Factors That Affect the Industry Life Cycle

In addition to the previous post on “Industry Life Cycle,” I would like to introduce the major factors that influence change in an industry’s life cycle.

Demand Growth: the pattern of demand and supply is responsible for the industries movement along various stages of the cycle. At the emergence of a business, there tends to be an increase in demand for products, which outweighs the supply level. As the business grows, the supply increases to meet up with the increasing demand level. During the stage of maturity, the supply level becomes higher as demand decreases. However, if the industry implements certain measures to enable it maintain a positive demand/supply pattern, it prevents it from declining.  The decline stage entails a decrease in both demand and supply.

Creation and Diffusion of Knowledge: An industries ability to innovate and modify products makes it stand out from competitors. This means that a business should observe consumer trends to improve its product design and function, ensuring that it provides the best quality of products and services, to prevent it from declining.