4 Types of Business Sector You Need to Know

The business sector is divided into four types: primary, secondary, tertiary, and quaternary. Each consists of many businesses, ranging from small businesses to large businesses. And, in each sector, we can see the many industries in which the business operates.

How is the sector different from the industry? Yes, here are the definitions for both:

• Industry – consists of businesses with similar products and competing directly with each other. In an industry, firms compete directly. For example, Toyota and Ford in the automotive industry. However, they can compete indirectly with businesses in other industries. For example, companies in the aviation industry compete indirectly with companies in the railroad business to serve passenger transportation.
• Sector – a group of industries with certain characteristics. For example, the manufacturing sector consists of various industries such as the food industry, the beverage industry, and the clothing industry. They have something in common, namely, processing input into the final output. For example, the food industry differs from the agricultural sector in that it does not produce agricultural commodities. Instead, the food industry buys raw materials from companies in the agricultural sector and then processes them.

Primary sector

The primary sector includes various businesses involved in extracting or harvesting products from nature. They produce commodities for raw materials in the secondary sector. Some are also for final consumption, such as staple foods.

The primary sector includes a variety of sub-sectors, including:

• Agriculture
• Forestry
• Fishery
• Excavation
• Mining

Simple processing activities such as packaging and processing of raw materials are also considered part of this sector.

Secondary sector

The secondary sector includes various businesses involved in processing raw materials into outputs. Output can be finished or semi-finished goods. Semi-finished goods then go into other businesses in this sector. So, overall, this sector produces the final output.

The secondary sector consists of manufacturing, construction, and utility businesses. Then, for a manufacturing business, it can be very diverse, for example:

• Foods
• Beverages
• Tobacco products
• Textile
• Apparel
• Paper
• Base metal
• Electronic
• Furniture

You can see the details from the International Standard Industrial Classification (ISIC).

Tertiary sector

The tertiary sector includes various businesses involved in providing services. They provide commercial services to businesses in the primary and secondary sectors and to the general public. They include:

• Wholesale and retail
• Warehousing and logistics
• Transportation
• Bank
• Insurance
• Restaurant
• Hotel

In developed countries, businesses in this sector account for a significant share of the economy’s output and employment.

Quarter sector

The quaternary sector is an intellectual-based service sector. Examples are computing services, information technology, research and development, and internet services. Some classifications may still categorize it as a tertiary sector. However, this sector has become a separate sector in developed countries because of its significant contribution to the economy.

Businesses in this sector provide services to the other three sectors. For example, information technology companies provide their services to manufacturing companies, agribusiness companies, and companies in the tertiary sector such as banking and hotels.

What to read next

• Circular Flow of Income: Types and Descriptions
• Economic Actors: Types and Roles
• Macroeconomic Sector: Types, Roles
• Government Sector: Meaning, Budget, and Impact on the Economy
• Household Sector: Definition and Role in the Economy
• Business Sector: Meaning, Types of Companies
• External Sector: Its Effect on the Economy
• 4 Types of Business Sector You Need to Know
• How Does the Government Play A Role In the Economy?