Sectors

Businesses that operate within the primary sector extract and harvest natural products from the land to collate raw materials and natural resources which are then sold on to other businesses who manufacture products or provide services.  For example, metal ores and coal have to be mined, oil and natural gas have to be drilled from the ground, rubber needs to be extracted from trees, foodstuffs need to be farmed, livestock need to be managed by farmers, and fish need to be trawled. Hence, primary sector production is also known as extractive production. 

The primary sector is essential and provides the foundations for the majority of businesses across all sectors and industries. 

Examples of primary sector output include:

The secondary sector refers to business activity involved with the manufacturing or construction of finished products. It encompasses transforming primary sector output into finished goods, ready for sale or use by the consumer. For instance, plastics need to be made from using oil. It also includes businesses that are involved in transforming other secondary sector output into finished goods, such as assembling the component parts of motor vehicles, laptops, or smartphones.

The tertiary sector refers business activity that involves providing services to customers, i.e., consumers and business clients. 

On a B2B (business to business) basis, these services typically support the production and distribution processes of other businesses such as advertising and marketing, transport, or healthcare etc. Alternatively, services can also be provided on a predominately B2C (Business to Customer) basis, examples include cinemas, supermarkets and beauty salons.

Tertiary sector output is the predominant sector in economically developed countries (or high-income economies). The tertiary sector of the economy accounts for the majority of gross domestic product (GDP) and employment in these countries. This is because the added value of tertiary sector output is very high. For example, households are generally willing to pay the high prices charged by a plumber to fix a leaking water pipe because the plumber provides high added value services to the consumer by fixing the leak, something that the consumer has no expertise or time to complete.

Examples of tertiary sector business activities include:

The quaternary sector (often referred to as the knowledge economy) is similar in nature to the tertiary sector as businesses in this sector also provide services.  In fact, 76% of the UK’s workforce is employed across the tertiary and quaternary sectors (BBC, 2021). However, businesses which provide services in the quaternary sector typically provide information services such as consultancy, research and development, data collection, specialised financial services, or professional bloggers. As such, the quaternary sector is defined as business activity involving the creation or sharing of knowledge and information. It involves the generation and exploitation of knowledge in wealth creation of the economy, rather than traditional industries that use natural resources or physical labour. Businesses operating in these knowledge-based industries deal with digital information and communications technology (ICT), research and development (R&D), and other high-level services.

Examples of production activities in the quaternary sector include:

The added value is extremely high in the quaternary sector. For example, each year, many students (or their parents) are willing to pay very high tuition fees charged by higher education establishments and universities. The table below highlights some of the differences between professions, businesses and industries in the tertiary and quaternary sectors: