Classification of Businesses

Involves extracting raw materials from the earth.
Examples:
- Agriculture: Farming activities (food production, flowers, tropical fish). One of the most important activities for some countries.
- Fishing: Netting, trapping & trawling for fish; China is the world's largest fish producer.
- Forestry: Provides timber & protects the natural environment, providing access & facilities for the public & managing areas for wildlife.
- Mining & Quarrying: Extraction of raw materials such as coal, iron, salt.

Production involves the conversion of raw materials into finished and semi-finished goods.
Includes all manufacturing, processing, and construction.
Semi-finished goods are produced for other businesses & used for the production of finished goods, which are then sold to consumers.
In developed countries, the secondary sector has declined.

The largest olive-growing region in the world.
Many growers are small family businesses.
The Casillas family grows olives and sells their harvest to a local business that processes the olives into oil, much of which is exported.
Harvest time is between November and March.
They usually employ about 15 villagers to help out.
Marco Casillas is considering investing in harvesting machinery to reduce labor costs and remain competitive.
Primary vs. Secondary Sectors (in this case study):
- Primary sector: Olive growing by the Casillas family (farming).
- Secondary sector: Olives being processed into olive oil using machinery; cleaning process to ensure purity.
Agricultural Employment in Spain (1980-2010):
- Significant decline in the number of people employed in agriculture.
- Fallen from around 19% in 1980 to just under 5% in 2010.
Reason for the Decline:
- Advances in technology: Farmers may rely more heavily on machines due to the growing availability of affordable technology.
- Example: Marco Casillas considering purchasing harvesting machinery to reduce labor costs and remain competitive.

Businesses in all three sectors rely on each other.
Example:
- Cereal farmers (primary) rely on bakers (secondary) for their sales of wheat.
- Bakers depend on advertising agencies (tertiary) to produce newspaper adverts for their products.
In modern developed economies, interdependence is significant.

Different sectors grow and decline; the number employed in each changes over time.
Historical Context (UK):
- Before the Industrial Revolution: Most production in the primary sector.
- Mid-19th Century: Secondary sector expanded rapidly.
- Last 60 years: Tertiary sector expanded at the expense of agriculture and manufacturing (de-industrialization).

People prefer to spend income on services rather than manufactured goods.
Fierce competition in the production of goods from countries like China, India, & Brazil.
As countries develop, the public sector (mostly services) grows.
Advances in technology: Employment in manufacturing falls as machines replace people.

China is well-known for its manufacturing capabilities due to its cheap and large supply of labor.
Hisense is a large state-owned Chinese manufacturer of white goods, electrical goods, and related products.
Hisense also provides services such as product design, information technology services, and property management.
Hisense has opened two new research and development centers.
Changes in China's Economy:
- Significant changes in the proportion of people employed across the primary, secondary, and tertiary sectors between 1990 and 2015.
- 1990: 60% in agriculture, 22% in the secondary sector, and 18% in the tertiary sector.
- 2015: 28.3% in agriculture, 29.3% in the secondary sector, and 42.4% in the tertiary sector.
China's Economy Becoming More Balanced:
- Less dependence on agriculture in 2015 compared to 1990.
- Potential for future imbalance as it becomes more dependent on services.

Occurs in well-developed countries (e.g., USA, Germany, Japan, France).
Involves the decline of the manufacturing sector at the expense of the tertiary sector.
Many western-style economies have seen a sharp fall in manufacturing employment and a steady increase in services.

Change in consumer demand: Shift towards spending on services rather than manufactured goods (e.g., holidays, restaurants).
Competition in manufacturing: Fierce competition from developing countries (e.g., India, China, Thailand, Brazil) with cheaper production costs.
Growth of the public sector: Public sector mainly provides services (e.g., education, transport, healthcare).
Advances in technology: Machines replace people in manufacturing, leading to a fall in employment.

Hisense may rely on retailers and other distributors to sell its manufactured goods to consumers.

Difference between secondary and tertiary production:
- Secondary sector: Manufacturing and processing (conversion of raw materials into goods). Example: Hisense manufacturing white goods and electronic products.
- Tertiary sector: Provision of services. Example: Hisense providing IT and design services.
Evidence of a more balanced Chinese economy since 1990:
- Decrease in agricultural employment from 60% to 28.3%.
- Increase in tertiary sector employment from 18% to 42.4%.
- Increase in secondary sector employment from 22% to 29.3%.
Interdependence:
- Cereal farmers (primary) rely on bakers (secondary) for wheat sales.
- Bakers may depend on advertising agencies (tertiary).
- The transport industry (tertiary) relies on the oil industry (primary) for fuel.
What is de-industrialisation?
- The decline of the manufacturing sector and expansion of the tertiary sector
Causes of de-industrialisation:
- A change in consumer demand
- Competition in manufacturing
- Growth of the public sector
- Advances in technology