Let us look at the industry life cycle model from a strategic perspective and consider its implications for the choices made by companies in each of the stages.
First, we must understand that the life cycle duration may vary widely across industries as each follows its own trajectory.
The introduction phase of the automobile industry in America lasted approximately 25 years. Starting in 1890. While the introduction stage of the personal computer industry took only four or five years, starting in the late 1970s.
In addition, a particular industry could be at different phases of its life cycle in different countries around the globe.
This is the case with the automobile industry. Studies have shown the market is still in its growth phase in Russia, China and India.
Competent top managers understand and exploit these trends. They know the phase their industry is in and have expectations about how long it’s going to last.
Ideally, they will enter a market in the growth phase and competes throughout maturity when cash flow generation is the highest.
Then they look for new opportunities when the decline phase approaches. That is why the industry life cycle model and the recognition of its stages is crucial.
This framework facilitates the understanding of an environment characterized by constant change where companies must adapt their strategies to survive.
