Business_Studies_Relationships

Business Sectors

Links/Relationship
between the 3 sectors
and challenges involved

Business Sector

Multiple Choice

In a case where bread is not available at a local supermarket due to the lack of flour caused by lack of rain. Which sector do you think has an issue that affects the other sectors?

• Primary Sector

• Secondary Sector

• Tertiary Sector

Multiple Choice

A shuttle service company that transports students from their homes to school operates in which sector?

• Primary Sector

• Secondary Primary

• Tertiary Sector

Multiple Choice

Adidas shoe manufacturing factory is an example of….sector

• Primary Sector

• Secondary Sector

• Tertiary Sector

Summary

• Primary sector : All natural or primary products. Extraction of raw materials.
• Secondary sector: This is the manufacturing or production sector where

primary goods ( raw materials) are made into finished products/ goods.

• Tertiary sector: This is known as service/ industry sector, where all finished

products are sold. This sector includes all businesses, health services, etc…

Relationship

• The primary sector sells raw materials to secondary sector. Sells raw

materials like pears to the tertiary sector to sell as fresh produce.

• The secondary sector buys raw materials from the primary sector to

manufacture. The secondary sector sells the manufactured/ finished goods
to tertiary sector to sell to consumer.

• The tertiary sector sells machinery to primary and secondary sectors to use

to manufacture or extract raw materials.

• The three sectors work together to create an economic chain of production.

Examples

Examples continue

• Both the primary and secondary sectors depend on the tertiary sector for

services such as insurance and the transportation of goods. Below is an
illustration:

Challenges sectors face

• Dumping : Dumping is the practice of a country selling goods to another

country at a lower cost ( less money ) then its domestic cost. ( exporting)

• A result of this would be that the importing country gets goods at an

affordable price.

Challenges continue…

• Load-shedding : Occurs when controlled power cuts are put in place to

secure that South Africa’s power grid remains stable. This is done to prevent
a national blackout.

• This causes a delay in business and the businesses production process.

Challenges continue…

• Strikes: Legal action taken by employees against their employer over disputes

such as wage increases. There are different types of strikes. A strike can also
be defined as action taken by organization's for unmet needs/ demands.

• Strikes affect the production of a business as employees may stay away

leading to no production taking place.

Integration

• When businesses sell goods or services to businesses in the same sector or

to businesses in another sector, we call this the forward link.

• When businesses buy good or services from businesses in the same sector or

from other businesses in another sector, we call it the backward link.

• It is important to know the above as businesses are interdependent, which

means they need each other to carry out their own responsibilities.

• When businesses in different sectors combine we call this vertical

integration.

• When businesses in the same sector are combined or acquired we call this

horizontal integration.

Integration continues

• Forward integration is a strategy used by businesses to gain control or

ownership over their previous customers.

• Vertical integration is a strategy used by businesses to gain control over

suppliers to increase its power in the market place.

• Backward integration is a strategy used by businesses to gain control or

ownership over their suppliers. All of these are management control
strategies.

Examples

• A business column is an example of vertical integration.
• When a fruit farm buys the canning factory forward integration occurs.
• When the canning farm buys the fruit farm backward integration occurs.
• When Shoprite and Checkers combined horizontal integration occurred.

• There are a series of stages that products and services have to go through

before reaching the final consumer.

• The manufacturing of a product can involve and usually involves more then

one industry.

• When we look at a business column it shows the various stages:

QUIZ TIME!

Multiple Choice

What type of link/integration is described below?

A manufacturing company may provide a mining company with machinery and equipment it needs to operate its busines

• 
  Backwards integration

• Horizontal integration

• Vertical integration

• Forward integration

Multiple Choice

What type of link/integration is described below?

Apple trees are planted, grown and harvested in the primary sector; they are going to be used in the secondary sector to process the fruit into canned fruit.

The fruits are placed in cans and are distributed to the retailers for selling

The goods are then transported to the retailers who sell it to the customers.

• Backward integration

• Forward integration

• Vertical integration

• Horizontal integration

Fill in the Blank

______ Is known as the extraction sector

Multiple Choice

Also known as the service/industry sector

• Primary sector

• 
  Insurance sector

• tertiary sector

• 
  Banking sector

Multiple Choice

Identify the sector

• Primary Sector

• Secondary Sector

• Tertiary Sector