Emerging Industry

AAA

DEFINITION of 'Emerging Industry'

A group of companies in a line of business formed around a new product or idea that is in the early stages of development. An emerging industry typically consists of just a few companies and is often centered around a new technology. Barriers to entry in emerging industries can be low because of limited competition, but it may be difficult to secure financing to grow the company.

Also, marketing expenses are high, because the product or service for sale is often unproven and companies in an emerging industry must convince both investors and consumers that the product or service they are selling is valuable. Investing in an emerging industry is considered a high-risk strategy, but it can also bring high rewards.

BREAKING DOWN 'Emerging Industry'

An emerging industry can grow rapidly if it is successful. If it reaches this stage, it is then considered a growth industry. Growth industries that perform well become mature industries, which tend to grow slowly or not at all, but provide stable profits. A mature industry may eventually become a declining industry if the product or service it is based on falls out of favor or becomes obsolete.

RELATED TERMS
  1. Sunrise Industry

    A colloquial term for a sector or business that is in its infancy, ...
  2. Market Penetration

    A measure of the amount of sales or adoption of a product or ...
  3. Infant-Industry Theory

    The supposition that emerging domestic industries need protection ...
  4. Industry

    A classification that refers to a group of companies that are ...
  5. Industry Classification Benchmark ...

    A company-classification system for stocks developed by Dow Jones ...
  6. Growth Industry

    A sector of the economy experiencing a higher-than-average growth ...
Related Articles
  1. Investing Basics

    Industry Handbook

    In this feature, we take an in-depth look at the various techniques that determine the value and investment quality of companies from an industry perspective.
  2. Markets

    Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.
  3. Fundamental Analysis

    4 Characteristics Of Recession-Proof Companies

    Investors can find profitable companies - even in a recession. It's all about knowing where to look.
  4. Options & Futures

    Due Diligence In 10 Easy Steps

    Got a hot stock tip? Follow up on it with these tips to avoid getting burned.
  5. Options & Futures

    Spotlight On The Solar Industry

    Before you buy into the hype, learn how the industry works and how to spot the winners.
  6. Options & Futures

    Henry Ford: Industry Mogul And Industrial Innovator

    This man made his dream of bringing the automobile to the masses a reality.
  7. Economics

    Selecting A Second-Tier Company

    Find out why an industry's "little guys" can be big winners.
  8. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  9. Investing Basics

    What's a Price-Taker?

    Price-taker is an economic term describing a market participant who has no effect on overall market activity.
  10. Economics

    Explaining Replacement Cost

    The replacement cost is the cost you’d have to pay to replace an asset with a similar asset at the present time and value.
RELATED FAQS
  1. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>
  2. When does Q4 start and finish?

    Most companies such as Facebook have financial years that end on December 31st. For these companies, the fourth quarter begins ... Read Full Answer >>
  3. When is it useful to look at a company's fixed asset turnover ratio?

    It is useful to look at a company's fixed asset turnover ratio when an outside observer, such as an investor, wants to know ... Read Full Answer >>
  4. What is the difference between perfect and imperfect competition?

    Perfect competition is a microeconomics concept that describes a market structure controlled entirely by market forces. In ... Read Full Answer >>
  5. How difficult is it to understand business analytics?

    In the abstract, business analytics is the study of financial, economic, consumer and production data through statistical ... Read Full Answer >>
  6. At what levels are core competencies required for businesses operating in the primary ...

    Core competencies help businesses understand their best abilities to perform in the market. Primary sector businesses mine ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  2. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  3. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  5. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  6. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!