A Brief Explanation of the CFi Codes Used in Industry Sector Classification Systems

Industry

A Brief Explanation of the CFi Codes Used in Industry Sector Classification Systems

In simple terms, industry is the collection of all related activities involving human activity and technological transfer. In macroeconomics, an industry consists of a specific segment of a market that produces a tightly-knit group of goods, materials, or services at a low level of productivity that provides a substantial surplus over that of other similar businesses in the market. For instance, one would compare the manufacturing of cars to the banking industry or to agriculture. The size and scope of a business or industry often determines its social scope and influence, which is why a small farming community has far more economic power than the largest city.

Since the dawn of modernity, the division of industries into various sectors has had tremendous impacts on how markets function. Industries can be classified based on their location, operation, and the nature of their products or services to determine how they should be distributed across the marketplaces. However, despite the usefulness of industry classification systems, many factors still remain as major barriers to entry for new entrants. This has impeded growth and development in many areas of the economy, especially the labour market, despite advances in technology. Thus, despite the important role of these sectors in overall GDP growth and prosperity, there are still many businesses that fail to realise their potential because of their location, operation, and even their products and services.

Some business-type choices help determine the nature of industries according to CFi codes. This is because industries are categorized according to economic activity that adds value to society in general. For instance, industries that are involved in producing tangible goods for personal or household consumption, are usually classified as primary industries. Other major categories, such as producers of energy products, mechanical engineering, construction, transportation and utilities, are more complex and have multiple subcategories.