The 5 Sectors of the Economy

primary activities definition

Businesses are involved in the production and distribution of one or more goods and services. This process is the chain of production in which there are primary business activities and secondary, or support, activities.

The service sector is the third of the three economic sectors of the three-sector theory. The others are the secondary sector (approximately the same as manufacturing), and the primary sector (raw materials). Tertiary activities are service based and give non-tangible value to customers. Examples of companies that work in this sector include banks, consulting and public transportation. Most companies that are involved in tertiary activities do not have operations involving primary or secondary activities.


All businesses have inputs and outputs and must add value during production. The quaternary sector is said to the intellectual aspect of the economy. It includes education, training, the development of technology, and research and development.

Primary activities include extracting raw materials that are prepared for production. Nevertheless, primary companies sometimes deal directly with finished goods, rather than just raw materials. Miners extract coal, minerals and fuel that may initially be part of raw materials. Similarly, farmers grow crops that can be ready for consumption and thus are not considered raw material. Secondary industry includes manufacturing and construction-related activities.

It is the process which enables entrepreneurs to innovate better manufacturing processes and improve the quality of services offered in the economy. Without this growth of technology and information, economic development would be slow or non-existent.

primary activities definition

These include initial public offerings, secondary offerings, and debt financing. The section also lists the amount of cash being paid out for dividends, share repurchases, and interest.

The occupations which produce finished goods by using the products of primary activities as raw materials are included in secondary activity. Manufacturing of cloth from cotton, sugar from sugarcane and steel from iron ore are important examples of secondary activities. The primary sector of the economy extracts or harvests products from the earth such as raw materials and basic foods. Activities associated with primary economic activity include agriculture (both subsistence and commercial), mining, forestry, grazing, hunting and gathering, fishing, and quarrying.

  • The primary activities focus on developing products, distributing them and offering after-sale services on these products.
  • Businesses are involved in the production and distribution of one or more goods and services.

Now, companies can further improve the primary activities of their value chain with secondary activities. Value chain support activities do just that, they support the primary activities. The support, or secondary, activity generally plays a role in each primary activity. Such as human resource management, which can play a role in operations and marketing and sales.

These activities are part of the normal functioning of a business that affects its monthly, quarterly and annual income and profits. They also provide the majority of the cash flow and determine profitability. A division of a country’s population based upon the economic area in which that population is employed. Secondary industries are those that take the raw materials produced by the primarysector and process them into manufactured goods andproducts. Examples of secondary industries include heavy manufacturing, light manufacturing, food processing, oil refining and energy production.


The operating activities of a business are found in the business’ financial statements particularly the cash flow statement and the income statement. Unlike governmental classification systems, the first level of market-based classification systems divides the economy into functionally related markets or industries. The second or third level of these hierarchies then reflects whether goods or services are produced. The economy is divided into different business sectors and the businesses within them exist to provide goods or services.

There are two primary revenue-generating activities of businesses – providing services and selling products. It also determines the business’ ability to pay its current expenses such as labor costs and debt repayment.

What are primary activities explain with examples?

Definition: A primary economic activity is a type of operation or industry that involves extracting or refining natural resources, such as mining, agriculture, forestry, and fishing.

The tertiary sector is the fastest growing industry in today’s economic world. The cash flow statement’s final section includes financing activities.

What are primary activities ? Explain with examples.

Any business activity related to financing and fundraising efforts is included in this section of the cash flow statement. These line items impact the net income on the income statement but do not result in a movement of cash in or out of the company. If cash flows from operating business activities are negative, it means the company must be financing its operating activities through either investing activities or financing activities. Routinely negative operating cash flow is not common outside of nonprofits.

A Relationship Between Logistics & Marketing

The packaging and processing of raw materials are also considered to be part of this sector. It is concerned with providing support services to primary and secondary sector and includes transport, banking, insurance, warehousing, communication, advertising, etc. It facilitates smooth flow of goods and services in the economy. Importance of tertiary sector has been observed in the last decade and its contribution to GDP has also risen.

The primary activities focus on developing products, distributing them and offering after-sale services on these products. Generally these activities include inbound and outbound activities, operations, marketing and sales and after-service activities.

Manufacturers use the raw materials provided by primary industries for production. Examples of manufactured products include books, chairs, bicycles and vehicles. The tertiary sector of the economy is also known as the service industry. This sector sells the goods produced by the secondary sector and provides commercial services to both the general population and to businesses in all five economic sectors. Some fundamental operating activities for a business are sales, customer service, administration and marketing.