Section 1.2 Classification of Businesses Flashcards
What are the three sectors business is classified into?
Primary, secondary and tertiary
What is the primary sector?
The primary sector involves extracting or harvesting natural resources. It provides raw material to the secondary sector
Examples of primary sector.
Fishing, farming, forestry, mining
What is the secondary sector?
Firms that process and manufacture goods from natural resources
Examples of secondary sector.
Refining (oil refining), manufacturing (cars, chairs), construction
What is the tertiary sector?
Firms that supply a service to consumers and other businesses
Examples of tertiary sector.
Shops, restaurants, banks, cinemas, airlines
What is chain of production?
The production and supply of goods to the final consumer involves activities from primary, secondary, and tertiary sector businesses. The sectors depend on each other.
Example of chain of production,
Primary: Oil is extracted from underground
Secondary: Oil is refined to produce petrol or gas
Tertiary: The petrol or gas is delivered to the customer by gas stations
What is LCD?
Less developed country or developing country
What is MCD?
More developed countries or developed country
What are features of a developing country?
- Low income
- Low life expectancy
- Low levels of education and healthcare
- Mostly employed in the primary sector
What are features of a developed country?
- Manufactured goods are imported
- Improved standard of living
- Increased freedom
- Mostly employed in the tertiary sector
- Higher income
How can you identify a developing country by looking at the size of their business sectors?
Developing countries have a high percentage of people working in the primary than in the tertiary
How can you identify a developed country by looking at the size of their business sectors?
Developed countries have a high percentage of people working in the tertiary than in the primary
What is industrialisation?
The growing importance of the secondary sector and reduced importance of the primary sector
What is de-industrialisation?
The growing importance of the tertiary sector and the reduced importance of the secondary sector
How can higher incomes affect consumer behaviour?
Consumer demand better quality and a wider choice of products
How can better education affect consumer behaviour?
Consumers expect better products and know they can buy goods from different suppliers (in different countries through e-commerce)
How can more leisure time affect consumer behaviour?
The demand for leisure activities will increase
What is a mixed economy?
An economy where the resources are owned and controlled by both the private and public sectors
What is a private sector?
The part of the economy that is owned and controlled by individuals and companies for profit
What is the public sector?
The part of the economy that is controlled by the state or government
Examples of organisations in the private sector.
Sole traders
Limited companies
Partnerships
Franchises, joint ventures, social entreprises
Examples of organisations in the public sector.
Government departments
Public organisations
National industries
Who answers the three questions of what, how and whom to produce in the private sector?
What to produce: Consumer decide
How to produce: Firms want to make profit
For whom to produce: Consumer’s buying power
Who answers the three questions of what, how and whom to produce in the public sector?
What to produce: The government decides
How to produce: The government decides
For whom to produce: The government decides
