Operating Segments

Hello, do you know for example the Unilever company? They produce a lot of different stuff, including food (Lipton tea, Hellmans mayonnaise, Flora margarine etc), cosmetics (Axe, Rexona, Dove, Timotei etc) as well as home care products (Domestos, Cif etc).
As each of these generates big revenues for the company, they can distinguish each of these groups of products as operating segments: “Food”, “Cosmetics”, “Home care products”. Probably they have also other ones.

Another example would be a division based on the geographical areas. Let’s say your company is a retailer of some machinery. You sell this machinery both in your country and also abroad. If the sales abroad are a big part of your business, then you can distinguish these 2 operating segments.

Of course, according to the revised IFRS 8 the segments should be distinguished based on the way the management divides the business of the company into different segments which are then regularly analysed by the management.

I hope this helps.

Btw, This is not any advertisement of Unilever – it was just the first company that came into my mind as a good example. You can easily find hundreds of similar companies.

Good example Szparag, thanks