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Explained: The difference between sector and industry

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Although the terms ‘industry’ and ‘sector’ are commonly used interchangeably, they do, in fact, have to a great extent different meanings. The difference in both the words pertains to their scope. A sector refers to a large segment of the economy, while the term industry describes a much more specific group or a narrowed focus of businesses.

A sector is one of a few general segments in the economy within which a large group of companies can be categorised. An economy is broken down into about a dozen sectors for analysis, which can describe nearly all of the business activity in that economy. For example, let’s look at the defence sector—you will find a number of industries, such as ammunition and missile, avionics (the electronic systems used on aircraft, artificial satellites and spacecraft), specific transport vehicles, naval ships, shipbuilding, aerospace, metallurgy, small arms, ammunition, combat vehicles, artillery, tanks, etc.

When breaking down an economy, the first groups are sectors that describe a general economic activity. Then all of the companies that fall into that sector are categorised further into industries where they are grouped only with companies with which they share very similar business activities. The definition does not end here; industries can be further sub-categorised into various, more specific groupings.

An industry, on the other hand, describes a much more specific grouping of companies with highly similar business activities.........

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