The Purpose of NAICS | Class Codes

Описание: NAICS Code Tutorial Series - The Purpose of NAICS. This is the first video of a seven-part series designed to help viewers better understand the NAICS classification system.

USER LINKS:

(1/7) The Purpose of NAICS:    • The Purpose of NAICS | Class Codes  

(2/7) Historical Background:    • Historical Background of NAICS | Class Codes  

(3/7) Development of NAICS:    • The Development of NAICS | Class Codes  

(4/7) Conceptual Framework of NAICS:    • The Conceptual Framework of NAICS | Class ...  

(5/7) Structure of NAICS:    • The Structure of NAICS | Class Codes  

(6/7) Defining the "Establishment":    • Defining the Establishment | Class Codes  

(7/7) Determining Industry Classification of the Establishment:    • Determining Industry Classification of the...  

SCRIPT FOR THE PURPOSE OF NAICS

Hello, and welcome to the NAICS Code Tutorial by Class Codes.

This series is designed to help you become a NAICS code expert.

Showing here is a list of all the videos in this series.

We have provided links to all of these videos in the description below.

Today, we’ll be going over the purpose of NAICS.

So what is the purpose of NAICS?

The North American Industry Classification System, or “NAICS,” is an industry classification system developed by the statistical agencies of Canada, Mexico, and the United States.

Created against the background of the North American Free Trade Agreement, or NAFTA, it is designed to provide common definitions of the industrial structure of the three countries and a common statistical framework to facilitate the analysis of the three economies.

NAICS is based on supply-side or production-oriented principles, to ensure that industrial data, classified to NAICS, are suitable for the analysis of production-related issues such as industrial performance.

I would like to quickly add that if you have any questions regarding this video, please ask in the comment section below.

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Economic statistics describe the behavior and activities of economic transactors and of the transactions that take place among them.

The economic transactors for which NAICS is designed are businesses and other organizations engaged in the production of goods and services.

They include farms, incorporated and unincorporated businesses and government business enterprises.

NAICS is a comprehensive system encompassing all economic activities.

It has a hierarchical structure.

At the highest level, it divides the economy into 20 sectors.

At lower levels, it further distinguishes the different economic activities in which businesses are engaged.

NAICS is designed for the compilation of production statistics and, therefore, for the classification of data relating to establishments.

It takes into account the specialization of activities generally found at the level of the producing units of businesses.

The criteria used to group establishments into industries in NAICS are similarity of input structures, labor skills, and production processes.

NAICS can also be used for classifying companies and enterprises.

However, when NAICS is used in this way, the following caveat applies:

NAICS has not been specially designed to take account the wide range of vertically- or horizontally-integrated activities of large and complex, multi-establishment companies and enterprises.

Hence, there will be a few large and complex companies and enterprises whose activities may be spread over the different sectors of NAICS, in such a way that classifying them to one sector will misrepresent the range of their activities.

However, in general, a larger proportion of the activities of each complex company and enterprise is more likely to fall within the sector, subsector and industry group levels of the classification than within the industry levels.

Hence, the higher levels of the classification are more suitable for the classification of companies and enterprises than are the lower levels.

It should also be kept in mind that when businesses are composed of establishments belonging to different NAICS industries, their company- and enterprise-level data will show a different industrial distribution when classified to NAICS, than will their establishment-level data, and the data will not be directly comparable.

NAICS has been designed for statistical purposes.

Government departments and agencies and other users that use it for administrative, legislative and other non-statistical purposes take responsibility for applying the classification in this manner.

Thank you so much for watching! Now that you’ve learned about The Purpose of NAICS, you can continue your journey to become a NAICS code expert by watching the next video in this series, The Historical Background of NAICS.