World industries drive the global economy, collectively transacting almost USD $70 trillion. An industry is a collection of companies that all perform similar functions. Industry can be used to refer to all company groups, or specifically to industry as being a set of productive entities that utilize productive forces to convert a simple input to a processed final product. The size of various industies vary by country, level of development, and demand in each region. This section of EconomyWatch.com introduces all the major industries and classification systems, together with key industry data.
Industries can be categorized in the following ways:
Offering Based Industry Classification
Does the industry provide products, services, or a mix of both products and services?
Production Based Industry Classification
Does the industry rely more on natural resources, human capital or financial capital? Industries can also be described as resource-intensive, labour-intensive or capital-intensive?
Classifying Industries by Sector
Is the industry in the primary, secondary or tertiary sector?
Classifying Industries by Size
Is the industry a small-scale or cottage indutry, a Small & Medium Business (SMB or SME) industry, or a global industry dominated by Multi-National Corporations (MNCs)?
Target Market Classification
Is the industry export-oriented and international, or domestic market focused?
Concentration Classification
Is the market fragmented, with many small 'mom and pop' businesses, or is it consolidated, with rounds of mergers and acquisitions leading to a few dominant players?
The financial, banking and insurance industries, underpin all other world industries, as we have seen during the Financial Crisis. As a result, they deserve special focus.
The current turmoil in the global financial industry is a result of financial tensions that started brewing in the US in 2007. These financial hiccups culminated into the demise of leading financial institutions. The financial crisis engulfed other developed and developing economies and turned into a full-blown global economic crisis by September 2008. The result was destabilized banking systems, a credit crunch, declining consumer confidence and a downturn in GDP growth rates for most countries.
In order to combat the situation, the US government planned to inject $700 billion injected funds into the economy. The US and European authorities took initiatives such as providing funds to firms to prevent them from declaring bankruptcy, taking over leading financial institutions, providing liquidity and lowering interest rates. The recovery is expected to continue with continued flow of credit and the stabilization of the global financial markets.
The global banking industry is undergoing intense transformation to negate the risks posed by competing instruments. Certain trends observed in the banking industry to remain profitable are:
The current dismal conditions notwithstanding, a McKinsey & Co research report predicts the doubling of revenues and profits for the banking industry by 2016.
The current economic slowdown poses several challenges to the insurance industry, in the form of capital crunches, instable asset values and decreased non-life premium rates. The insurance industry needs to take the following steps to fight these challenges:
Although these major world industries are currently experiencing a slowdown, initiatives are in place to ensure growth in the near future.
Among the other world industries are:
