What is Industry Life Cycle?

A concept relating to the different stages an industry will go through, from the first product entry to its eventual decline. 

1. Pioneering stage
   • First stage
   • Technology as well as the product are relatively new and have not reached a state of perfection. 
   • Characterized by rapid growth in demand for the output of industry. 
   • Great opportunity for profit and risk
   • Also called sunrises industry  
2. Expansion stage
   • This stage is quite attractive for investment purposes
   • Investors can get high return at low risk because demand exceeds supply 
   • Companies will earn increasing amounts of profits and pay attractive dividends. 
3. Stagnation/Maturity stage
   • Growth of the industry stabilizes
   • Sales may be increasing but at a slower rate than that experienced by competitive industries or by the overall economy. 
4. Decay stage
   • Products of the industry are no longer in demand. 
   • New products and technologies have come to the market. 
   • Customers have changed their habits, likings and style. 
   • Industry becomes obsolete and gradually ceases to exist. 
   • Decline in demand, changes in technology and changes in social habits are the causes of decay of an industry.