Industry vs. Sector (With Definitions and Differences)
By Indeed Editorial Team
Updated 24 November 2022
Published 7 May 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
It's possible that you've seen the terms 'industry' and 'sector' while researching the fields that you might want to work in. There are many types of industries and sectors with a variety of job positions to explore. Learning the definitions of industry and sector respectively may give you a clearer idea about your career preferences. In this article, we define industry and sector, list the main differences between the two and offer some tips on discovering your passion.
Definitions of industry and sector
Before learning more about industry vs. sector, it's important that you first understand the definition of each word:
What is an industry?
A group of companies that engage in similar business activities is an industry. For example, people refer to companies that manufacture similar goods as the manufacturing industry. These groups are usually distinct from other groups of companies. For example, the manufacturing industry is different from the electronics industry. Here are some examples of industries in which you may want to find a job position:
arts and design
maintenance and repair
science and technological
social and community services
weapons and artillery
What is a sector?
A sector is a general term that describes a large segment of the economy made up of many similar industries. You may divide an economy into multiple sectors and classify those sectors based on their economic activities. For example, the defence sector of the economy includes industries such as ammunition, missiles and aircraft. There are four generally-accepted major economic sectors:
The primary sector includes activities related to the extraction or production of natural resources. These natural resources are often commodities such as oil, natural gas or other fossil fuels. Other industries within the primary sector can include agriculture, fishing and forestry.
The secondary sector of an economy involves processing goods or primary resources into a final product. Thus, most manufacturing and construction industries fall into this category. Electricity, gas, water and other public utilities also fall within the category of the secondary sector.
The tertiary sector involves services. These services usually support the primary and secondary sectors. For example, the banking, transportation and communication industries are part of the tertiary sector. Advertising and packaging services also form part of the tertiary sector.
The last sector is the quaternary sector. This sector comprises industries that provide information services and intellectual activities. Some examples of industries within this sector include education and research industries. Computing, consultancy and research and development industries may also be part of this final sector.
Differences between an industry and a sector
The main differences between an industry and a sector can be split into the following aspects:
As mentioned above, the scope of the industry and the sector are different. An industry is typically narrower in scope than a sector since the sector may include many industries. The number of industries within each sector may differ as well. Some sectors may include thousands of industries while others may only include a few industries.
When there are multiple companies or firms that produce similar products or services, you can form an industry. These industries can form quickly depending on the characteristics of the businesses, advancements in technology or economic growth. Industries can also shift or change over time or even dissipate with economic changes.
Sectors form when multiple similar industries combine. The more economically-stable sectors tend to be less affected by changing industries. In general, the secondary and tertiary sectors are more stable even during significant economic changes because they include some of the essential industries. They can also leverage technological advancements to keep production constant despite any external variations. A primary sector instead relies on natural resources and the environment, which could fluctuate.
From an economic perspective, the industry and the sector are at different locations in the overall economic hierarchy. At the top of the hierarchy is the economy because it's the basis for which all business practices can occur. The economy is the largest overarching component and also the biggest group in relation to sectors and industries. Next in the hierarchy is the sector. A sector is the next largest component within the economy as it comprises many different smaller components or industries. Sectors organise economic practices into orderly groups to maximise their output.
Industries follow next in the hierarchy as they're individual components. As specific elements within the economy, industries are the smallest in terms of size. Following after an industry is a company, many of which can group together to form a company. A company is a basic structure that produces output to sustain the economy.
Another factor that differentiates an industry and a sector is the way you can analyse both of them. Analysing sectors and industries is useful for obtaining useful information about competitive changes, future opportunities and supply and demand statistics. You can use trends and interpretations from such analyses to determine the effect of external factors such as the health of the economy. You can also make a difference by implementing plans and policies to counteract the effects of the economy.
In terms of conducting analysis, industry analysis involves a comparatively narrow view of the economy because the focus is on the performance of many individual companies. Analysis of a sector is a wider view of the economy given the nature of a sector. Analysts and economists typically compare industries with industries and sectors with other sectors. This ensures that you can sensibly compare the results to each other.
You can also tell a sector apart from an industry by looking at the management of each area. It may be less complex to manage a company within an industry because the company conducts a specific type of business activity. There are well-defined products and services so it's easy to oversee and manage one particular aspect. The number of products and services are also confined to what the company can cope with so there's probably a limited number of these offerings.
A sector is more complicated to manage because there can be different sectors to manage. These sectors, while similar, aren't identical. Thus, managers managing a sector may be familiar with a greater scope of activities. They tend to oversee more areas and at a greater level of generality. Managing or controlling a sector also usually requires a high level of expertise and experience.
Tips to discover your passion
If you're trying to find your passion in the professional world, here are some tips you may want to remember:
Find a sector that interests you
In a broad field, you can start by finding a sector that you have an interest in. For example, you may find that you enjoy working within the defence sector. Narrowing your focus by choosing a sector can help you explore different career paths and opportunities. It can also help you complete relevant education before beginning your career path.
Decide on an industry
Next, you can decide which industry you want to work in. For example, you may decide that you're most interested in the military intelligence industry within the defence sector. This then gives you an idea of what sort of companies you can look into to find a job. This can help you complete specific requirements, such as advanced training or a certain diploma.
Shortlist suitable companies
You can then proceed with short-listing suitable companies within your preferred industry. These companies are typically competitors since their products or service belong to the same industry. By short-listing these companies, you again narrow down the options for yourself to make finding a job more manageable.
Pick a job position
Finally, you can pick a job position within these shortlisted companies. Read the job description to understand what sort of role you might be fulfilling at the company. Speak to seniors, peers and family members within the industry or company to understand more about the responsibilities and the nature of the job. These factors could help you make an informed decision about your career.
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