Tuesday, May 8, 2007

Link of the Week: Standard Industrial Classification (SIC) System Search

Sometimes, when working on a company or (more likely an) industry research assignment, a professor will tell students to get their "SIC Code" as one of their tasks. Or, in attempting to use a library database or a ratio book, you will find that the industrial organization of a particular resource is done by SIC.

First established back in the 1930s, the Standard Industrial Classification was devised to create a uniform system of classification for business establishments, and thereby to facilitate the comparability of statistics and data "describing various facets of the U.S. economy."

This Link of the Week is the quick Standard Industrial Classification (SIC) System Search, a U.S. Department of Labor tool that allows you to either look up a known four digit SIC code and learn more about that industry category, or look up a keyword to find SIC categories that match your industry.

When SICs matching your search are presented, you can then click on a likely match and see a more detailed definition of that industry, and a list of business types that are assigned that SIC code. Although this search mechanism works quite well, it is a little on the quirky side, and is sensitive to singular and plural words. For example, when I searched restaurant I got seven possible results for industries like "furniture" and "sheet metal work." No close matches. But when I searched restaurants (plural), I received four results [see image above], one of which was 5812 Eating Places, which is, in fact, the category for restaurants.

Once known, the SIC can be a handy number to use in online directories to find other companies who would be competitors, or may be used in library database "advanced search" options to find articles or data about, or company entries within, a particular industry. And, as mentioned before, they can also be used in ratio books/databases like D&B Key Business Ratios for industry averages and benchmarks. [Note: For more on getting ratios from databases and books please take a look at Sonia's earlier database use tip on that exact topic.]

Two additional caveats should be mentioned.

First, because the SIC system is so old, it does a poor job of detailing technology industries. Therefore, a newer system was devised called NAICS (North American Industry Classification System). In some cases, published or online sources will use NAICS codes instead. For a similar search engine for NAICS (the 2002 Revision), see the North American Industry Classification System -- Revisions for 2002 page from the Census Department. And for more detailed descriptions and links to a wide variety of web pages related to the SIC/NAICS system, please take a look at our Sawyer Library Industry Information Resource Guide, which lists all kinds of databases, websites, and print resources that would help with industry research.

The other caveat is that if you are trying to compare a REAL company to an industry, doing keyword searching of the industry at the SIC System Search and then using what you perceive to be the closest match is NOT always the wisest approach. Many companies, especially large ones, are very diversified. And what you might consider to be their industry is not necessarily their real "primary SIC" code. So, when searching a company within an industry you might want to start with any of our directory databases, like Hoover's and search for your corporate name. Then look for the industry area of their profile--

like the one, from Hoover's, for Procter & Gamble, shown above. Look for the clear statement of what is officially considered the "Primary SIC Code" for the company, and then use this numerical code as you look for industry information, articles, and data, using the SIC.

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