synonymIndustrial life cycle(Economic terminology) generally refers to the industry life cycle theory
Industry Life Cycle.Industriallife cycleIt refers to the time from the emergence of an industry to its complete withdrawal from social and economic activities.The industry's life cycle mainly includes fourDevelopment stage: infancy, growth, maturity,Recession period。asOverview of termsAs shown in the figure.The life cycle curve of the industry ignores the specificProduct model, quality, specifications and other differences, only from the perspective of the entire industry.The industry life cycle can be divided intoProphase of maturityAnd late maturity.In the early stage of maturity, almost all industries have S-shapedgrowth curveIn the late maturity stage, it can be roughly divided into two types.
The product design in this period is not yet mature,Industry profit rateLower,Market growth rateHigh demand, rapid growth in demand, and large technological changes. Users in the industry are mainly committed to opening up new users and occupying the market, but at this time, there are a lot ofUncertaintyThere is a lot of leeway in product, market, service and other strategies, and little information about industry characteristics, industry competition, user characteristics, etcBarriers to entryLower.
Growth period
Industry life cycle theory
Of this periodMarket growth rateHigh demand, rapid growth in demand, technology gradually becoming finalized, industry characteristics, industry competition and user characteristics have been relatively clearBarriers to entryThe number of product varieties and competitors increased.
mature period
Of this periodMarket growth rateNot high, the demand growth rate is not high, the technology is mature, and the industry characteristics, industry competition and user characteristics are very clear and stable,Buyer's marketFormation, industryProfitabilityIt is more difficult to develop new products and new uses of products,Barriers to entryVery high.
Recession period
Industry during this periodthroughputThere will be surplus, and the technology will be imitatedAlternative productsFlooded the market,Market growth rateSerious decline, demand decline, product variety and number of competitors decrease.
From the perspective of the causes of recession, there may be four types of recession:
(1) Resource type recession refers to the recession caused by the exhaustion of resources on which production depends.
(2) Efficiency recession, that is, due to inefficientComparative disadvantageThe industry recession caused by.
(4) Agglomeration excessive decline.That is, the industry recession caused by the abuse of excessive economic agglomeration.
Analysis Introduction
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There are some limitations in the application of the industry life cycle, because the life cycle curve is a typical curve that has been abstracted, and the curve drawn by each industry according to the actual sales volume is far from such a smooth rule. Therefore, sometimes it is difficult to determine the stage of the industry development. Improper identification can easily lead to strategic mistakes.However, there are many factors that affect the change of sales volume, and the relationship is complexPeriodic changeIt is not easy to distinguish from the evolution of an industry. Moreover, the evolution of some industries is from centralization to decentralization, and some industries are from decentralization to centralization, which cannot be matched with a strategic model. Therefore,TheindustryLife cycle analysisWhen combined with other methods, it will not fall into the one-sided analysis.
Cycle stage
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The industry's life cycle mainly includes fourDevelopment stage: infancy, growth, maturity,Recession period。As shown in Figure 1life cycleThe curve ignores the specificProduct model, quality, specifications and other differences, only from the perspective of the entire industry.The industry life cycle can be divided intoProphase of maturityAnd late maturity.In the early stage of maturity, almost all industries have S-shapedgrowth curveIn the later stage of maturity, the industry can be roughly divided into two types: the first type is that the industry is in the mature stage for a long time, thus forming a stable industry, as shown in the curve 1 at the top right of Figure 1;The second type is that the industry enters the recession period quickly, thus forming a rapidly declining industry, as shown in curve 2 in Figure 1.The industry life cycle is a qualitative theory, and the industry life cycle curve is an approximate hypothesis curve.
Specific development stages and characteristics:
1. Initial stageEnterprise scaleIt may be very small, but there are different views on how enterprises in this industry develop,product type, features, performance andtarget marketContinuous development and change.The market is full of new products or services,management layerTake strategies to support product launch.product designIt is not yet mature, and the development of industrial products is relatively slow,profit marginLower,Market growth rateHigher.
Strategy: follow the opponent, participate or wait and see.
2. During the growth period, the industry has formed and developed rapidly, and most enterprisesgrowth rateIt continues to exist in the industry.The management needs to ensure that the output is fully expanded to reach the targetmarket share。A large amount of capital is needed to achieve high growth rate and production expansion plan,Cash shortage。Using patents orcost reductionTo setBarriers to entry(Intrinsicscale economy）, blockcompetitorEnter the industry.
Strategy: increase investment, increaseMarket share, Block new entrants.
3. The growth rate in the mature period drops to a relatively normal level, which is relatively stable. The sales volume changes and profits in each yearGrowth rateSmaller, more competitive.In the later stage, some enterprisesROIUnsatisfied and quit the industry, a small number of enterprises dominate the industry and need to monitor potential merger opportunities（BeerIndustry), explore new markets (China's tractor export), research and develop new technologies, and develop new products with different features.strategic management crucial
Strategy: improve efficiencycost control, access and controlMarket segmentation。Merger and expansion, research and development of new products.
4. During the recession, the industry has overcapacity and the technology has been imitatedsuccedaneumThe market is flooded, the market growth rate is seriously reduced, the product variety is reduced, and the level of industry activity decreases with the withdrawal of companies from the industry, and the industry may no longer exist or be merged into another industry.The existence period of the industry is longer than any single product.It is important to make full use of strategic management
