Executive Summary: Page - 1

EXECUTIVE SUMMARY
Business is a major economic activity in all modern societies concerned as it is with
the production and sale of goods and services required by people. The purpose behind
most business activities is to earn money by meeting people’s demands for goods and
services.
All human beings, wherever they may be, require different types of goods and
services to satisfy their needs. The necessity of supplying goods and services has led
to certain activities being undertaken by people to produce and sell what is needed by
others.
Business is central to our lives. Although our lives are influenced by many other
institutions in modern society such as schools, colleges, hospitals, political parties and
religious bodies, business has the major influence on our daily lives. It, therefore,
becomes important that we understand the concept, nature and purpose of business.
From the study, we will try to understand
1. What is business economics?
2. The different economic sectors
3. Economic sectors and their contribution to the GDP of a country.
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1. Introduction
1.1 Definition of Business
The term business is derived from the word ‘busy’. Thus, business means being busy.
However, in a specific sense, business refers to any occupation in which people
regularly engage in an activity with a view to earning profit. The activity may consist
of production or purchase of goods for sale, or exchange of goods or supply of
services to satisfy the needs of other people.
Business activities can be classified in to two categories
i. Industry: Is concerned with the production or processing of goods and

materials.
ii. Commerce: Facilitate the exchange of goods and services.
1.2 Definition of Economics
The word ‘economy’ comes from Greek word oikonomos, which means for ‘one who
manages a household’. Economics is a social science concerned with the production,
distribution, and consumption of goods and services. It studies how individuals,
businesses, governments, and nations make choices about how to allocate resources.
Economics activities can be broadly classified into two groups,
i. Economic: Are those by which we can earn our livelihood

ii. Non-economic: Are those performed out of love, sympathy, sentiment,
patriotism, etc.
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1.3 Characteristics of Business Activities
1. An economic activity
Because it is undertaken with the objective of earning money or livelihood
2. Production or procurement of goods and services
Every business enterprise either manufactures the goods it deals in or it
acquires them from producers, to be sold to consumers or end users. Services
may include facilities offered to consumers.
3. Sales or exchange of goods and services for the satisfaction of human needs
Directly or indirectly, business involves transfer or exchange of goods and
services for value.
4. Profit Earning
One of the main reasons of business is to earn income by way of profit.
5. Uncertainty of returns
Every business invests capital to run its activities. There is always a possibility
of losses being incurred, in spite of the best efforts put into.
6. Element of risk
It is caused by some unfavorable or undesirable events
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2. Sectors of the Economy
The main sectors of the economy are:
1. Primary sector: Extraction of raw materials

e.g. mining, fishing and agriculture
2. Secondary / manufacturing sector: Concerned with producing finished goods,
e.g. construction sector, manufacturing and utilities.
3. Service / ‘tertiary’ sector: Concerned with offering intangible goods and
services to consumers
e.g. retail, tourism, banking, entertainment and I.T. services
4. Quaternary sector: Concerned with the intellectual aspects of the economy
e.g. knowledge economy, education, research and development
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Business
Industry Commerce
Primary Secondary Teritiary Quaternary Trade
Extractive Manufacturing Banking Education Internal External
Genetic Construction Warehousing R&D Wholesale Import
Tourism Retail Export
Entertainment Entrepot
Transportation
IT Services
Fig 1. Economic Sectors
2.1 Primary Sector

This sector includes all those activities which are concerned with the
extraction and production of natural resources and reproduction and development of
living organisms, plants, etc.
Primary sector makes up for large portion of the economy of developing countries as
the economy is dependent on it. It is a proven fact that once a country starts
developing, its reliability on primary industry starts decreasing and dependence on
secondary and tertiary industries start increasing.
People engaged in the primary industries are called red-collar
Examples of primary sector are
1. Agriculture
2. Forestry
3. Mining
4. Fishing
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5. Diary
2.2 Secondary Sector
This sector concerns with using materials which have already been extracted
at the primary state. Industries under this sector process goods for final consumption
or for further processing by other industrial units.
The secondary sector is often considered a bridge between both the primary and
tertiary sectors. Industries in this sector help in the growth and prosperity of countries.
They help in generating opportunities for employment.
People working in secondary industries are

called blue collar workers
Types of Secondary industries
1. Light Industry
Eg: Textile mills, distilleries, food
factories, etc.
2. Heavy Industry
Eg: Glass, chemical, industrial machinery,
iron and steel industries, etc.
2.3 Tertiary Sector
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EXECUTIVE SUMMARY

Business is a major economic activity in all modern societies concerned as it is with

From the study, we will try to understand

1. What is business economics?

2. The different economic sectors

3. Economic sectors and their contribution to the GDP of a country.

1.1 Definition of Business

Business activities can be classified in to two categories

i. Industry: Is concerned with the production or processing of goods and

1.2 Definition of Economics

Economics activities can be broadly classified into two groups,

i. Economic: Are those by which we can earn our livelihood

1. Primary sector: Extraction of raw materials

Primary Secondary Teritiary Quaternary Trade

Extractive Manufacturing Banking Education Internal External

Genetic Construction Warehousing R&D Wholesale Import

Tourism Retail Export

Fig 1. Economic Sectors

2.1 Primary Sector

2.2 Secondary Sector

People working in secondary industries are

Types of Secondary industries

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