Welcome to the World of Education.

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.

Share This