Industry classification or industry taxonomy is a type of economic taxonomy that classifies companies, organizations and traders into industrial groupings based on similar production processes, similar products, or similar behavior in financial markets.
National and international statistical agencies use various industry-classification schemes to summarize economic conditions. Securities analysts use such groupings to track common forces acting on groups of companies, to compare companies’ performance to that of their peers, and to construct either specialized or diversified portfolios.
Classification of Industries
Size of industries are measured by how much money is invested, employee count and goods produced.
- Large-scale industries: Largescale industries are the exact opposite of small-scale industries. Here the capital invested is large and advanced technology is in use here. Example, Automobiles and Heavy Machinery.
- Small-scale industries: Small-scale industrieshave less capital and technology invested in them. There is often manual labour noticed here. Example, Basket weaving, pottery, and handicrafts.
- Mineral based industries: Mineral-based industries are based on mining and use ‘mineral ore ‘as raw material. These industries also provide to other industries. They are used for heavy machinery and building materials.
- Agro-based industries: These industries use plantsand animal-based products as their raw materials. Examples, food processing, vegetable oil, cotton textile, dairy products, and leather industries.
- Marine-based industries: Marine-based industries use raw materials from sea or ocean. Examples, fish oil.
- Forest-based industries: These industries use raw materials from the forest like wood. The industries connected with forestare paper, pharmaceutical, and furniture.
- Public sector: Public industries are owned and managed by the government. Example, Hindustan Aeronautics Limited (HAL).
- Private sector: Private industries are businessesthat are owned and operated by an individual or group of individuals.
- Joint sector industries: These industries are jointly operated by the state and individuals. Example, TATA.
- Cooperative sector industries: Cooperative industries are operated by the suppliers, producers or workers of raw material. Example, Amul India.
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). Some authors add quaternary (knowledge) or even quinary (culture and research) sectors. Over time, the fraction of a society’s activities within each sector changes.
They commonly divide economic activities into industries according to similar functions and markets and identify businesses producing related products.
Industries can also be identified by product, such as: construction industry, chemical industry, petroleum industry, automotive industry, electronic industry, power engineering and power manufacturing (such as gas or wind turbines), meatpacking industry, hospitality industry, food industry, fish industry, software industry, paper industry, entertainment industry, semiconductor industry, cultural industry, and poverty industry.
Market-based classification systems such as the Global Industry Classification Standard (GICS), the Industry Classification Benchmark (ICB) and The Refinitiv Business Classification (TRBC) are used in finance and market research.
Industrial systems are made up of input, processes, and output. The input of raw materials, labour, land, power, and other infrastructure. The process is the plan the manufacturer has of how to turn raw materials into finished products of value. And finally, the output is the end of the product from which the income earned it.
Industrial clusters occur when many industries are located close to each other and share the benefits of their closeness. Major industrial clusters in India are:
- Mumbai-Pune cluster
- Bangalore-Tamil Nadu region
- Hugli region
- Ahmedabad-Baroda region
- Chottanagpur industrial belt
- Vishakhapatnam-Guntur belt
- Gurgaon-Delhi-Meerut region
- Kollam-Thiruvananthapuram industrial cluster