Discuss how each stage of the industry life cycle (introduction, growth, maturity, and decline) can play a role in decisions that managers must make at the business level. Provide an example for each stage.

Question

What will be an ideal response?

Answer 1

The industry life cycle refers to the stages of introduction, growth, maturity, and decline that occur over the life of an industry. In considering the industry life cycle, it is useful to think in terms of broad product lines such as personal computers, photocopiers, or long-distance telephone service. Changes tend to be slower than what is needed for forecasting. Why are industry life cycles important? The emphasis on various generic strategies, functional areas, value-creating activities, and overall objectives varies over the course of an industry life cycle. Managers must become even more aware of the strengths and weaknesses of their firm in many areas to attain competitive advantages. For example, firms depend on their research and development (R&D) activities in the introductory stage. R&D is the source of new products and features that everyone hopes will appeal to customers. Firms develop products and services to stimulate consumer demand. Later, during the maturity phase, the functions of the product have been defined, more competitors have entered the market, and competition is intense. Managers then place greater emphasis on production efficiencies and process (as opposed to the product) engineering in order to lower manufacturing costs. This helps to protect the market position of the firm and to extend the product life cycle because the lower costs of the firm can be passed on to consumers in the form of lower prices, and price-sensitive customers will find the product more appealing.