A Short Overview of Sectors in Broad Terms

Industry

A Short Overview of Sectors in Broad Terms

In economics, a sector is a subset of an overall industry, which creates a closely related list of products, materials, or services produced by a physical business or activity. For instance, one could compare the health insurance industry to the coal mining industry, both of which create physical products and services that are then traded and sold. In more economic terms, there is only one overall industry, and that’s the retail industry, while each of its subsets, such as the wholesale and retail industries, are named after their physical characteristics, such as the brick-and-mortar retail industry’s physical makeup.

In business terms, a sub-sector is a subset of a larger sector, which then becomes a larger segment of that larger sector. So, for example, in the steel industry, there are primary products and services, secondary products and services, and final goods and services created by the various manufacturers, dealers, and suppliers that make up that larger steel industry. However, the steel-makers are not the only ones that can create steel, and neither are the dealers and suppliers, although they would be a subsample of the primary steel producers. The steel and iron-making industry, for example, is actually the main part of the overall steel industry, even though the primary producers and dealers are a smaller portion of it.

Within each primary sector, however, there can be many subsets, including government and municipal businesses, finance, information technology, oil refineries, transportation, and consumer products. Many businesses, even within each primary sector, can become subsets of other industries through mergers, acquisitions, and divestitures; through reorganization; and through fusion, when two businesses combine into one. All of these processes allow the primary sector to be subdivided into smaller, more specialized subsectors, such as financial services, insurance, technology, and consumer products.