Chapter 9 - Sectors Flashcards
1
Q
Name THREE types of business sectors
A
Primary Sector
- The primary sector deals with raw materials and natural resources
- Goods are sold in their raw state and the processing and packaging does not change the product in any way
- Mining, fishing, agriculture, forestry and farming
Secondary Sector
- All secondary sector manufactures and processes raw materials into final goods
- All manufacturing, processing, construction and engineering fit into the secondary industry
- The final goods are sold to the consumer
- Vehicle manufacturing ship building, clothing and food processing
Tertiary Sector
- The tertiary sector is also known as the service industry and includes all industries that offer services to other businesses and consumers
- The services may include distribution, transportation, banking, insurance, retail, entertainment and tourism
- This is where intermediaries are found - linking the product with the customer
- Retail outlet shops, transport companies, electricians, doctors, and consultants
2
Q
- State the extent of control businesses have over each environment
A
- State the extent of control businesses have over each environment e.g.
- micro: full control,
- market: little control can influence
- macro: no control.
3
Q
Name the three business environments
A
Micro
8 business functions, vision and mission, objectives and goals, organisational culture, organisational resources, management and leadership
Market
Customers, suppliers, competitors, regulators, unions, intermediaries
Macro
Institutional, economic, technological, political, physical/nature, global and social, cultural and demographic
4
Q
Micro & Primary
A
- The way the business is managed and structurally organised can create more efficient purchasing and distribution of raw materials to customers
- Training of employees and workers and better use of business resources can lead to improved productivity in the purchasing and distribution or raw materials
- Planning and precautionary measures against natural disasters such as floods, fire and drought can prevent loss of produce
5
Q
Micro & Secondary
A
- Changing the method of production and efficiency can improve the business’s profits as the processing of raw materials becomes more cost-effective
- Improving the skills of employees involved in the manufacturing process through training and development will improve productivity
- Improving the skills of leadership and management can allow the business to grow as highly skilled leaders and managers create efficient and cost-effective manufacturing processes that produce high quality goods
- Improving capital goods and the quality of raw materials used in the process can improve the quality of the product
- Diversifying the product can expand the business’s share of the market
6
Q
Micro & Tertiary
A
- Well-trained and skilled staff will improve the quality of the service provided to customers and the efficiency of service
- Research and development can be used to improve the service delivery methods and communication within the business and with customers
- Diversifying the service offered and improving on the current service could attract a bigger market
- Precautionary measures such as insurance against unforeseen circumstances will reduce risk associated with a business’s dependency on human and other suppliers to provide services to customers
- Improving the business culture and the business’s image in the market will motivate employees to deliver the best possible service and lead to increased market share and customer retention
7
Q
Market & Primary
A
- Supply and demand for goods influences prices, business who are growing or extracting raw materials to keep input costs low if they wish to compete in a price-sensitive market
- If a raw material is in short supply, and there is not much competition, the supplier can increase the price
- If a raw material is a key ingredient in as essential product, such as wheat in bread, then suppliers can continue to increase their prices with little price resistance from bread manufactures
- A key input-cost for any business is the price of labour/human resources, many raw material industries are unionised
- Trade unions play a key role therefore in determining the cost of labour
- Specialised labour specialist may be in short supply and may be able to demand higher wages
8
Q
Market & Secondary
A
- Businesses are impacted by the supply of and demand for their product, over supply of bread in the market will mean bread prices will be low
- The supply of raw materials also impacts the price of the final product, if the price of wheat increases the price of bread will increase – price fixing
- A secondary sector businesses are in the middle of the supply chain, they are vulnerable to the costs that are added on by intermediaries , business in the secondary sector can reduce costs by dealing directly with suppliers
- Trade unions may drive up the price of labour through strikes and regulations that set standards for the production of goods and their ultimate quality can force businesses to invest in expensive technology
- Marketing and advertising can influence the choices that customers make
9
Q
Market & Tertriary
A
- The supply and demand for a particular service in the tertiary sector will impact on the cost to the business and the price at which it must sell the service to make a profit
- The number of competitors in a service industry and the price and quality of the service they provide will in turn influence the price at which a service business can sell their service and the share of the market they can obtain – competitive advantage
- Break in supply when unionised employees go on strike, trade unions drive up input costs as they negotiate increase salaries and wages form employees in this sector
- Entry into certain industries in the tertiary sector may be influenced by an oversupply in that industry as well as the large amounts of capital required – banking and insurance
- The supply and demand for a particular service in the tertiary sector will impact on the cost to the business and the price at which it must sell the service to make a profit
- The number of competitors in a service industry and the price and quality of the service they provide will in turn influence
10
Q
Macro & Primary
A
- Government or industry regulations can impact costs, efficiencies and ultimately the price of raw materials
- Globalisation is a big influence on all sectors. In the tertiary sector, the supply of cheap raw materials from farmers in other countries, for example, can mean that SA farmers must sell their raw materials at low prices which may mean they need to supply at a loss
- The increased concern about global warming and the need to produce raw materials sustainably influences for example farming practices
11
Q
Macro & Secondary
A
- In the secondary sector, government or industry regulations can impact costs, efficiencies and ultimately the price of goods – SABS
- The supply of cheap raw materials from farmers in other countries can mean that South African manufacturers can source raw materials at a lower cost than local competitors and in turn charge less for their products
- The political environment and the values and goals of the current government have a large impact on practices in the secondary sector too, a key example of post-apartheid government policy that has influenced practices in secondary sector businesses is the EEA which has required that manufacturers upskill staff as well change the balance of the groups who are employed in favor of previously disadvantaged groups
- The increased concern about global warming and the need to produce goods sustainably influences the ways in which manufacturers make their products and the types of inputs they use - manufacturers try to reduce the amount of electricity they consume
- Research into improved manufacturing processes and the use of technology to increase efficiencies is made easier by the access to research and practices in other countries
12
Q
Macro & Tertiary
A
- In the tertiary sector government of industry regulations can also impact cost demand and ultimately the price of goods
- Globalisation enables service industries to access skills needed for their services from other countries, not only does this enable them to price competitively but it also enables them to insure against the risks of a short supply of key skills in the country in which they are supplying the service – call services
- The political environment and the values and goals of the current government impacts the service industry in much the same way it influences the other two sectors
- Businesses in the tertiary sector are not growing and manufacturing raw materials and goods, but depend on those two sectors to produce sustainably
- Global advances in technology and increased access to this via improved telecommunication and Internet services can
