Understanding the Classification of Businesses

• Business
• Secondary Education

Classification of Businesses

Year 10 IGCSE Business

In this lesson

You will be able to: 

• define primary, secondary and tertiary sectors
• classify businesses into the primary, secondary, and tertiary sectors 
• understand their relative importance.

Classification of Businesses

Businesses can be classified into three main sectors: 

• primary 
• secondary
• tertiary

Primary Sector

The primary sector involves activities that directly extract or harvest natural resources from the environment.

This stage involves the Earth’s natural resources. Activities in the primary sector of industry include farming, fishing, forestry and the extraction of natural materials, such as oil and copper ore.

Secondary Sector

The secondary sector involves activities that transform raw materials into finished goods through manufacturing or construction processes. 

This stage involves taking the materials from the primary sector and converting them into manufactured or processed goods. Activities in the secondary sector of industry include building and construction, aircraft and car manufacturing, computer assembly, bread baking.

Tertiary Sector

The tertiary sector involves activities that provide services to individuals, businesses, or other organisations.

This stage involves providing services to both consumers and other businesses. Activities in the tertiary sector of industry include transport, banking, retail, insurance, hotels and hairdressing.

What sector are these businesses?

Importance of Sectors

Usually the three sectors of the economy are compared by:

» percentage of the country’s total number of workers employed in each sector

or

» value of output of goods and services and the proportion this is of total national output.

Importance of Sectors

In some countries, primary industries such as farming and mining employ many more people than manufacturing or service industries. These tend to be countries – often called developing countries – where manufacturing industry has only recently been established. 

Countries which have developed these methods are often called industrialised countries.

Research two countries

Which sector of industry is most important in your country? Research:

» percentage of the country’s total number of workers employed in each sector

or

» value of output of goods and services and the proportion this is of total national output.

Create a poster

In groups choose a country which is not your own. Research the different sectors in that country and examples of the different companies which exist in those sectors.

Summary

In summary, businesses can be classified into primary, secondary, and tertiary sectors based on their economic activities. The relative importance of these sectors varies across different economies.

Reflection

Take a moment to reflect on what you have learned about the classification of businesses. How do the primary, secondary, and tertiary sectors contribute to the overall economy?

Activity: Classifying Businesses

Divide into groups and classify the following companies into the primary, secondary, or tertiary sector: 1) Apple Inc., 2) ExxonMobil, 3) Starbucks, 4) Ford Motor Company.

Quiz Time: Economic Sectors

Test your knowledge! Answer the following questions to assess your understanding of the classification of businesses into economic sectors.

Further Exploration

Research and find examples of companies that operate within each sector in your local economy. Share your findings in the next class.

Write down 3 things you learned in this lesson.

Have students enter three things they learned in this lesson. With this they can indicate their own learning efficiency of this lesson.

Write down 2 things you want to know more about.

Here, students enter two things they would like to know more about. This not only increases involvement, but also gives them more ownership.

Ask 1 question about something you haven't quite understood yet.

The students indicate here (in question form) with which part of the material they still have difficulty. For the teacher, this not only provides insight into the extent to which the students understand/master the material, but also a good starting point for the next lesson.