top of page

How are businesses classified?

Updated: Jun 25, 2023

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.

Primary Sector

A firm in a primary sector produces mostly from the use of natural resources, such as agriculture and mining. This would include farming, hunting, 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.

Secondary Sector

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.

Example of secondary sector businesses are such as Tesla, Apple, Foxconn and Samsung. Tesla produces cars from electrical components produced by other secondary sector businesses

Tertiary Sector

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.

Example of tertiary sector businesses are like restaurants and universities, where businesses are paid for services provided by employees and employees are paid wages. Shops in shopping malls are also tertiary sector businesses as workers sell products such as washing machines (secondary sector) to customers.

What are other examples of primary, secondary and tertiary sectors businesses?


  1. Specialization

  2. Industrial Structure



  1. Define ‘primary sector’. (2 marks) May/June 2021/12

  2. Define ‘secondary sector’. (2 marks) Oct/Nov 2021/12

  3. Identify two classifications of business sector activities (2 marks) Oct/Nov 2018/12

  4. Do you think selecting employees with the right personality is more important than their experience for a tertiary sector business? Justify your answer. (6 marks) May/June 2020/13

  5. Do you think using renewable energy is the best way for a tertiary sector business to contribute to sustainable development? Justify your answer. (6 marks) Feb/Mar 2021/12

  6. State two factors that a service sector business should consider when deciding where to locate. (2 marks) May/June 2021/11

  7. Do you think it is better for a tertiary sector business to use full-time employees rather than part-time employees? Justify your answer. (6 marks) May/June 2021/12

  8. Do you think the number of employees is the best way to measure the size of a tertiary sector business? Justify your answer. (6 marks) Oct/Nov 2021/12

  9. Explain two non-financial methods a small tertiary sector business could use to keep its employees well-motivated. Justify which method should be chosen. (6 marks) Oct/Nov 2021/13

  10. Explain two ways a business in the primary sector might contribute to sustainable development. Which do you think is the best way? Justify your answer. (6 marks) Oct/Nov 2022/13

Related Posts

See All


bottom of page