Classification of Businesses 

Businesses can be classified into three sectors: 

➔ Primary sector: this involves the use/extraction of natural resources. Examples include agricultural activities, mining, fishing, wood-cutting (forestry), oil drilling etc. 

➔ Secondary sector: this involves the manufacture of goods using the resources from the primary sector. This is the conversion of raw materials into finished goods or semi-finished goods. Examples include auto-mobile manufacturing, steel industries, cloth production etc. 

➔ Tertiary sector: this consists of all the services provided in an economy. This includes hotels, travel agencies, hair salons, banks etc. 

Interdependence 

Businesses in each sector of the three sectors above are likely to be independent. This means they rely on each other. 

Changes in Sectors 

The number of individuals employed in each industry does not stay constant. Different industries experience growth and decline over time.

Why has manufacturing declined in developed countries while services have grown? 

People prefer spending more on their services than on manufactured goods. 

There is fierce competition in the manufacturing countries such as India, China and Bangladesh. The public sector expands when countries develop, and because the public sector mostly offers services, this contributes to the growth of the tertiary sector. 

Manufacturing jobs are being lost as a result of technological advancements, as machines take their place.