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OLevel

Business Studies - 7115

Business Activity In Terms of Primary, Secondary and Tertiary Sectors

Paper 1 & 2

Business Activity In Terms of Primary, Secondary and Tertiary Sectors

Basis of Business Classification

There are three main stages of business classifications. These stages are classified into a primary stage, secondary stage and tertiary stage. These stages are discussed in detail below:

Stage 1

This stage is called the primary stage. This stage is basically related to the natural resources of the earth. Some of the natural resources are oil, gas, water, crops, seafood, etc. 

As per definition, the primary sector of the economy uses natural resources as raw material that is used in different businesses.

Stage 2

Stage 2 is called the secondary stage. This stage is related to the production and manufacturing of goods like a woodcutter cuts the wood from forest sells to a carpenter. The carpenter makes furniture and sends it to the showroom. In this stage, the production or manufacturing process is done e.g. car manufacturing, building and construction and computer assembling are included in this stage.

According to the definition, the secondary sector of the economy manufactures different products by using the raw material given by the primary sector. 

Stage 3 

Stage 3 is called the tertiary stage. This stage basically provides the services to the consumer and business both. The services include in this stage are transport, retail, banking, and insurance, etc. 

We can define the tertiary sector as the services provider sector for consumers and other businesses both.

Importance of Business Classification

There are some countries in the world where primary sector employees more employees. Most of the people are employed with farming, fishing, forestry, and mining, etc. This situation happens generally in developing countries. Most of the people in these countries are settled in rural areas. Low income is a common trait in these countries. Industrialization is also on the initial stage in these countries. 

On the other hand, there are some countries where industrialization has been started many years back, now considered as developed countries. Most of the people are employed in manufacturing units and industries. Their output level is also higher than those economies that depend upon the primary sector.

Change in Sector Importance

In the United Kingdom and many other countries, a decline in the industrialization has been observed. The economy of these countries is going towards the tertiary sector. In the UK, this decline started in the 1970s when a shift towards services observed in the economy. It was difficult for people who were working in the industry to join the service sector. It is because many of the workers lost their jobs. This process is also called de-industrialization.

De-industrialization can also be defined as the decline in the importance of the manufacturing sector or industry of a country.  

On the other hand, in some other countries like India and China, industrialization started in the 1980s. in both countries, the tertiary sector is also expanding rapidly. 

There are some reasons why the relative importance of these sectors change over time

In some countries, some resources are near to be finished as most of the resources have been used as raw material. Like in Somalia, the forests are at the end as timber has been used as raw material. It mostly happens in developing countries. 

Some countries like Brazil, India, and China are showing competitiveness in manufacturing as compared to many other countries. 

Those countries where income and living standards of people are increasing, people are taking interests in different activities like traveling and hoteling, etc. it usually happens in developed countries like the US and the UK, etc. it is because the transport and hotel services are much better and developed than many other countries.   

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