What Does The North American Industry Classification System Do

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What Does the North American Industry Classification System (NAICS) Do?

The North American Industry Classification System (NAICS) is a standard used to classify businesses and industries in North America. It is a hierarchical system, with businesses being classified into sectors, subsectors, industries, and subindustries.

**Purpose of NAICS**

  • To provide a common framework for collecting, analyzing, and comparing economic data.
  • To facilitate the comparison of data across different countries and regions.
  • To help businesses identify their target markets and competition.
  • To support government policymaking and regulation.

**Structure of NAICS**

NAICS is a six-digit code system. The first two digits identify the sector, the third digit identifies the subsector, the fourth digit identifies the industry, and the fifth and sixth digits identify the subindustry.

For example, the NAICS code for the Computer and Electronic Product Manufacturing industry is 334.

**Benefits of Using NAICS**

  • It provides a common language for describing businesses and industries.
  • It makes it easier to compare data across different countries and regions.
  • It helps businesses understand their target markets and competition.
  • It supports government policymaking and regulation.

**Conclusion**

The NAICS is a valuable tool for businesses, governments, and other organizations. It provides a common framework for classifying businesses and industries, which makes it easier to collect, analyze, and compare data. It also helps businesses identify their target markets and competition, and supports government policymaking and regulation.

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