1.2 Classification of businesses Flashcards
What are the three sectors businesses are classified into?
Primary Sector
Secondary Sector
Tertiary Sector
What does the Primary Sector do?
It extracts natural resources from the earth (like farming, mining, fishing) to produce raw materials for other businesses.
What does the Secondary Sector do?
It takes the raw materials from the primary sector and manufactures goods (like factories that turn raw materials into products).
What does the Tertiary Sector do?
It provides services to people and other businesses (like shops, banks, or healthcare).
What is the situation in Developing Countries?
In developing countries, the Primary Sector is the most important because many people work in agriculture, mining, etc.
What is the situation in Developed Countries?
In developed countries, the Tertiary Sector is the most important, with services like education, healthcare, and finance making up a large part of the economy.
What is De-industrialisation?
This is when the Secondary Sector (manufacturing) becomes less important in a country’s economy over time.
Why does the importance of sectors change over time?
Depletion of natural resources in the Primary Sector.
Competition from newly industrialised countries.
People in developed countries spend more on services (like travel, entertainment) than on manufactured goods.
What is a Mixed Economy?
A mixed economy has both a Private Sector (businesses not owned by the government) and a Public Sector (businesses owned by the government).
What does the Private Sector do?
Businesses in the Private Sector are owned by individuals or companies, and their main goal is to make profit.
What does the Public Sector do?
The Public Sector is owned and run by the government, and its goal is to provide services (like healthcare, education, and transport) to people.
What is Privatisation?
Privatisation is when the government sells a Public Sector business to a Private Sector business.
What are the Arguments for Privatisation?
The private sector can control costs better because their goal is profit.
Private businesses can be more efficient in how they use money and resources.
Competition between private businesses can lead to better quality products.
What are the Arguments against Privatisation?
Unemployment can rise because private businesses may cut costs by firing workers.
Private businesses may not focus on social goals, like helping poor people.
How can we classify businesses in a Mixed Economy?
Private Sector: Owned by individuals or companies (like shops, restaurants, tech companies).
Public Sector: Owned by the government (like hospitals, schools, public transport).
