In this piece, we will take a look at the ten least competitive industries in the world. If you want to skip our analysis of why competition is important, head on over to 5 Least Competitive Industries in the World.

Competition sits at the heart of the business world and the capitalist system. It forces firms to innovate and makes those with unprofitable business models or obsolete products either get their act together or go out of business.

In fact, competition is also a large reason why the Western world was eventually able to overcome the Communist system of Soviet Russia. The country had a centralized planned economy, which required steel making plants to meet their monthly quotas. The managers of these plants as a result were not eager to improve their cost efficiencies and instead would simply overhire labor and order excess raw materials to just meet the requirements set by the government. Over the long term, this introduced inefficiencies in the system, and would often lead to managers sometimes not even meeting their production targets if they were afraid that the targets would be increased next year. The end result of this ensured a lack of competition in the Soviet Union’s factories and stunted innovation – which have led to key technologies such as semiconductors and optics being relatively underdeveloped even today.

The world has changed since the time of the Soviet Union and one of the biggest changes comes in the form of the Internet. The internet allows people to make money while sitting at home instead of toiling away in factories or in offices. And its proliferation across the globe means that there are a variety of niche markets that any seller can target. And some great niche markets for 2023 come from none other than the retailing platform Shopify Inc. (NYSE:SHOP). According to Shopify, great niche markets that can be interesting in 2023 include laptop accessories, desktop toys, reusable drinking straws, melatonin gummies, GPS pet trackers, and oil diffusers. And when it comes to finding high demand and low competition business ideas, it can pay to understand search algorithms to determine which products are in high demand, analyze competitor behavior, and see if any substitute products can attract similar demand to well selling ones.

Additionally, we don’t need to take a look too far back in history to pick out which industries need competition. One of the biggest examples of an industry that lacked competition and was subsequently transformed due to an agile and intelligent entrant is aerospace. The aerospace industry has typically been funded by governments for state programs as its only other source of demand is satellites. And until 2015, the industry continued to rely on big and slow companies such as The Boeing Company (NYSE:BA) and Lockheed Martin Corporation (NYSE:LMT). However, Space Exploration Technologies Corporation’s (SpaceX) entry into the fray has forever changed the way in which the astronautics industry operates. SpaceX’s reusable rocket has dramatically reduced the cost of launch, taken market share from the largest company before it, and broken the United Launch Alliance’s (ULA) decades old monopoly in the national security space launch (NSSL) market.

Another industry that has been begging for competition for decades is satellite internet. For years the only options consumers have had came from satellites placed high up in geostationary orbits resulting in slow speeds due to the vast distances involved. And for decades, the low Earth orbit (LEO) satellite internet industry needed competition.  Yet, only one firm made an attempt starting in the 1990s. And while Teledesic Corporation tried to break into the industry, eventually it had to go bankrupt. However, SpaceX is making its mark in the LEO internet market too, with its Starlink satellite service up and running and providing coverage globally. You can take a detailed look at the satellite industry by checking out 10 VLEO Technology Stocks and Startups to Watch.

Furthermore, competition is not limited only to corporate players. It also extends itself to the job market, where thousands of candidates jostle to land a dream role. Yet, others also seek a relatively stress free life where they don’t have to worry about competition in the job market. So what are some jobs that have low competition but pay remarkably well? Well, some roles are pediatricians, pharmacists, dentists, optometrists, and tax directors.

Finally, one highly competitive industry that sees players cut prices aggressively to woo customers is telecommunications. On this front, the management of T-Mobile US, Inc. (NASDAQ:TMUS) shared details about its strategies during the firm’s latest earnings call where it shared:

So we announced last week our latest Un-carrier move with Phone Freedom, a move aimed to free customers and other wireless providers locked into those three-year contracts, while they are subjected to relentless pricing changes and gadgets. We continue to make it easier for customers to come to T-Mobile and switch to T-Mobile for peace of mind, knowing that with price lock, we won’t raise their price for top text and data. And now with new one too are part of Phone Freedom, they will be upgrade-ready in two years, because three years is too long to force customers to wait.

Here’s kind of a crazy sort of fact to get your head around, AT&T reported the lowest postpaid phone churn in the industry this quarter and yet quantitative research states that their customers have the highest self-reported likelihood of switching away. Their customers report being almost 50% more likely to switch than Verizon’s or T-Mobile’s customers. The lowest churn, but the highest apparent dissatisfaction. And to me, that means one thing. Their customers are trapped and we are here to solve it and that’s what our latest Un-carrier move is all about. That’s what Phone Freedom is all about. And it’s the way we have been designing our groundbreaking Un-carrier moves for a full decade now. And as you know, we hit another milestone this month, the three-year anniversary of our merger.

With these details in mind, let’s take a look at some of the least competitive industries in the world. If you’re interested to find out about companies that have remained in business despite being mostly the same, you can check out 10 Least Innovative Companies That Are Still In Business Today.

Our Methodology

To compile our list of the least competitive industries in the world, we used Michael Porter’s Five Forces as the backbone of our hunt. According to Porter, industries with a high buyer and supplier power, high threats of substitution and new entrants, and high competitive rivalry have low returns on investments (ROIs) since companies have little pricing power to squeeze out more margins. So, we used data from CSI Market to see which industries have the lowest ROI as a proxy for the least competitive industries.

10 Least Competitive Industries in the World

10. Capital Goods

Return on Investment (ROI) Estimate: 9.55%

The capital goods industry is typically involved with making and selling heavy duty industrial equipment. This covers a wide range of products such as steam turbines, land excavators, tractors, jet engines, and other machines. The sector requires significant capital expenditure and guaranteed orders for companies to take the risk of producing bulky and expensive goods. Some notable capital goods companies are General Electric Company (NYSE:GE), Caterpillar Inc. (NYSE:CAT), and Deere & Company (NYSE:DE).

9. Consumer Non Cyclical

Return on Investment (ROI) Estimate: 8.49%

The consumer non cyclical industry takes its name from the idea of a business cycle. A business cycle, broadly speaking, describes the economy and the business environment as prospering in cycles of high and low growth. Consumer non cyclical companies are those that are relatively insulated against the changes in the business cycle as they are typically operating in stable sectors such as utilities, healthcare, and consumer staples – which are bound to see demand regardless of the state of the economy.

8. Basic Materials

Return on Investment (ROI) Estimate: 8.01%

The basic materials industry is quite self explanatory really. It deals with the building blocks and raw materials for a variety of industries. One of the more popular basic materials segments these days is the lithium industry which is seeing sustained demand due to the global shift toward electric vehicles. Some well known basic materials companies are Rio Tinto Group (NYSE:RIO), BHP Group (NYSE:BHP), and Vale SA (NYSE:VALE).

7. Conglomerates

Return on Investment (ROI) Estimate: 7.04%

Conglomerates, simply put, are firms that try to do it all. These companies often have a global presence and often operate in completely unrelated industries. One of the best examples of a conglomerate is the South Korean chaebol Samsung which makes smartphones, medicines, washing machines, chips, and other products.

6. Transportation

Return on Investment (ROI) Estimate: 5.56%

The transportation industry is one of the more crucial ones for economic progress. Not only does it enable firms to transport raw materials and finished goods across territories, but it is also the backbone of the tourism industry. Transportation spans across several mediums, including land, air, water, and more recently, space.

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Disclosure: None. 10 Least Competitive Industries in the World is originally published on Insider Monkey.