Updated: Feb 21
By primary, secondary or tertiary sectors
Almost anything and everything can become a business. Nobody would have thought of renting their room in their home like a hotel room before AirBnB.
As such, businesses are classified by their industrial sector - primary, secondary or tertiary through the goods and services they produce and sell. They are then classified by their ownership, that would indicate if they are incorporated or not.
A firm in a primary sector produces mostly from the use of natural resources, such as agriculture and mining. This would include farming, fishing, oil and gas, mining minerals and metals such as gold, logging and crop plantations.
They also make the most cost-effective raw material for production of goods and services as they are extracted from natural resources.
In the secondary sector, firms manufacture products using raw materials produced in the primary sector. The most common examples of products from the secondary sector are electronic components, construction equipments, machines and building materials and transport.
The tertiary sector consists of services by labour. Services produced are from human capital and complements the secondary and primary sector as the final stage of their production before being sold to consumers.
An example is how a farmer would need to engage a distributor to sell the crop the farm produces. An agreement would have to be made to set a price and payment terms. A lawyer, from the tertiary sector, would provide his service to draft a legal contract on behalf of the farmer to be signed by the distributor, who provides his service to transport and sell the crops to the markets in the city.
What are the examples of primary, secondary and tertiary sectors in the example?
Does the farmer, lawyer and distributor specialize? If yes, what do they specialize in?
Comment below to answer.