A concept relating to the different stages an industry will go through, from the first product entry to its eventual decline.
- 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
- 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.
- 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.
- 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.
April 15, 2022
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