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. Mature Firm

    A company that is well-established in its industry, with a well-known ...
  6. Emergency Fund

    An account that is used to set aside funds to be used in an emergency, ...
Related Articles
  1. Investing

    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.
  2. Economics

    Explaining Industry

    The term industry refers to a classification of companies that share similar business activities.
  3. Mutual Funds & ETFs

    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. Personal Finance

    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. Economics

    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. Stock Analysis

    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.
  7. Stock Analysis

    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.
  8. Stock Analysis

    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.
  9. Mutual Funds & ETFs

    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.
  10. Mutual Funds & ETFs

    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.
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. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center