Classification of Businesses

Sorting by Economic Activity

• Production Steps (Chain of Production): How raw materials become finished goods.

• Shift in Industry (Sectoral Change): As countries get richer, businesses move to different sectors.

  • Poor countries: Focus on getting raw materials (primary sector).

  • Growing countries: More factories (secondary sector).

  • Rich countries: Focus on services (tertiary and quaternary sectors).

Sorting by Ownership (Public & Private)

• Public Sector: Government-owned, provides services.

• Private Sector: Private owners, want to make money.

• Privatization: Selling government businesses to private owners.

• Why Governments Own Businesses:

  • To make sure everyone gets important services.

  • To protect important industries and the country.

  • To create jobs and help the economy grow.