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11 Characteristics of Industry

 , August 10, 2020
An industry is a grouping of businesses that offer similar products and services. The following are the basic characteristics that can be used to compare industries and firms within industries.

Sector

A sector is the level of value creation of an industry. These are as follows.
SectorLevelExamples
PrimaryThe production of raw materials.Agriculture, Mining
SecondaryThe production of finished goods.Manufacturing,Craft
TertiaryServices that add intangible value.Restaurants, Banks, Retail

Business Model

A business model is how a firm generates and captures value. For example, club goods is a business model used by theme parks whereby a firm offers access to expensive capital for an admissions fee.

Capital

Capital is the productive property that is required to participate in an industry including natural resources, land, buildings, infrastructure, machines, computers and vehicles.

Labor

The labor requirements of an industry. For example, banks that commonly employ large numbers of knowledge workers.

Financials

Financial metrics are typically comparable across an industry. For example, manufacturing firms in a particular region may have similar profit margins, return on invested capital and revenue per employee.

Barriers to Entry

Barriers to entry is how difficult it is for new competitors to enter an industry. For example, restaurants have relatively low barriers to entry such that a successful location may soon face new competitors.

Competition

The level of competition in an industry. For example, farmers that are protected from competing with global producers by the protectionist policies of a government.

Structure

Structure refers to the basic type of competition in an industry. The following are the basic types.
StructureNumber of Firms
MonopolyA single firm mostly dominates.
OligopolyThree to ten firms dominate competition.
Pure CompetitionA large number of firms compete.
Monopolies have no competitors and typically need to be regulated to prevent abuse of their market power such as high prices, low quality and unfair practices forced on customers and partners.

Competitive Advantage

What it takes to win competitive battles in an industry. For example, in the fast moving consumer goods industry brand recognition is a primary type of competitive advantage such that firms in this industry must spend heavily on advertising.

Industry Life Cycle

An industry life cycle is a stage of growth of a market for goods and services.
StageGrowth Level
NascentA newly formed industry with space for new entrants but often an uncertain future.
GrowthAn industry that is quickly growing revenue.
MatureAn industry that is slowly growing revenue.
DeclineAn industry with falling revenues.

Economic Bads

Industries produce economic goods that have value but may also produce economic bads such as pollution.

Industries

This is the complete list of articles we have written about industries.
Advertising
Advertising Industry
Agriculture Industry
Art Business
Communications
Construction
Consulting
Creative Economy
Creative Industries
Education
Entertainment
Farming
Fashion
Film Industry
Finance
Financial Industry
Food Industry
Green Industry
Heavy Industry
Hospitality
Information Industry
Infrastructure
IT Industry
Light Industry
Manufacturing
Materials
Media
Media Services
Music
Primary Industry
Professional Services
Publishing
Restaurants
Retail
Robotics
Secondary Industry
Service Industry
Software
Space
Space
Sports Industry
Technology Industry
Telecom
Tertiary Sector
Transport Industry
Travel Industry
Video Game Industry
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Industries

A list of industries.

Software Industry

Examples of the software industry.

Sectors Economy

A list of the sectors of the economy.

Industry Vertical

The definition of industry vertical with examples.

Industry Examples

A list of common industries.

Transportation Industry

A list of the major components of the transportation industry.

Travel Industry

The basic components of the travel industry.

Financial Sector

The definition of the financial sector with examples.

Insurance

An overview of various types of insurance.

Economic Sector

The definition of economic sector with examples.

Tertiary Sector

The definition of tertiary sector with examples.

Secondary Industry

The definition of secondary industry with examples.
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