Describe the Industry Life Cycle

· Reflects the changes that take place in an industry over time.

· Birth stage: firms seek to develop a winning technology.

· VHS vs. Betamax in video, or 8-track vs. cassette in audio.

· Growth stage: Product gains customer acceptance and grows rapidly.

· New firms enter industry, production improves, distributors emerge.

· Shakeout stage: at end of growth, there is a slowing customer demand.

· Competitor rivalry increases, prices fall.

· Least efficient firms fail and leave industry.

· Maturity stage: most customers have bought the product, growth is slow.

· Relationships between suppliers, distributors more stable.

· Usually, industry dominated by a few, large firms.

· Decline stage: falling demand for the product.

· Prices fall, weaker firms leave the industry.

The life cycle of the industry - a period during which industry goes through four stages: nucleation, growth, maturity and decline.

Аll industries can be divided into three groups: innovative or emerging, mature and industry in recession. Companies in these industries have similar strategies, despite the fact that they can produce very different products. In developing the strategy the enterprise of any industry such problems arise:
- Determine at what stage of the life cycle of the industry is at the moment;
- To establish whether it is possible to do something to slow down or speed up the decline in growth.
The life cycle of the industry may change under the influence of supply, competition, the emergence and spread of new knowledge (new technologies, new substitute products, new requirements), changes in the industry environment.

14. The General Environment

· Consists of the wide economic, technological, demographic and similar issues.Managers usually cannot impact or control these. Forces have profound impact on the firm.

Economic forces: affect the national economy and the organization.

· Includes interest rate changes, unemployment rates, economic growth.

· When there is a strong economy, people have more money to spend on goods and services.

Technological forces: skills & equipment used in design, production and distribution.

· Result in new opportunities or threats to managers.

· Often make products obsolete very quickly.

· Can change how we manage.

Socialcultural forces: result from changes in the social or national culture of society.

· Social structure refers to the relationships between people and groups.

· Different societies have vastly different social structures.

· National culture includes the values that characterize a society.

· Values and norms differ widely throughout the world.

· These forces differ between cultures and over time.

Environment - a set of objective circumstances in which the activities of the company. There are internal and external environment of the enterprise. The external environment - a set of factors that have a direct impact on production and the operations of the company. Management theory considers the firm as a system of two main types: closed and open. Closed system arbitrarily assumes a degree of independence from the surrounding external environment company. Аny dependence on the external environment of the organization is an open system. All environmental factors can be divided into two main groups: direct and indirect effects

Environment direct impact. Consumers - it is one of the key factors for any business, as they determine what products to produce and at what price it can be sold. Suppliers of material, labor and financial resources.

Date: 2015-12-18; view: 655