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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.

Autor:   •  May 8, 2015  •  Coursework  •  284 Words (2 Pages)  •  660 Views

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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 Stage

  • The introduction stage is when:
  • Products are unfamiliar to consumers
  • Market segments are not well-defined
  • Product features are not clearly specified
  • Competition tends to be limited
  • Strategies:        
  1. Develop a product and get users to try it
  2. Generate exposure so the product becomes “standard”

Growth Stage

  • The growth stage is:
  • Characterized by strong increases in sales
  • Attractive to potential competitors
  • When firms can build brand recognition
  • Strategies:
  1. Strong brand recognition
  2. Create differentiated products
  3. Provide financial resources to support value-chain activities

Maturity Stage

  • The maturity stage is when:
  • Aggregate industry demand is slows
  • Market becomes saturated, few new adopters
  • Direct competition becomes predominant
  • Marginal competitors begin to exit the market
  • Strategies:
  1. Create efficient manufacturing operations
  2. Lower costs as customers become price-sensitive
  3. Adopt reverse positioning or breakaway positioning

Decline Stage

  • The decline stage is when:
  • Industry sales and profits begin to fall
  • Changes in consumer tastes or a technological innovation
  • Price competition increases
  • Firm’s strategic options depends on the competitors’ actions
  • Strategies:
  1. Maintaining the product position
  2. Harvesting profits as much as possible & reducing costs
  3. Exiting the market
  4. Consolidating or acquiring surviving firms

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