2 Classification of Business O Level Business

Zia sir

Stages of economic activity

Primary sector: primary sector of industry involves the extracting raw materials from the earth.

Primary sector of industry include farming, fishing, forestry, and the extraction of natural
materials such as oil, and copper ore, gold, coal.

Secondary sector: Secondary sector of industry involves converting raw materials into finished
and semi finished goods. (manufactures of goods using the raw materials provided by the
primary sector) All of manufacturing, processing and construction lie within this sector. For
example building and construction, aircraft and car manufacturing, computer assembly, bread
making.

Tertiary sectors: The tertiary sector involves the provision of wide variety of services to
consumers and other sector of industry. Activities of the tertiary sector of industry include
transport, banking, retail, insurance, hotel, education and hairdressing.

Commercial services: freight delivery, printing, debt collection and employment agencies

Financial services: Banking, insurance, investment advice.

Household services: plumbing, decorating, gardening etc.

Relative importance of economic sectors

Which sector of industry is most important in a country depend on:

 the percentage of the country’s total number of workers employed in each sector.
 Value of output of goods and services and the proportion this is of total national output.

In some countries many more people are employed in farming and mining then manufacturing
or service industries. These tend to be countries often called developing countries.

In countries where many people are engaged in secondary and tertiary sectors compare to
primary sectors are called developed country. The level of output in the primary small
compared to other sectors.

1
Changes in sector importance

In the UK and other developed economies there has been a decline the importance of
manufacturing or the secondary sector. The tertiary sector in the UK employs well over 70 per
cent of all workers. The decline in the manufacturing or secondary sector of industry is called
de-industrialisation. (De-industrialization occurs when there is a decline in the importance of
the secondary, manufacturing sector of industry in a country.

Mixed economy

A mixed economy is where there is both a public sector and a private sector.

Feature of mixed economies:

 Existence of both private and public sector.

 A considerable role of the govt.
 Existence of competition and self-interest.
 Freedom of choice and enterprise.

Private sector – The private sector of an economy is that part of the economy that is owned
and controlled by the private individuals. As sole tradership, partnership, limited companies
and cooperative.

Public sector – The public sector of an economy is that part of an economy, which is owned and
controlled by the government or state.

Mixed economies- changes

In recent years, many state owned businesses are sold to the private sector. This is called
privatization.

Government basically done this because private sector businesses are more efficient then
public sector businesses. This might be because their main objective is profit and therefore cost
must be controlled. Competition between private sector businesses can help to improve
product quality. However, a business in the private sector might make more workers
unemployed than a public sector business in order to cut costs. A private sector business is also
less likely to focus on social objectives.

2
2 Classification of Business O Level Business

Zia sir

Stages of economic activity

Primary sector: primary sector of industry involves the extracting raw materials from the earth.

Primary sector of industry include farming, fishing, forestry, and the extraction of natural
materials such as oil, and copper ore, gold, coal.

Secondary sector: Secondary sector of industry involves converting raw materials into finished
and semi finished goods. (manufactures of goods using the raw materials provided by the
primary sector) All of manufacturing, processing and construction lie within this sector. For
example building and construction, aircraft and car manufacturing, computer assembly, bread
making.

Tertiary sectors: The tertiary sector involves the provision of wide variety of services to
consumers and other sector of industry. Activities of the tertiary sector of industry include
transport, banking, retail, insurance, hotel, education and hairdressing.

Commercial services: freight delivery, printing, debt collection and employment agencies

Financial services: Banking, insurance, investment advice.

Household services: plumbing, decorating, gardening etc.

Relative importance of economic sectors

Which sector of industry is most important in a country depend on:

 the percentage of the country’s total number of workers employed in each sector.
 Value of output of goods and services and the proportion this is of total national output.

In some countries many more people are employed in farming and mining then manufacturing
or service industries. These tend to be countries often called developing countries.

In countries where many people are engaged in secondary and tertiary sectors compare to
primary sectors are called developed country. The level of output in the primary small
compared to other sectors.

3
Changes in sector importance

In the UK and other developed economies there has been a decline the importance of
manufacturing or the secondary sector. The tertiary sector in the UK employs well over 70 per
cent of all workers. The decline in the manufacturing or secondary sector of industry is called
de-industrialisation. (De-industrialization occurs when there is a decline in the importance of
the secondary, manufacturing sector of industry in a country.

Mixed economy

A mixed economy is where there is both a public sector and a private sector.

Feature of mixed economies:

 Existence of both private and public sector.

 A considerable role of the govt.
 Existence of competition and self-interest.
 Freedom of choice and enterprise.

Private sector – The private sector of an economy is that part of the economy that is owned
and controlled by the private individuals. As sole tradership, partnership, limited companies
and cooperative.

Public sector – The public sector of an economy is that part of an economy, which is owned and
controlled by the government or state.

Mixed economies- changes

In recent years, many state owned businesses are sold to the private sector. This is called
privatization.

Government basically done this because private sector businesses are more efficient then
public sector businesses. This might be because their main objective is profit and therefore cost
must be controlled. Competition between private sector businesses can help to improve
product quality. However, a business in the private sector might make more workers
unemployed than a public sector business in order to cut costs. A private sector business is also
less likely to focus on social objectives.

4
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