When you think of General Motors, the image of the automobiles they produce often comes to mind. General Motors is a popular company in the automobile industry, which consists of many other organizations that manufacture automobiles. This relationship can be described as a part and whole relationship, with General Motors being a part of the larger automobile industry. Some people may still be confused about the difference between a company and an industry, so here is a brief explanation of both terms.
Company
A company is a business entity comprised of individuals working together to advance the company’s goals and objectives. Companies can take various forms, such as a corporation, partnership, association, private limited, or public limited company, depending on their registration and structure. Legally, a company is treated as an individual, continuing in perpetuity regardless of the death or insolvency of the owner. A company comes into existence after registration under the Companies Act and, once incorporated, must pay taxes on its income, just as an individual would.
Industry
An industry refers to a specific sector of the economy involved in producing goods or providing services. It is the sum total of all the companies engaged in one particular activity or a group of activities. For instance, Revlon may be a cosmetic company that produces beauty products, but it is only part of the larger cosmetics industry, which includes hundreds of companies manufacturing similar products. Therefore, an industry is always larger than a company or group of companies.
Key Takeaways
- A company is a legal entity incorporated under the Companies Act, involved in manufacturing and selling products or services.
- A company is always part of an industry, which consists of many other companies engaged in producing similar products and services.
- While a company is a part, an industry represents the whole, and an industry is always larger than a company.
