🏗️ The three business sectors
Big Idea: Every business belongs to one of three sectors, depending on what stage of production it works in.
Primary sector
Businesses that extract raw materials from the earth. They deal with natural resources.
- Farming, fishing, mining, forestry, oil drilling
- The starting point — raw materials come from here
- Common in developing economies
Secondary sector
Businesses that process or manufacture raw materials into finished or semi-finished goods.
- Construction, car manufacturing, food processing, clothing production
- Takes raw materials and turns them into something useful
- Involves factories and production lines
If an exam asks you to 'define the secondary sector', say: it involves the processing and manufacturing of raw materials into finished goods.
Tertiary sector
Businesses that provide services rather than physical products.
- Retail, banking, education, healthcare, transport, tourism
- The biggest sector in most developed economies
- Directly serves consumers and other businesses
Example: A wheat farmer (primary) sells to a bread factory (secondary), which supplies a supermarket (tertiary).
📈 Sectoral change
As countries develop, the importance of each sector changes. This is called sectoral shift.
- Developing countries rely heavily on the primary sector
- As countries industrialise, the secondary sector grows
- Developed countries are dominated by the tertiary (services) sector
- Some businesses operate across multiple sectors (e.g. a coffee company that grows, roasts and sells)
Think of it like climbing stairs: countries move from primary → secondary → tertiary as they develop. 📊
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🔗 Sectors and operations decisions
The sector a business operates in affects its operations decisions — like what resources it needs, where to locate and how to manage quality.
- Primary: focus on natural resources, location near raw materials, seasonal factors
- Secondary: focus on production methods, economies of scale, machinery investment
- Tertiary: focus on customer experience, staff training, convenience of location
In exams, if you need to explain a business's operations, think about which sector it's in — this will guide your answer!