Mature industry life cycle

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Defining a Mature Industry

9. life cycle strategies

Companies within an industry may create a rivalry with one another as they compete to gain customers and market share. When an industry is relatively new, companies try to establish themselves in the industry and create a demand for their products. These products may be based on a new concept or idea, which requires companies to educate customers about their benefits. The competitive rivalry is typically strong during this period as companies race to improve their products and build a customer base. For example, your small business may work diligently during this stage to perfect your product so it becomes the industry standard. Companies focus their efforts on supplying the growing demand and increasing efficiency rather than taking business from competitors. The growing demand for products eventually slows as an industry becomes more established, or mature.
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industry lifecycle

The evolution of an industry does not always follow a predictable pattern as various external factors technological, regulatory, social, or demographic changes may significantly affect the shape of the pattern. Also, the performance of companies within industries does not always mirror that of the overall industry as there can be successful companies in declining businesses and failing companies in high-growth industries. The newspaper industry has been shrinking for years in the shadow of the internet and hour cable news networks. What is the life-cycle stage that best fits the newspaper industry? The newspaper industry has long ago moved past the shakeout stage and has more recently shifted into a period of decline against the increasing popularity of the internet.
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Evidence on entry, exit, firm survival, innovation and firm structure in new industries is reviewed to assess whether industries proceed through regular cycles as they age. A leading depiction of the evolution of new industries, the product life cycle, is used to organize the evidence. It is shown that the product lift cycle captures the way many industries evolve through their formative eras, but regular patterns occur when industries are mature that are not predicted by the product life cycle. Regularities in entry, exit, firm survival and firm structure are also developed for industries whose evolution departs significantly from the product life cycle.
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