Difference Between Industry and Sector

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Most people think that the terms sector and industry resemble one another, as both indicate enterprises whose business type is identical or operates in a segment.

This difference or variance pertains to their scope. A sector will be a vast economic segment. At the same time, the term industry one can describe as a unique group of businesses or companies. In comparison, one can prescribe the term industry as an umbrella covering all the firms or organizations engaged in similar business functions or activities.

On the other hand, the sector refers to the broader classification of an economy into various segments. So, for example, multiple companies offer similar or substitute services or products. As against that, there could be many industries combined into one sector.

Industry vs. Sector Infographics

Key Differences

The key differences are as follows:-

  • The cluster of firms involved in the processing or producing the same or similar kinds of services or products is called an industry. The segment of an economy into which one can classify various or different business segments is known as a sector.Industries can be classified based on an activity or the process they perform. On the contrary side, the sector divides the whole economy into various other or different segments based on the companies or firms’ business activitiesBusiness ActivitiesBusiness activities refer to the activities performed by businesses to make a profit and ensure business continuity. read more.As mentioned in the table below, the industry’s scope is narrower than the sector’s. Because, as we know, there can be hundreds or thousands of those industries in an economy. In contrast, there can only be a handful of those sectors. Further, a sector of the economy will consist of hundreds or thousands of those industries.One can use the term industry to define firms operating in a specific segment. As opposed to this, the term sector is broad, including all those industries working in one particular segment.As said earlier, the industry is a group of companies or firms, and the sector is a conglomerateConglomerateA conglomerate in business terminology is a company that owns a group of subsidiaries conducting business separately, often in distinct industries. It reflects diversification of operations, product line and market to allow business expansion.read more of those industries.

Industry vs. Sector Comparative Table

Conclusion

We can conclude that industry is a narrower term and a subset of the broader term known as the sector. Therefore, economists and investors study those sectors and industries to understand better which industry or sector will contribute to the growth and progress of the whole economy and which will prove to be highly profitable.

Further, one can also compare the firms or the companies operating in a particular industry to identify which firm or the company will provide or expect to generate the returns to the investors.

You should also note that you can find certain situations where both terms reverse. But the general idea will remain the same: one breaks the whole economy down into a few specific segments while the other further subdivides those into more particular businesses. For example, the generally accepted terminology – an industry – is more specific. A sector is a broader classification in the capital marketThe Capital MarketA capital market is a place where buyers and sellers interact and trade financial securities such as debentures, stocks, debt instruments, bonds, and derivative instruments such as futures, options, swaps, and exchange-traded funds (ETFs). There are two kinds of markets: primary markets and secondary markets.read more.

This article is a guide to Industry vs Sector. Here, we discuss the difference between industry and sector, infographics, and a comparison table. You may also have a look at the following articles: –

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