What this lesson teaches
I can classify firms by sector and ownership, and weigh the advantages of small and large firms.
Syllabus K343, 3.4.1. Different types of firms: primary/secondary/tertiary sector firms; private sector/public sector firms; advantages and disadvantages of small and large firms
Make a guess
A supermarket chain sells to the public every day. Is it in the public sector?
- Yes, because the government regulates supermarket food safety.
- No. It is owned privately, so it is in the private sector.
- Yes. It serves the public, so it is in the public sector.
Show the answer
No. It is owned privately, so it is in the private sector.
Public sector means owned or run by the government. Who the customers are does not matter.
Firms differ by sector (primary, secondary, tertiary) and by ownership (private or public sector).
Firms can be grouped by sector. Primary sector firms take natural resources from the land or sea, such as farming, fishing and mining. Secondary sector firms turn materials into goods, such as factories and builders. Tertiary sector firms provide services, such as banks, shops, hospitals and airlines.
As a country develops, workers move from the primary to the secondary and then the tertiary sector. Machines let fewer farmers grow more food, and richer households spend more of their income on services. Singapore today has a tiny primary sector, a strong secondary sector making chips, medicines and petrochemicals, and a large tertiary sector in finance, trade and tourism.
Firms can also be grouped by ownership. Private sector firms are owned by individuals or shareholders and usually aim to make a profit. Public sector organisations are owned or run by the government and usually aim to provide a service, such as public housing, water or hospitals. In Singapore, the Housing and Development Board and PUB, the national water agency, are in the public sector.
Why it matters: a private firm that makes losses may close, so it watches costs and customers closely. A public sector body can keep providing a service at a loss when the government decides the service matters, but it may face less pressure to cut waste.
- Primary sector
- Extracting natural resources: farming, fishing, mining.
- Secondary sector
- Manufacturing and construction.
- Tertiary sector
- Services: retail, banking, healthcare.
- Private vs public sector
- Owned by individuals/shareholders vs owned or run by government.
Worked example: Placing Singapore firms
Sort these Singapore organisations by sector and by ownership.
- A fish farm off the coast: primary sector, private.
- A factory making semiconductor chips: secondary sector, private.
- A bank, a hawker stall and a hotel: tertiary sector, private.
- HDB, which builds and sells public flats: public sector. It is run by the government to provide affordable homes, not mainly to make a profit.
Watch out for this
Public sector firms are firms that sell to the public.
Public sector means owned or run by the government. Most firms selling to the public, such as supermarkets, are in the private sector.
Check your understanding
A company that mines tin is in which sector?
- Secondary
- Tertiary
- Primary
Show the answer
Primary
Right. It extracts a natural resource.
Check your understanding
A privately owned company makes medicines in a Tuas factory. Which sector of production does it belong to?
- Secondary, because it turns materials into goods
- Tertiary, because it serves patients' health
- Primary, because some medicines come from plants
- Public, because healthcare is a service people rely on
Show the answer
Secondary, because it turns materials into goods
Right. Factories that make goods from materials are in the secondary sector, whoever owns them.