What Is an Industry?
An industry is a group of companies that are related based on their primary business activities. In modern economies, there are dozens of industry classifications. Industry classification are typically grouped into larger categories called sectors.
Individual companies are generally classified into an industry based on their largest sources of revenue. For example, while an automobile manufacturer might have a financing division that contributes 10% to the firm’s overall revenues, the company would be classified in the automaker industry by most classification systems.
- Similar companies are grouped together into industries, and there are a number of different industries, such as department stores and shoemakers.
- Industry grouping is based on the primary product that a company makes are sells. Meanwhile, industries are grouped together into sectors.
- The North American Industry Classification System is the standard classification system used by government agencies to organize companies into sectors