Chapter 7
Classification of business
1. Classification of business
Business activity is classified into 3 sectors.
1.1 Primary sector
Meaning : involves a range of farming, the extraction of raw materials from the
earth.
Eg. Agriculture, Fishing, Forestry, Mining
1.2 Secondary Sector
Meaning : Production involving the conversion of raw materials into finished and
semi-finished goods.
Eg. Car production, Textile, Engineering industries etc.
1.3Tertiary sector
Meaning : Production of services in the economy
Eg. Commercial services, Financial services, Household services, Leisure services
and transport
2. Changes in sectors
: The decline in manufacturing is called “ de- industrialisation”
Why has manufacturing declined in developed countries while services have
grown?
- People may prefer to spend more of their income on services than manufactured goods.
- This is fierce competition in the production of manufactured goods from developing
countries such as India, China, Brazil
- As countries develop, the public sector grows. Since the public sector mainly provides
services, this adds to the growth of the tertiary sector.
- Advances in technology mean that employment in manufacturing falls because
machines replace people.
