What is a fragmented industry?


Quick Answer

A fragmented industry is one in which no major companies drive the direction of the industry. Fragmented industries typically result because a lot of small companies exist in the sector, and it is difficult for one company to establish a large or robust operation.

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Full Answer

Some fragmented industries are relatively small, but others are expansive with a lot of companies in operation. A benefit to companies in a fragmented industry is relatively low promotional costs, since most companies operate in local areas. Smaller companies also have the opportunity to attract local customers and build loyalty. A challenge is the inability to have a large operator push the industry forward and establish best practices.

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