UK → services (banking, IT, tourism) major share of GDP.
- Reasons for Change:
- Technology (automation reduces primary/secondary jobs).
- Rising incomes → demand for services increases.
- Globalisation → manufacturing shifts to developing countries (cheap labour).
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
1.2.2 Private Sector vs Public Sector in a Mixed Economy
Classification
| Sector | Definition | Examples |
|---|---|---|
| Private Sector | Owned and run by individuals or groups for profit | Supermarkets, clothing brands, banks |
| Public Sector | Owned and controlled by government to provide services for citizens | State schools, public hospitals, police, military |
Mixed Economy
- Most economies combine both private and public sector activity.
- Private sector → efficiency, innovation, profit-driven.
- Public sector → essential services, infrastructure, welfare, defence.
Reasons for Existence of Both
- Some services (healthcare, education, defence) too vital to leave to profit motive.
- Private firms better at competitive industries (retail, technology, manufacturing).
- Balances efficiency with social welfare.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Quick Recap Table
| Concept | Key Point |
|---|---|
| Primary | Extracts resources |
| Secondary | Manufactures goods |
| Tertiary | Provides services |
| Developing economy | Agriculture-heavy |
| Developed economy | Service-heavy |
| Private sector | Profit-driven, individual ownership |
| Public sector | Government-owned, welfare focus |
| Mixed economy | Combination of both |