1. Life cycle of industry
Structure of an enterprise is not something that changes easily. Any enterprises should establish a strategy which matches the industrial environment at the given time.
Let us try to understand the idea of life cycle of a product of an industry here. Any industry grows gradually while passing through various stages.
First of all, the sales do not increase because the new product is not fully known or acknowledged by the general customers at the initial stage on entry. The sales pick up promptly once the merits of the new products have been acknowledged. After some time when almost all the major customers have procured this new product and the demand is mainly restricted to these customers, who want operation go in for a change, it results in dull growth. Finally, the growth rate becomes zero. Further, the sales decline due to severe cost competition as well as the changes in needs. The fall in growth rate and the sales is further severe when new alternate products start appearing.
Further, in actual practice it can not be denied that this type of standardized concept is free from problems. It is not surprising to find some industries, which have recovered the high growth rate through innovations and new application of products, though it is considered to be at a stage of maturity period. The competition pattern probably varies depending upon the industry and it may not be exaggeration to call the method of comparing the industry on the basis of single index i.e. growth rate, a too simple an approach. The structure of an industry changes fundamentally at times and there are various factors besides the growth rate, which force this change. Some of the factors are the change in technology base and characteristics feature of the product, dispersion of monopolistic know how and technology information like patent etc, originality in marketing and the change in appropriate size etc.
However, it is not the structural factors prevalent inside the industry alone, which determine the type of enterprise that should remain or enter in the industry and the type of enterprises which must move out of the industry. There are other important factors which affect the industry strongly. These factors include the policy changes by the Government and structural changes in the related industries like the world of customers or the supplier of the alternate product, the parts supplier, or material and extra finance etc.
It is necessary to formulate the strategy considering various factors, as described above during the stages of developments.
Let us try to understand the operation strategies for different periods, e.g. by dividing the periods in three, namely introduction and growth period, maturity period and decline period.
Structure of an enterprise is not something that changes easily. Any enterprises should establish a strategy which matches the industrial environment at the given time.
Let us try to understand the idea of life cycle of a product of an industry here. Any industry grows gradually while passing through various stages.
First of all, the sales do not increase because the new product is not fully known or acknowledged by the general customers at the initial stage on entry. The sales pick up promptly once the merits of the new products have been acknowledged. After some time when almost all the major customers have procured this new product and the demand is mainly restricted to these customers, who want operation go in for a change, it results in dull growth. Finally, the growth rate becomes zero. Further, the sales decline due to severe cost competition as well as the changes in needs. The fall in growth rate and the sales is further severe when new alternate products start appearing.
Further, in actual practice it can not be denied that this type of standardized concept is free from problems. It is not surprising to find some industries, which have recovered the high growth rate through innovations and new application of products, though it is considered to be at a stage of maturity period. The competition pattern probably varies depending upon the industry and it may not be exaggeration to call the method of comparing the industry on the basis of single index i.e. growth rate, a too simple an approach. The structure of an industry changes fundamentally at times and there are various factors besides the growth rate, which force this change. Some of the factors are the change in technology base and characteristics feature of the product, dispersion of monopolistic know how and technology information like patent etc, originality in marketing and the change in appropriate size etc.
However, it is not the structural factors prevalent inside the industry alone, which determine the type of enterprise that should remain or enter in the industry and the type of enterprises which must move out of the industry. There are other important factors which affect the industry strongly. These factors include the policy changes by the Government and structural changes in the related industries like the world of customers or the supplier of the alternate product, the parts supplier, or material and extra finance etc.
It is necessary to formulate the strategy considering various factors, as described above during the stages of developments.
Let us try to understand the operation strategies for different periods, e.g. by dividing the periods in three, namely introduction and growth period, maturity period and decline period.