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Summary AS Business Structure
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Typed out summary of business structure, summary of whole chapter, in colour and with simplified explanations and examples
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AS level business (9060)Business structure
2.1 Economic Sectors
Business activity produces a range of goods and services, able
to classify them into four categories.
• Primary sector business activity: firms engaged in farming,
fishing, forestry, mining and other industries that extract
natural resources so that they can be used and processed
by other firms.
• Secondary sector business activity: firms that manufacture
and process products from natural resources
• Tertiary sector business activity: firms that provide
services to consumers and other businesses
• As well as the quaternary sector
• The balance of these sectors in the economies of different
countries varies substantially. It depends on the level of
industrialisation in each country.
Changes in relative importance of economic sectors
The classification of business activity by economic sectors has
two features: changes over time and variations between
different economies.
1. The importance of sectors changes over time
§ The importance of each sector in an economy changes
over time. The growing importance of secondary sector
manufacturing industries in developing countries is called
industrialisation.
§ The relative importance of each sector is measured in
terms of either employment levels or output levels as a
proportion of the whole economy.
2.1. Consequences of industrialisation: benefits
, § Total national output (GDP) increases and this raises
average standards of living.
§ Increasing output of goods can result in lower imports
and higher exports
§ Expanding manufacturing businesses will result in more
jobs being created.
§ Expanding and profitable firms will pay more tax to the
government.
§ Value is added to the country’s output of raw materials,
rather than just exporting unprocessed goods
2.2 Consequences of industrialisation: problems
§ The chance of work in manufacturing can encourage
people from the countryside to move into the towns, which
leads to housing and social problems.
§ Imports of raw materials and components are often
needed, which increases the country’s import costs.
§ Much of the growth of manufacturing industry is due to the
expansion of multinational companies. These can have a
negative impact on the economy too.
Þ In developed economies, there is a decline in the
importance of secondary sector activity and an
increase in the tertiary sector - deindustrialisation.
• Rising incomes associated with higher living standards
have led consumers to spend much of their extra income
on services rather than more goods.
• Manufacturing businesses in developed countries face
much more competition as a result of increasing global
industrialisation.
3. Consequences of deindustrialisation
§ the increase in relative importance of the tertiary and
quaternary sectors include:
§ job losses in agriculture, mining and manufacturing
industries
§ movement of people towards towns and cities
• job opportunities in service industries
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