Industry classification

Industry classification or industry taxonomy is a type of economic taxonomy that organizes companies into industrial groupings based on similar production processes, similar products, or similar behavior in financial markets.

Many are used by national and international statistical agencies to summarize economic conditions. They are also used by securities analysts to understand common forces acting on groups of companies, to compare companies' performance to their peers', and to construct either specialized or diversified portfolios.[1]

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.

Below the economic sectors are more detailed classifications. 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.

List of classifications

A wide variety of taxonomies is in use, sponsored by different organizations and based on different criteria.

Abbreviation Full name Sponsor Criterion/
unit		 Node count by level Issued
ANZSIC Australian and New Zealand Standard Industrial Classification Governments of Australia and New Zealand 1993, 2006
BICS Bloomberg Industry Classification Standard[2] Bloomberg L.P. 10/.../2294
GICS Global Industry Classification Standard Standard & Poor's, Morgan Stanley Capital International market/
company		 2-8 digits
10/24/68/154		 1999
HSICS Hang Seng Industry Classification System[3] Hang Seng Indexes Company Revenue source 11/31/89
IBBICS Industry Building Blocks[4] Industry Building Blocks Market line of business 19/130/550/3000/20200 2002
ICB Industry Classification Benchmark FTSE market/
company		 10/20/41/114
ISIC International Standard Industrial Classification of All Economic Activities United Nations Statistics Division production/
establishment		 4 digits
21/88/238/419		 1948–present (Rev. 4, 2008)
MGECS Morningstar Global Equity Classification System[5] Morningstar, Inc. Securities behavior 3/14/69/148
NACE Statistical Classification of Economic Activities in the European Community European Union production/
establishment		 6 digits 1970, 1990, 2006
NAICS North American Industry Classification System Governments of the United States, Canada, and Mexico production/
establishment		 6 digits
17/99/313/724/1175 (/19745)1		 1997, 2002, 2012
RBICS FactSet Revere Business Industry Classification System FactSet, acquired in 2013[6] line of business 11000
SIC Standard Industrial Classification Government of the United States production/
establishment		 4 digits
1004 categories		 1937–1987 (superseded by NAICS, but still used in some applications)
SNI Swedish Standard Industrial Classification Government of Sweden
TRBC The Refinitiv Business Classification Refinitiv market/
company		 10 digits

13/33/62/154/898[7]

 2004, 2008, 2012, 2020[8]
UKSIC United Kingdom Standard Industrial Classification of Economic Activities Government of the United Kingdom 1948–present (2007)
UNSPSC United Nations Standard Products and Services Code United Nations Product 8 digits (optional 9th) (four levels) 1998–present

1The NAICS Index File[9] lists 19745 rubrics beyond the 6 digits which are not assigned codes.

See also

References
  1. "Frequently Asked Questions about GICS". MSCI. Retrieved 2 April 2020.
  2. "Reference Data". Bloomberg. Retrieved 5 Oct 2020.
  3. "Hang Seng Industry Classification System" (PDF). Hang Seng Indexes Company Limited. 2019. Retrieved 2 April 2020.
  4. "Industry & Company LOB Information". Industry Building Blocks. Retrieved 2 April 2020.
  5. "Morningstar Global Equity Classification Structure", May 24, 2011
  6. Inc, FactSet Research Systems. "Alternative Data | FactSet". www.factset.com.
  7. "The Refinitive Business Classification" (PDF). Refinitiv. Retrieved 9 Oct 2020.
  8. "The Refinitiv Business Classification Methodology" (PDF). Refinitiv. Retrieved 6 Oct 2020.
  9. "Data". www.census.gov. 2007. Retrieved 2020-05-07.

Further reading
  • Michael E. Porter (1980). Competitive Strategy. Free Press, New York. ISBN 978-0743260886.
  • Michael E. Porter (1985). Competitive Advantage. Free Press, New York. ISBN 978-0743260879.
  • Bernard Guibert, Jean Laganier, and Michel Volle, "An Essay on Industrial Classifications", Économie et statistique 20 (February 1971) full text
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