Industry Life Cycle Analysis is an investigation of four stages such as Emerging or Embryonic stage, Growing stage, Mature Stage and Declining stage. Somewhere you can find 5 stages of Industry life cycle. Industry life cycle is also known as Stages of Industry life cycle. We can consider two factors for Life cycle analysis of Industry  – Market Size and Time. Somewhere 5 stages of Industry analysis can be observed. Below we have given complete information about Industry Life Cycle Analysis with suitable examples.

    Introduction

    Like products, every industry pass through different stages of growth. Every business or organization relates to a particular industry.

    For example: Retail hypermarket is a part of Retail Industry

    Cement business is a part of Cement Industry.

    Typically Industries pass through 4 stages in their life –

    1. Embryonic or Emerging Stage

    2. Growth Stage

    3. Maturity stage

    4. Decline Stage

    Somewhere we can observe 5 stages of Industry life cycle which are –

    1. Embryonic or Emerging Stage

    2. Innovation or Growth Stage

    3. Shakeout or Cost phase (Dominant design, Economies of scale, Increased entry barriers for new companies)

    3. Maturity stage

    4. Decline Stage

    All these stages are depends on two factors

    1. Market Size

    2. Time

    STAGE 1. EMBRYONIC OR EMERGING STAGE

    Emerging stage of Industry Life Cycle has following conditions.

    Conditions

    Highest Investment

    Lower and Uncertain Returns

    Companies are first movers and fast followers who have to generate capital internally or attract outside capital usually from venture capitalists

    Unproven technology, and yet not standardized

    Customers lack of Information

    Demand is being established

    High Business Uncertainty

    High risks in business decisions

    Examples of Emerging industries in India

    Biotech

    Bioinformatics

    Cyber Media

    Drug Development

    Entertainment

    Green Products (Eco Friendly)

    Organic Foods services

    Growth

    STAGE 2: GROWTH STAGE

    Examples from India:

    Automobile

    Information Technology

    Mobile Telephony

    Pharmaceutical

    Primary Education

    Private Healthcare

    Retailing

    Description

    Industry enters a growth stage as  products and services gain sophistication and market expansion.

    Reasons for entry in the growth stage:

    Improved and ongoing technology

    Reduced costs

    Key complimentary product developement

    Conditions

    Decreased capital needs and investment

    Increased Returns (High returns)

    Demand is established

    Customers are informed about products and Industry

    Customers learn to differentiate between the product offerings

    Business Models take shape

    Managerial decisions invite moderate risks

    Increase in market share

    New bases for market segmentation emerges

    STAGE 3:MATURITY STAGE

    Examples from India

    Manufacturing

    Textile

    Steel

    Oil and gas business

    BPO (Business Process Outsourcing)

    Description

    Saturated with more companies

    Increased competition

    There are few conditions for Industry Life Cycle Analysis of this stage which are given as below.

    Conditions

    Capital Needs and Investment decreased significantly

    High Standardization

    Less or few technological developments

    Lower but stable returns

    Customers are well aware and can differentiate products / options available easily

    Stable demand

    Well established business models

    Steady market share and jealously guarded

    Dominated by a small number of large companies

    Business Strategies in this stage are:

    1. Cost leadership

    2. Differentiation

    3. Focus

    All these strategies can be used at this stage to gain advantage.

    STAGE 4: DECLINE STAGE

    Examples from India

    Agriculture

    Mining

    Tobacco (e.g. Beedi)

    Print Media

    Cotton textiles

    Paper and pulp Industry

    Metallurgical Industry

    These are the examples of Sick Industries (popular term in India).

    Description

    This stage refers to individual industrial units that have declined in performance or are declining.

    The below said are the some conditions of Declining stage of Industry Life Cycle Analysis.

    Conditions

    Declined Returns

    Investment and Capital practically cease

    Technological development become superfluous

    Demand Shrink

    Very difficult to attract new customers

    Products tends to become commodity and lose their brand power

    Market share reduced

    Retrenchment strategies for movement

    Retrenchment strategies mainly focus on cost reduction.