Industrial Life Cycle - Essay Example

Industrial Life Cycle refers to the study of different stages and steps which an industry will go thorough during its entire life. When an industrialist decides to set up a new industry, he must assess each and every stage of production. This technique involves such steps which are used to ensure the economic feasibility of the industry to be set up. The life cycle of an industry can be divided into four different stages; the Start up stage, Consolidation stage, Maturity stage, and the Decline stage.

Start up stage is the very first stage of the life cycle of an industry. This is the stage where the growth and development process is immensely fast. This stage could be regarded as the phase of the life of an industry where it is newly born. At this point of time the industry can be a small scale company which has limited production. This is the time when the investment involved is at its peak. The industry does not only require investment to initiate its production, but it also require heavy funding for the research and expertise much needed to settle down its products in the market.

The Start up stage refers to that point of life of an industry where there is virtually no profit. This is the time period where the revenue generated is at the lowest of all its levels and heavy amount is spend on the development and test prototype stages of the product. Whatever profit is generated, it is reinvested in the industries development processes, preparing it for the next stages to come. Consolidation stage of an industry refers to the time when the growth is not as fast as the initial Start up stage, but still the industry is bearing fruit and keeps running faster than the economy in general.

This is the stage where steps are taken to strengthen the industry and maximize the profit. It is during this stage that the break even is achieved and good profit starts to generate. This stage requires good marketing techniques in order to ensure that the product being offered is different and much better than its competitor’s products in the market. The economic factor involved in this stage primarily focuses on the marketing side, because if the product is launched successfully in the market it will ensure its good sale which will eventually raise the profit of the company.

During this stage it is also required that the industry carry out researches to improve its already offered product, thus ensuring its sustainability in the market. In the Maturity stage, the growth rate is not as fast as the general economy but this is the time period when growth is not the focus; in fact cash flow and share in the market are the basic targets of the industry. This is the stage when the industry has settled and its product has made the consumer accept its worth. It might be possible that some new industries will try to steal the share of the market of the already existing industry, but it would not be easy.

And with proper marketing the industry can ensure its competitiveness. A firm of an industry might pay some dividend or profit to its shareholders during this stage, as the profit is maximized. The Decline or Relative Decline is the final stage in the life of an industry. This is the stage when the growth rate becomes lower than the general economy and the industry may be substituted by a new one. This stage is comes to an industry when its research and innovations fail to face the growing challenges of the market.

Thus the product becomes obsolete and