Emerging Industry

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. Mature Industry

    An industry which has passed both the emerging and the growth ...
  2. Growth Industry

    A sector of the economy experiencing a higher-than-average growth ...
  3. Industry Lifecycle

    A concept relating to the different stages an industry will go ...
  4. Declining Industry

    An industry where growth is either negative or is not growing ...
  5. Barriers To Entry

    The existence of high start-up costs or other obstacles that ...
  6. Consolidation Phase

    A stage in the life of a company or an industry in which components ...
Related Articles
  1. Markets

    Explaining Industry

    The term industry refers to a classification of companies that share similar business activities.
  2. Insights

    Capital Intensive Companies: What Are The Pros & Cons for Investors?

    Learn about the pros and cons of investing in capital-intensive industries. Find out how barriers to entry and mature industries impact investment outlook.
  3. ETFs & Mutual Funds

    Time to Add Emerging Markets to Your Portfolio?

    Now that emerging markets are out of favor, is it time to add them to your portfolio?
  4. Markets

    Industries That Will Never Go Away

    A list of industries that will not perish anytime soon, as they provide and feed our basic needs.
  5. Markets

    What are Barriers to Entry?

    A barrier to entry is any obstacle that restricts or impedes a company’s efforts to enter an industry.
  6. ETFs & Mutual Funds

    How to Play Emerging Markets Rebound with ETFs

    Emerging markets are on the rebound, but not everyone is a believer. Here's how to play it either way with ETFs.
  7. Markets

    3 Risks Emerging Markets Debt Faces in 2016

    Learn about the major risks for emerging market debt in 2016. Discover how low interest rate policies by central banks fueled the growth of debt globally.
  8. Markets

    5 Risks Emerging Markets Equities Face in 2016

    Learn why investing in emerging market equities carries inordinate risk in early 2016 based on the financial deterioration in their economies.
  9. Markets

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  10. ETFs & Mutual Funds

    3 Emerging Markets Vanguard Funds

    Explore a detailed analysis of three Vanguard emerging markets mutual funds, and learn about the characteristics and suitability of these funds.
RELATED FAQS
  1. What developed countries have the largest proportion of industrial companies?

    Examine the industrial sector in developed countries, and learn about the shift in manufacturing production to emerging market ... Read Answer >>
  2. How does market share affect a company's stock performance?

    Discover how market share affects a company's performance. Market share is important in cyclical industries and not important ... Read Answer >>
  3. Is Japan an emerging market economy?

    Discover whether Japan is an emerging market economy. Emerging markets have high levels of risk and reward due to their growth ... Read Answer >>
  4. How does the risk of investing in the industrial sector compare to the broader market?

    Discover how the risk of investing in the industrial sector compares to the broader market. The industrial sector is highly ... Read Answer >>
  5. What emerging markets are best suited for getting the most exposure to the industrial ...

    Discover which emerging markets are best suited to gain exposure to the industrial sector. China is the largest variable ... Read Answer >>
  6. How does investing in banks in emerging markets compare to developed countries?

    Explore the similarities and differences between investing in banks in emerging markets versus investing in banks in developed ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center