Global Industry Segmentation – The Game Board

8 Jan, 2009 | by


With the global recession, the debate is over, we are truly one global economy.

So where’s the global game board?

Wouldn’t marketing and strategic planning be easier with a global industry game board – a listing of all significant industries, with an industry analysis for each?  And shouldn’t companies be analyzed at the line of business level using the same industry taxonomy?

Everyone answers “yes” to these questions because the answers are so clear.

But then everything gets cloudy with the one additional question, “Do you think such a global industry game board exists?”

For those of you who believe that a global industry information resource does exist, I would like to hear from you via a feedback comment – but first: the reason for the cloudiness is because of the definition of the word “industry.”

Today, the term “industry” is used so loosely it can be applied to anything: from frozen pizza manufacturing (a true industry) to all of food manufacturing (an industry sector); from wholesale funds transfer services to all of financial services; from laptop manufacturing to all of IT hardware manufacturing.

The working definition I use at for the term “industry” is:

  •  The correct level to build a Michael E. Porter five forces industry analysis.

And the definition we use when talking with people not familiar with Porter’s work is:

  • A market of one or more products and / or services that are direct substitutes that are sold by one or more businesses to one or more external customers, and where the activities required for developing the products or delivering the services are similar.

The lack of line-of-business industry information is somewhat shocking.

In exploring the issue for twenty years, the top two reasons why information vendors do not provide true global industry information are:

1.      Information vendors that acquire and reformat company information are in a completely different line of business. These vendors assign companies into industry groups and then market this “industry sector” data as “industry” data. These information providers typically divide the global economy into somewhere between 20 and 600 industry sectors.

2.      Information vendors that are dependent on government-based industry classification systems (such as NAICS, SIC, etc.) have a narrow geographic scope and, for whatever reason, they do not use Porter’s five forces analysis for defining industries. These information providers typically divide the global economy into somewhere between 300 and 1200 industry groups; and they too market this information as “industry” data.

So even though there are hundreds of information companies which say they provide “industry” information, the list of firms that actually provide true five forces “industry” information for the global economy is very short. Can you name three companies, or even one?

Business professionals for the past 30 years have been reading Porter’s books; and MBA schools around the world routinely teach Porter’s five forces industry analysis methodology. When these people want industry information, do they have to engage a consulting firm each time? Shouldn’t there be a service to just look up global industry information?

Using a global industry game board for marketing and strategic planning, should be as common as using a GPS device when traveling. With a global game board, global segmentation becomes so much easier and quicker, providing a much better opportunity to target the right: industries, product segments, customer segments, channel segments, buyer decision makers, and vendors.  It also provides an instant guide for looking up potential business partners and acquisition candidates.

Take a look at where they have a Global Industry Dashboard [TM] that provides five forces industry information on the top 10,000 global industries.  Industries can be grouped in any combination to cover the portion of the global economy of interest; and companies are defined in terms of the industries they compete in using the same industry taxonomy. For example, the analysis report shown on the site indicates the average Global 1000 company competes in 52 industries (lines of business).

Corporate executives, business unit manages, marketing and sales professionals, as well as financial experts looking for an edge with line-of-business data, could all fine this information very valuable. In my past positions as a corporate planner and marketing executive at major global corporations, so much time was wasted dealing with poorly defined “industry sector” data that I wanted to share my perspective because it might help people out there struggling with this industry segmentation dichotomy.

10 Responses so far | Have Your Say!

  1. mitch
    January 11th, 2009 at 9:10 pm #

    Common industry language as described by Alan makes total sense. Establishing The Game Board as a de facto standard for corporate America — priceless.

  2. Rich Vinhais
    January 12th, 2009 at 4:04 pm #

    Nicely done…

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