Typically, an industry is a group of companies connected by their primary lines of business. There are several lists or types of these industries existing in today’s economy, which will also serve as the center of focus in this post. We’ll list out a variety of examples and types to help you better understand how different business industries are organized, what makes up each category, and what you can expect from each one. Let’s get started.
Types of Industries
An industry is a collection of businesses that are linked by their core business activities. Currently, there are more than a dozen different types of business classifications in the economy. Typically, industry classifications are grouped into broader divisions known as sectors.
We also group individual businesses into industries based on their primary revenue streams. While a car manufacturer’s financing segment may contribute 10% of the company’s overall revenues, most categorization methods would classify the company as part of the automaker industry. Industry classifications are based on the significant products produced or sold by similar businesses.
This effectively creates industrial groups, which you can subsequently utilize to separate enterprises from those involved in a variety of activities. Investors and economists frequently research sectors in order to better understand the factors.
Meanwhile, there are four types of industries, namely primary, secondary, tertiary, and quaternary. These industries influence and limit corporate profit growth. You can compare companies in the same industry to each other in order to determine a company’s relative attractiveness within that industry. The coal mining industry is an example of this industry.
The types of industries include the following: primary, secondary, tertiary, and quaternary. In detail, this means:
- The economy’s primary sector (the raw materials industry)
- The economy’s secondary sectors (manufacturing and construction)
- The economy’s tertiary sector (the “service industry”)
- Economy’s quaternary sector (information services)
- The economy’s primary sector (human services)
Types of Industries in Business
As we said above, an industry is a collection of enterprises with a common primary activity. Some of these industries include manufacturing automobiles or selling groceries. Note also, that you can group smaller types of industries in business (such as vehicle manufacturing) together into bigger industry sectors. For instance, the manufacturing sector in general.
A private corporation, institution, firm, person, group, or association engaged in commerce, trades, manufacturing, or the provision of services within the state, or a public or nonprofit. Also, a licensed hospital, licensed by the Department of Social and Health Services, falls under the category of businesses and industries. A private corporation, limited liability company, limited partnership, [registered limited liability partnership], institution, firm, person, group, or other entity or association of the same, engaged in commerce, trade, manufacturing, or the provision of services within the commonwealth, or a public or nonprofit hospital licensed by the commonwealth, or any company whose primary purpose is the sale of goods at retail, if specific funds for that purpose are available.
We divide every company into industries of business depending on the types of products it produces. Also, we divide these companies depending on the markets they serve. The division of these industries is also based on the specialties of the goods and services they offer. While some corporations specialize in a single area and offer industry-specific goods or services, others are conglomerates that serve many industries at once.
List of Types of Industries
We already know that all types of industries list need factor inputs from the general economy as well as material inputs from other sectors to create a finished product. However, in the preceding pizza example, a maker of pizza would obtain raw materials from producers in other industries. It comprises dairy-produced cheese and farm-grown vegetables. In order to produce the finished good, pizza, they would also utilize inputs from the broader economy, namely pizza makers from the labor market. Some of the popular types of business industries include:
- Aerospace Industry
- Agriculture Industry
- Computer Industry
- The Construction Industry
- Education Industry
- Electronics Industry
- Energy Industry
- Entertainment Industry
- Food Industry
- Healthcare Industry
- Hospitality Industry
- Manufacturing industry
- Mining Industry
- Music Industry
- News Media Industry
- Pharmaceutical Industry
- Telecommunication Industry
- Transportation Industry
Categories of Industries
There are different categories we use to group the list of different types of industries. The categories are divided into those related to manufacturing or building, as well as those that are heavy or light, domestic or foreign, durable or non-durable.
#1. Light or Heavy
This category details the amount of capital needed to launch a firm in the sector. Businesses in the heavy sector frequently use capital-intensive manufacturing methods that demand a substantial upfront investment, like running machinery and equipment. The majority of industries that extract natural resources, for instance, steel, coal, and other industries involved in mining are examples that come under the “heavy” category. The automotive and aviation industries are two more sectors that are heavy in categorization.
In contrast, a business would need significantly less capital to launch in a light industry area. However, the production procedures in these industries are typically labor-intensive. For instance, the restaurant industry is light because they use labor for the majority of operational tasks rather than machinery.
#2. Foreign versus Domestic
If a sector operates and provides goods and services within a nation’s borders or not, it’s this category’s job to indicate that. From the viewpoint of that nation, this classification will be made.
Domestic industries are industries you find within the boundaries of a nation. For instance, the US maintains a domestic coal industry, which is made up of all US-based coal-related production operations.
Foreign sectors, on the other hand, are the ones you find outside of a nation’s borders. Using the same example, the foreign coal sector comprises all coal-related production activities that take place outside of the US.
#3. Durable to Non-durable
This category describes if the industry generates products that have a lengthy lifespan and also, amortize over many years. An industry that creates long-lasting products is durable. For instance, the auto and aviation industries both create commodities (cars and aircraft, respectively) as well as use and maintain them over a long period of time.
As an alternative, the non-durable sector creates perishable, short-lived products that must be consumed immediately. A notable example of a non-durable industry is the agriculture sector, which produces food that easily spoils if you do not store them properly.
#4. Construction versus Manufacturing
This classification identifies whether the industry creates finished goods or only raw materials and intermediate products, which they use in the manufacturing processes of other industries.
Industries that manufacture items for end-use are called manufacturing industries. These are the goods that consumers ultimately receive for consumption. Despite being significantly distinct from one another, the pizza and automobile industries from the preceding two examples would both be categorized as manufacturing sectors.
Companies that make intermediate goods, or goods that other businesses use, to make final consumption goods, are referred to as being in the “building” industry. Keep in mind that the construction sector in this sense does not refer to businesses that construct homes or other structures.
Examples of Types of Industries
We already understand that industry, which is a collection of effective businesses or organizations that provide goods, services, or income streams. However, let’s also look at its typical division into primary, secondary, and tertiary categories in economics. In discussing the different types of industries with their examples in this part of the post, we will make use of the three divisions of the types of industries to explain these examples.
#1. A Primary Industry
Agriculture, forestry, fishing, mining, quarrying, and the exploitation of minerals are all included in this sector of a country’s economy. You can also divide them into two groups: the extractive industry, which produces exhaustible raw resources that you cant grow via cultivation, and the genetic industry. They also produce raw materials which increase by involving more humans in the manufacturing process.
Agriculture, forestry, livestock management, and fisheries are all genetic sectors that advance in science and technology impact over time, and also relating them to renewable resources. The mining of mineral ores, stone quarrying, and the extraction of mineral fuels are all considered extractive industries.
The primary sector of the economy typically predominates in underdeveloped and developing countries. Still, as secondary and tertiary sectors are established, the primary sector’s share of the economic output tends to decline.
#2. Second-tier Industries
These types of industries are often examples of the manufacturing sector, either (1) using primary industries’ raw materials to produce consumer items, (2) refining things that secondary industries have already produced, or (3) constructing capital equipment to produce both consumer and non-consumer goods. Along with the construction sector, secondary industries also include those that produce energy (such as hydroelectric industries).
Heavy, or large-scale, and light, or small-scale, secondary industry are two categories that you can easily distinguish. Large-scale industries typically require significant capital expenditures for buildings and equipment, supply a wide range of markets, including those for other manufacturing industries, have a complex industrial structure and frequently employ a skilled, specialized labor force, and produce a lot of products. The fabrication of steel and iron, heavy equipment and automobiles, cement, the refinement of nonferrous metals, the packing of meat, and the creation of hydroelectric power are a few examples.
Light industry, also known as a small-scale industry, can be distinguished from the heavy industry by the non-durability of manufactured goods, a lower capital investment in plants and equipment, and the possibility of nonstandard items such as specialized or handcrafted goods. The labor force can be either low-skilled, as in the production of textiles and apparel, food, and plastics, or highly-skilled, as in the production of electronics and computer hardware, precision instruments, gemstone cutting, and craft work.
#3. Tertiary Industries
This sector, commonly known as the service industry, comprises businesses that produce money through providing services or intangible rewards rather than physical things. In mixed and free-market economies, this sector typically combines private and public businesses.
This sector includes the following industries: banking, finance, insurance, investment, and real estate services; wholesale, retail, and resale trade; transportation, information, and communications services; professional, consulting, legal, and personal services; travel, lodging, dining, and entertainment; repair and maintenance services; education and teaching; and health, social welfare, administrative, police, security, and defense services.
How do you classify industries?
They are frequently broken down into primary (extraction and agriculture), secondary (manufacturing), and tertiary (other sectors) sectors at the top level in accordance with the three-sector theory (services). Some authors have added quaternary or even quinary (culture and research) sectors.
What are primary industries?
description. In business: principal industry Agriculture, forestry, fishing, mining, quarrying, and the exploitation of minerals are all included in this sector of a country’s economy. It can be split into two categories: the genetic industry and the potential production of raw resources.
What are secondary industries examples?
Establishments that create capital items and consumer goods like apparel are considered secondary manufacturers.
Which is the secondary industry?
The production of the primary industry is sold and exported by the secondary industry. Examples of secondary industries include heavy manufacturing, light manufacturing, food processing, oil refining, and energy production.
What do you mean by GDP?
GDP calculates the monetary value of the final goods and services—those purchased by the consumer—produced in a nation during a specific time period (say a quarter or a year). It accounts for all the output produced inside a nation’s boundaries.
What is GDP vs GNP?
GDP counts the commodities and services generated inside a nation’s boundaries by both Americans and people from other countries. GNP counts only local and international goods and services generated by Americans.
Conclusion
Different types of businesses in our modern economy are working hard to attain primary results in their own niches, which helps them keep their fundamental goals separate. For those of you planning to start a business, it’s a good idea to familiarize yourself with the aforementioned list and types of industries. Also, use this post’s examples of types of industries to classify your own business in the proper category as well.
Types of Industries FAQs
What are the main 3 types of industries?
In economics, industries are customarily classified as primary, secondary, and tertiary; secondary industries are further classified as heavy and light.
What are the 5 largest industries in the world?
The 10 Global Biggest Industries by Employment
- Global Consumer Electronics Manufacturing. 17,430,942
- Global Commercial Real Estate. 17,164,710
- International Fast Food Restaurants. 13,458,146
- Global HR & Recruitment Services. 11,988,376
- Global Apparel Manufacturing. 9,675,672
- International Hotels & Resorts
- World Coal Mining
- World Tourism
How many industries are there?
These sectors are broken down further into 24 industry groups, 69 industries, and 158 sub-industries. There are more classification standards, such as Industry Classification Benchmark (ICB), Standard Industrial Classification (SIC), North American Industry Classification System (NAICS), and others
How do you categorize industries?
Sectors and industries
Economic activities can be classified in a variety of ways. At the top level, they are often classified according to the three-sector theory into sectors: primary (extraction and agriculture), secondary (manufacturing), and tertiary (services).
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