The Importance of Considering the Industry Life Cycle to Determine a Firm’s Business-Level Strategy and Its Relative Emphasis on Functional Area Strategies and Value-Creating Activities.
LO5.7: The Importance Of Considering The Industry Life Cycle To Determine A Firm’s Business-Level Strategy And Its Relative Emphasis On Functional Area Strategies And Value-Creating Activities.Introduction StageThe introduction stage is when:Products are unfamiliar to consumersMarket segments are not well-definedProduct features are not clearly specifiedCompetition tends to be limitedStrategies:        Develop a product and get users to try itGenerate exposure so the product becomes “standard”Growth StageThe growth stage is:Characterized by strong increases in salesAttractive to potential competitorsWhen firms can build brand recognitionStrategies:Strong brand recognitionCreate differentiated productsProvide financial resources to support value-chain activitiesMaturity StageThe maturity stage is when:Aggregate industry demand is slowsMarket becomes saturated, few new adoptersDirect competition becomes predominantMarginal competitors begin to exit the marketStrategies:Create efficient manufacturing operationsLower costs as customers become price-sensitiveAdopt reverse positioning or breakaway positioningDecline StageThe decline stage is when:Industry sales and profits begin to fallChanges in consumer tastes or a technological innovationPrice competition increasesFirm’s strategic options depends on the competitors’ actionsStrategies:Maintaining the product positionHarvesting profits as much as possible & reducing costsExiting the marketConsolidating or acquiring surviving firms