Know What Sector You Are In

There was a Wall Street analyst who said that Boston Market was not a restaurant company but a HIGH RISK LENDING company.  How true.  They failed to stay in business, by instead focusing first on selling franchises that dependably served food that instead of the usual too expensive was too cheap for what you got.

They delivered piles of food that tasted good with sides and filled restaurants but failed to secure profit in cash flow models.  Building a brand is good, it takes capital, but for HOW long and at WHAT cost?  Sell the franchises they did, but failed to figure a return OF capital not just return ON capital…

To get a handle on what business you are in, lets begin with a simple map.  It helps to know that there are just six or seven fundamental major categories, or what in investment finance are called SECTORS.

Those can be divided into some fifteen or twenty parts and different analysts and constituencies have different ways of grouping them, but here is an accurate map based on nature, size, mass, speed, how virtual or concrete, durable or transitory the endeavor, etc.

The map certainly is not from a book, but synthesized from the last thirty years of my brain navigating a wide range of business territories, easily done nearly with my eyes closed:

I. KNOWLEDGE

1. TECHNOLOGY

The stuff that connects, communicates, and transmits is made up of, and the delivery and support of it:

Software, Internet
Hardware, and Peripherals
Telecommunications, or Communications
Semiconductors
Aerospace.  Part of manufacturing proper, but really is technology
Services

2. HEALTH

Taking care of our bodies with goods and services:

Medical including Doctor, Nurse, Hospital, Dental, Outpatient, Rehab
Pharmaceuticals
Biotech
Healthcare

II. CONSUMER

3. ENTERTAINMENT

Discretionary spending on experiences, media, and other distractions outside material productivity:

Media (including broadcast, publication, and the commercial side of expression such as performance).
Recreational equipment
Travel and Lodging
Church and Charity
Not for Profit, Groups, Clubs

4. RETAIL

Stuff that is made which is sold and distributed either at commercial locations or by mail or fed by the internet.

Stores
Grocery store, also retail but a specialty
Drug stores
Specialty retailers
Warehouses
Mail order, catalog, distributor, aggregator/consolidator.

5. CONSUMER DISCRETIONARY

You cannot live without water or air, but you can live with out Coke or Budweiser, but some might disagree!  Near instant point of sale with little planning needed or typically given.

Food and Beverages, Manufacturing
Consumer Non-durables, personal care products.  Toilet paper is needed, yet comes and goes.
Restaurants and in particular fast food and chain are a special type of retail category, its all about discretionary.
Apparel, fashion
Luxury items

III. MANUFACTURING

6. CONSUMER DURABLES

Stuff you buy which will last.   Appliances have yearly life cycles.  Shopping is usually planned.

Appliances, electronics
Manufacturing proper
Building Materials
Furniture

7. INDUSTRIAL

Getting serious here.  Making big things that can take a little as three weeks or long as five years

Automotive, Transportation Manufacturing including truck, rail, boat.
Home Building and Housing
Commercial and Heavy Construction, including earthworks and road building
Defense is almost one and the same with Aerospace, but fits better here.  Big ticket, long term.  Capital intensive.

IV. HEAVY INDUSTRY

8. Basic Materials

Stuff found, made, or extracted, often heavy or in bulk.  Takes large scale infrastructure.

Chemicals, Specialty Chemicals
Forestry
Mining
Metals
Specialty Metals

V. CONVEYANCES

9. ENERGY

Production

Oil and Gas
Nuclear Power

10. UTILITIES

Distribution

Utilities, in particular electric production and transmission.
Alternate Energy
Water

11. TRANSPORT

Getting stuff around.

Trucking
Airline
Rail
Bus, cab, public transport
Ocean Freight
Express
Sanitation, Disposal

VI. SERVICES

12. FINANCIAL

Stored, abstract human energy which is redistributed.  The concomitant of energy or fuel is finance.

Banking
Investment
Mortgage and Loan

13.  PROFESSIONAL SERVICES

Human activity.  Not physical production.  Knowledge work, administration, project management.  Planning.

Legal
Accounting
Engineering and Architecture
Advertising
Staffing, outplacement, Labor, Human Resources

14. GOVERNMENT

Operations

Local, Township, City, State, Federal bureaucracy
Education
Mental Health and other Social Serives

Public Safety

Police, fire, EMT, rescue
Detention
Military, CIA FBI, NSA, Homeland Security

VII. OTHER

15. FOOD PRODUCTION

Agriculture
Fishing

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Knowledge manager, who can create, plan, furnish, operate, refine, and deliver complex processes involving people, products, results.

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About David
David Korn Special Projects has over twenty years experience in the creation, planning, operation, delivery, and refinement of the complete life cycle of complex and demanding projects. These can involve people, results, or process. Projects can be for events, business planning, financial analysis, construction, litigation, or investment.
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