industry life cycle

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Industry Life Cycle

The period of time from the introduction of an industry to its decline and stagnation. Different analyses posit different stages of an industry life cycle (usually four to five), but all emphasize that an industry has a beginning, with technological innovation; a period of rapid growth; maturity and consolidation; and finally decline and possibly death. For example, in the video cassette recording (VCR) industry, the mid-1970s were a period of decentralized technological innovation, with VHS and Betamax formats vying for dominance. Later, video cassettes very quickly became a common household item. In the maturity phase, different companies selling VCRs attempted to corner a greater market share for their own (identical) versions of the product. Finally, the industry declined and was eventually supplanted by DVD players. An industry life cycle can be prolonged by several factors, including opening new markets to the product, finding new uses for the same product, or even attaining government subsidies. The concept of an industry life cycles applies most readily to the sale of goods and it is difficult to gauge how it works in a service economy.

industry life cycle

The stages of evolution through which an industry progresses as it moves from conception to stabilization and stagnation. The stage in which a particular industry (and thus, a firm within the industry) currently exists plays a major role in the way investors view its future.
References in periodicals archive ?
Klepper, "Industry life cycles," Industrial and Corporate Change, vol.
An industry life cycle analysis allows for firms within the industry to frame policies [4] and nature of an industry changes as the industry moves through its life cycle [5].
Different Phases of Industry Life Cycle. The basic idea of life cycle theory comes from biology parallel with the life cycle of an organism [16].
In this phase of the industry life cycle, the strategic choice is the harvesting strategy as a strategic management decision to reduce investment in the business with the hope of reducing costs or improving cash flow.
However, if the industry after recession comes through certain industrial innovations and upgradations, the output of the industry will stop to decline and may revive the industry and may bring a new round of industry life cycle [26].
Klepper, Steven (1997), "Industry Life Cycles," Industrial and Corporate Change, 6(1): 145-183.
This prediction is based on an essentially taken-for-granted premise that in the economic theory of industry evolution, the industry life cycle approach applies to the trucking industry.
A number of studies concerned with how the European trucking industry develops in response to economic change (e.g., e-commerce, globalization, and cross-border integration) have tended to adopt an industry life cycle (ILC) approach (although this approach was never intended for other than manufacturing industries) and argued that, except within a few niches, only large motor carriers can create value to shippers in the long run (Cooper 1991, 1993, Bayliss et al.
The industry life cycle (ILC) approach offers an understanding of the dynamics and evolution of industries.
Even if the ILC approach acknowledges the importance of entry from other industries, such entry is typically seen as an external shock that either reverses the industry life cycle or marks the birth of an entirely new industry.
Crucially, Kim and Mauborgne reject the idea that a company's strategic options are determined by traditional industry life cycles.
One thing is clear: Most CI industries are in the maturity or decline stages of the industry life cycle. CIs across the country tend to become involved in businesses that are in the maturity or decline stages.

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