Any industry follows a particular life cycle; here is the list of stages of Industry Life Cycle through which industry has to pass through –
1. Pioneering Stage – In this stage rapid growth occurs in demand of the products for the industry happens and therefore companies which can survive the competition enjoys a high growth in their sales as well as their profit.
2. Expansion Stage – Under this stage companies which had survived in the pioneering stage became big companies, however they do not enjoy the same growth in sales and profits as they had enjoyed in pioneering stage.
3. Stabilization Stage – Under this stage products become standardized and also due to more competition companies have to reduce the price of their products so as to maintain their sales growth which leads to lower profits. In other words companies stops growing or grow at very less rate.
4. Declining Stage – Under this stage companies either merge with bigger companies or go out of the industry because there is no growth and therefore companies tend to shift their focus on other industries in which they see growth.