Cambridge AS A Level Business Studies/ ZIMSEC Advanced Level Business Studies/ Business Enterprise Skills Notes: Levels of Economic Activity
- Just as the economy can be divided into three sectors (primary, secondary and tertiary)
- So can business activity/operations be divided into three levels of activity namely:
- These are also known as the three levels of economic activity
- It is important to note that while most businesses confine themselves to the same sector some businesses span several sectors
- So we can have a business that is in the primary sector but also has operations in the tertiary and secondary sectors more on that later
Primary level businesses/business activity
- It is made up of businesses that are involved in the extraction of raw materials
- There is minimal conversation of these raw materials usually this takes the form of breaking down the resource into smaller sizes so that it can be extracted or activities like harvesting or milking
- This makes up the largest sector of developing economies such as that of Zimbabwe
- The primary sector provides essential raw materials to other sectors of the economy
- For example fuel for Transport and Raw materials for manufacturing.
- It provides food that is used to feed the personnel in each sector.
- It also makes its own contribution to the Gross Domestic Product thus leading to an increase in the standards of living.
- Some raw materials are exported to other countries earning essential foreign currency for Zimbabwe
Secondary level businesses
- Refers to all businesses which manufacture and process the raw materials which can be used by the end consumers are known as Secondary Sector businesses.
- These include building, construction, compute assembly, shoe factories, textile factories etc.
- Examples of businesses in this industry include Unilever, Astra Paints, Lobels Bread etc
- The primary sector adds value to processed raw materials
- It makes them usable by the end consumers or by other industries, for example, copper wires are used in manufacturing electronic and electrical equipment.
- Finished goods can be exported to other countries thus earning foreign currency.
- The Secondary industry increases Zimbabwe’s GDP and leads to an increase in the standards of living.
- Exporting processed goods instead o raw materials minimises the possibility of imbalances in trade and thus lead to the development of Zimbabwe.
Tertiary level Businesses
- Are all those businesses which provide services and assist both the primary and secondary sector businesses can be classified as Tertiary sector businesses.
- These include transportation, insurance, hospitals, educational institutes, showrooms etc
- Examples include the University of Zimbabwe, Midlands State University etc.
- The tertiary industry provides essential services to the other sectors thus leading to development.
- Without Transport for examples goods would not be transported from the source to destination markets.
- Warehouses provide storage and other services to the other sectors of the economy.
- Advertising enables sellers to communicate with buyers.
- Banking provides essential financial services.
- Insurance provides essential functions such as indemnifying customers and businesses against incidental losses.
- Communication services enable various entities within the economy to communicate with one another. Studies have shown a correlation between broadband (part of communication) usage and the development of a country (GDP).
- Other services such as Hotels also play a crucial service by bringing in foreign currency into the country through for example tourism.
- As has already been said a business can span more than one or even all the sectors
- For example, a business can own a mine, a processing plant that turns this mines ore into say iron and steel and a transport business
To access more topics go to the Advanced Level Business Studies page
To access more topics go to the ZIMSEC Business Enterprise and Skills page
To access more topics go to the Cambridge AS A Level Business Studies page
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