Industry classification is a system used to categorize businesses and organizations based on their primary activities. This helps in understanding the structure of the economy and facilitates data collection, analysis, and comparison across different sectors. Common classification systems include the North American Industry Classification System (NAICS) and the Standard Industrial Classification (SIC). By grouping similar industries together, stakeholders such as policymakers, investors, and researchers can identify trends, assess market conditions, and make informed decisions. Industry classification also aids in regulatory compliance and economic reporting, ensuring that businesses are accurately represented within their respective sectors.