Business SUBUNIT 1.2

What is the definition of the primary sector?

The sector of the economy that involves the extraction and harvesting of natural resources. It includes all activities that take natural resources directly from the earth or sea.

Name 5 examples of primary sector activities.

Farming/agriculture, fishing, forestry, mining, oil and gas extraction, quarrying.

Give an example of farming in the primary sector.

Growing crops (wheat, vegetables, fruit) and rearing livestock (cattle, sheep, poultry).

Give an example of mining in the primary sector.

Extracting minerals, coal, ores, and precious metals from the ground.

Give an example of oil extraction in the primary sector.

Drilling for oil and natural gas.

Give an example of quarrying in the primary sector.

Extracting stone, sand, gravel, and clay.

What is the employment trend for the primary sector in developed countries?

Employment in the primary sector has DECLINED in most developed countries (e.g., UK, USA, Germany).

Give 3 reasons why primary sector employment has declined in developed countries.

Mechanisation (machines replacing workers), depletion of natural resources, cheaper imports from developing countries, higher wages in other sectors attracting workers.

What is the employment trend for the primary sector in developing countries?

Employment in the primary sector remains HIGH in many developing countries (e.g., parts of Africa, Asia).

What common mistake do students make about the primary sector?

Thinking the primary sector only means farming. It includes ALL extraction of natural resources

What is the definition of the secondary sector?

The sector of the economy that involves the manufacturing and processing of raw materials into finished or semi-finished goods. It transforms inputs from the primary sector into products.

Name 5 examples of secondary sector activities.

Car manufacturing, food processing, electronics manufacturing, textile manufacturing, furniture making, construction, brewing and bottling.

Give an example of manufacturing in the secondary sector.

Turning steel, rubber, and glass into vehicles (car manufacturing) OR turning wheat into bread (food processing) OR turning cotton into clothing (textile manufacturing).

Give an example of construction in the secondary sector.

Building houses, offices, factories, roads, bridges, dams, tunnels, airports.

What are utilities in the secondary sector?

Electricity generation, water treatment and supply, gas production and distribution.

What is the employment trend for the secondary sector in developed countries?

Employment in the secondary sector has DECLINED in most developed countries.

What is deindustrialisation?

The decline in manufacturing (secondary sector) as a proportion of total economic activity in a country, accompanied by growth in the tertiary sector.

Give 3 reasons for the decline (deindustrialisation) of the secondary sector in developed countries.

Cheaper labour costs in developing countries, automation and robotics replacing workers, businesses relocating production overseas (offshoring), shift towards service-based economies.

What is the employment trend for the secondary sector in newly industrialised countries?

Employment in the secondary sector remains HIGH in newly industrialised countries (e.g., China, India, Vietnam).

What common mistake do students make about the secondary sector?

Thinking the secondary sector only means factories. It also includes construction and utilities. Also forgetting that the secondary sector ADDS VALUE to primary sector products.

What is the definition of the tertiary sector?

The sector of the economy that provides services to individuals and businesses rather than producing physical goods.

Name 5 examples of tertiary sector services to consumers (B2C).

Retail (shops/supermarkets), hospitality (hotels/restaurants), leisure (cinemas/gyms), personal services (hairdressing/dry cleaning), healthcare (hospitals/clinics), education (schools/universities), banking/insurance, transport.

Name 5 examples of tertiary sector services to businesses (B2B).

Financial services (business banking, corporate insurance), professional services (legal advice, accounting, consultancy), marketing and advertising agencies, IT and technology services, logistics and distribution, cleaning and maintenance services, recruitment and HR services.

What is the employment trend for the tertiary sector in developed countries?

Employment in the tertiary sector has INCREASED significantly in developed countries. It employs over 80% of workers in some developed economies.

Give 5 reasons for the growth of the tertiary sector.

Higher incomes → more spending on services, technological changes creating new service industries, specialisation of businesses → outsourcing services, increased leisure time → more demand for entertainment and hospitality, ageing population → more demand for healthcare services.

What common mistake do students make about the tertiary sector?

Thinking the tertiary sector only includes shops and retail. It includes ALL services

What is the chain of production?

The sequence of activities from the extraction of raw materials to the delivery of a finished product or service to the final consumer.

What is the chain of production for bread?

Primary: Farmer grows wheat → Secondary: Mill processes wheat into flour; bakery bakes bread → Tertiary: Shop sells bread to customers; delivery service transports it.

What is the chain of production for a car?

Primary: Mining iron ore, extracting oil for plastics, farming rubber → Secondary: Steel made, car parts manufactured, car assembled → Tertiary: Car dealership sells car; mechanics service it; insurers provide cover.

What are the three economic sectors in order of the production chain?

Primary (Raw Materials) → Secondary (Manufacturing) → Tertiary (Services/Distribution).

What is interdependence between the three sectors?

The three sectors depend on each other: Primary supplies raw materials to Secondary, Secondary supplies manufactured goods to Tertiary, Tertiary provides services to support both Primary and Secondary.

How does the tertiary sector add value?

By providing services that make products more accessible or desirable

What is the definition of the private sector?

The part of the economy that is owned and controlled by private individuals or groups of individuals, rather than the government. Its main aim is usually to make a profit.

Give 5 examples of private sector business types.

Sole traders, partnerships, private limited companies (Ltd), public limited companies (PLC), franchises, co-operatives.

Give 2 examples of sole traders in the private sector.

A local newsagent, a plumber, a freelance graphic designer.

Give 2 examples of partnerships in the private sector.

A law firm, an accounting practice, a dental surgery.

Give 2 examples of private limited companies (Ltd) in the private sector.

A family-owned manufacturing business, a medium-sized retail chain.

Give 3 examples of public limited companies (PLC) in the private sector.

Tesco, Apple, Nike, HSBC (shares traded on stock exchange).

Give 2 examples of franchises in the private sector.

McDonald's, Subway, Domino's Pizza (owned by franchisees).

Give 2 examples of co-operatives in the private sector.

The Co-operative Group, John Lewis Partnership.

What are the typical objectives of private sector businesses?

Profit maximisation, sales maximisation/increasing market share, survival (especially for new businesses), growth, social objectives (for social enterprises), customer satisfaction.

How is the private sector funded?

Owner's own capital (savings/investments), loans from banks and other financial institutions, share capital (for limited companies), retained profits, venture capital.

What common mistake do students make about the private sector?

Thinking all private sector businesses aim to maximise profit. Some (like co-operatives and social enterprises) have other aims, though most aim for profit.

What is the definition of the public sector?

The part of the economy that is owned and controlled by the government (local, regional, or national). It provides goods and services that are considered essential or beneficial for society.

Give 5 examples of national government public sector services.

National Health Service (NHS)

Give 5 examples of local government public sector services.

Refuse collection and recycling, library services, street lighting and road maintenance, parks and leisure facilities, council housing (social housing), local planning and building control.

What are the objectives of public sector organisations?

Provide a service (ensure essential services are available to all), accessibility (regardless of income/location), equity (fair and equal access), quality (maintain standards), value for money (cost-effective), social objectives, national security.

How is the public sector funded?

Taxation (income tax, corporation tax, VAT, council tax), government borrowing (issuing bonds), charges for some services, National Insurance contributions (for health and pensions).

What common mistake do students make about the public sector?

Thinking the public sector never charges for services. Some public services charge fees (e.g., NHS prescriptions in some countries, museum entry fees, driving tests).

How does ownership differ between private and public sectors?

Private sector: owned by private individuals/shareholders. Public sector: owned by the government (local/national).

How does control differ between private and public sectors?

Private sector: controlled by owners/managers/directors. Public sector: controlled by government ministers/civil servants.

How does the main aim differ between private and public sectors?

Private sector: profit (usually). Public sector: provide service to the public.

How does funding differ between private and public sectors?

Private sector: owner's capital, loans, share capital, retained profits. Public sector: taxation, government borrowing, charges.

How does competition differ between private and public sectors?

Private sector: competitive markets. Public sector: often monopoly (sole provider) or limited competition.

Who are private sector businesses accountable to?

Private sector: accountable to shareholders/owners.

Who are public sector organisations accountable to?

Public sector: accountable to the public and government.

What common mistake do students make when comparing sectors?

Thinking the public sector NEVER competes with the private sector. In some areas they compete (e.g., private schools vs state schools, private hospitals vs NHS).

Give 5 reasons why the public sector exists.

Merit goods (services everyone should access regardless of ability to pay), public goods (non-excludable/non-rivalrous, e.g., street lighting, defence), natural monopolies (efficient to have one provider), strategic importance (national security), redistribution (reduce inequality through services), regulation and control.

What are merit goods?

Services that society believes everyone should have access to, regardless of ability to pay (e.g., education, healthcare). They have positive externalities for society.

What are public goods?

Goods that would not be provided by the private sector because they are non-excludable and non-rivalrous (e.g., street lighting, defence, lighthouses). The private sector cannot profitably provide them.

What are natural monopolies?

Industries where it is most efficient to have one provider due to high infrastructure costs (e.g., water supply, electricity transmission networks).

What is a merit good example and why is it provided by the public sector?

Education and healthcare

What is a public good example and why is it provided by the public sector?

Street lighting, defence, lighthouses

What is the definition of privatisation?

The transfer of ownership of a business or industry from the public sector to the private sector. A government sells state-owned businesses to private individuals or companies.

Give 3 examples of privatisation in the UK.

British Telecom (BT)

Give 4 arguments FOR privatisation.

Increased efficiency (profit motive encourages efficiency), competition (improves quality and lowers prices), investment (private sector can raise capital more easily), customer focus (must satisfy customers to survive), reduces government debt, innovation.

Give 5 arguments AGAINST privatisation.

Profit over service (may cut services to increase profits), monopoly risk (private monopolies may charge high prices), loss of strategic control (government loses control over essential industries), job losses, short-term focus (shareholders want short-term returns), inequality (services less accessible to low-income groups).

What common mistake do students make about privatisation?

Thinking privatisation always means selling to a single private company. Sometimes the government sells shares to the public (public offering) or sells to multiple private businesses.

What is the definition of nationalisation?

The transfer of ownership of a business or industry from the private sector to the public sector. The government takes over ownership and control of private businesses.

Give 3 examples of nationalisation.

Many UK industries were nationalised after World War II (coal, railways, steel, electricity). Some countries have nationalised banking, oil, or telecoms industries.

Give 4 arguments FOR nationalisation.

Strategic control (government controls essential industries), protecting jobs (keep loss-making businesses open), providing essential services (ensure everyone has access), preventing monopolies (stop private monopolies exploiting consumers), long-term investment (government can invest without needing short-term profits).

Give 4 arguments AGAINST nationalisation.

Inefficiency (state-owned businesses lack profit incentives), cost (buying businesses is expensive), lack of competition (state monopolies have no incentive to improve), political interference (decisions for political not business reasons), slower innovation.

What common mistake do students make about nationalisation?

Thinking nationalisation and privatisation are permanent. Countries can and do reverse these decisions over time.

What is a public corporation?

A business organisation owned and run by the government (state), established by an Act of Parliament (or equivalent legislation) to provide public services.

Give 3 characteristics of a public corporation.

Owned by the government, created by a specific Act of Parliament, has its own management structure, funded primarily by taxation (may charge for some services), accountable to government ministers and ultimately to Parliament.

Give 2 examples of public corporations.

BBC (British Broadcasting Corporation), Bank of England (historically), public utility companies (historically).

How does a public corporation differ from a government department?

Public corporation: has its own board/management, more operational independence, may raise some of its own revenue. Government department: run directly by ministers, direct government control, funded entirely by taxation.

What common mistake do students make about public corporations?

Thinking all public sector organisations are structured the same way. Public corporations are different from government departments

What is a Public-Private Partnership (PPP)?

A partnership between the public sector and private sector to deliver public services, where both share the costs, risks, and rewards. Also known as Private Finance Initiative (PFI).

Give 2 examples of Public-Private Partnerships.

Building and running hospitals

Give 4 advantages of PPPs.

Government gets infrastructure without paying upfront, private sector brings expertise and efficiency, risks are shared, private sector has incentive to complete projects on time and on budget.

Give 4 disadvantages of PPPs.

Government pays more in the long term due to private sector profits, contracts can be complex and expensive to negotiate, private sector may cut corners to increase profits, loss of public control over public assets.

What common mistake do students make about PPPs?

Thinking PPPs are the same as privatisation. PPPs are partnerships where the public sector retains some control and ownership

Define: Primary sector.

The sector of the economy that extracts and harvests natural resources (farming, fishing, mining, forestry, oil extraction).

Define: Secondary sector.

The sector of the economy that manufactures and processes raw materials into finished or semi-finished goods (factories, construction, utilities).

Define: Tertiary sector.

The sector of the economy that provides services to individuals and businesses (retail, healthcare, education, banking, transport).

Define: Chain of production.

The sequence of activities from the extraction of raw materials to the delivery of a finished product or service to the final consumer.

Define: Deindustrialisation.

The decline in manufacturing (secondary sector) as a proportion of total economic activity in a country, accompanied by growth in the tertiary sector.

Define: Private sector.

The part of the economy owned and controlled by private individuals or groups, usually aiming to make a profit.

Define: Public sector.

The part of the economy owned and controlled by the government, providing services for the public benefit.

Define: Privatisation.

The transfer of ownership of a business or industry from the public sector to the private sector.

Define: Nationalisation.

The transfer of ownership of a business or industry from the private sector to the public sector.

Define: Public corporation.

A business organisation owned and run by the government, established by legislation to provide public services.

Define: Public-Private Partnership (PPP).

A partnership between the public and private sectors to deliver public services, sharing costs, risks, and rewards.

Which sector is farming in

private or public?

Which sector is car manufacturing in

private or public?

Which sector is healthcare in

private or public?

Which sector is retail in

private or public?

Which sector is education in

private or public?

Which sector is oil extraction in

private or public?