Individual Assignment Industry Life Cycle – Critique/IndustryLevel Analysis · Length: A written report ofapproximately 2,500 words Requirements You are to undertake a literature review of the...

Running Head: INDUSTRY LIFE CYCLE
Running Head: INDUSTRY LIFE CYCLE
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INDUSTRY LIFE CYCLE
Industry Life Cycle
Name
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Abstract
Understanding industry life cycle is imperative in ensuring competitive advantage and ensuring success in industries. Various stages are involved in the life cycle namely the fragmentation, shake out, maturity, and decline stage. During the fragmentation stage, new industries emerge where they deal with problems of invention and innovation. In the second stage, their competitors start realizing business prospects in the new organisation, hence competition and rivalry is increased. In the maturity stage, the success of the new organization’s products continues to ensure competitive advantage over their rivals. The final stage is the decline stage where war leading to organization’s downfall emerges and industries are forced to reconsider their model. This report has given limelight to the four stages and analyzed airline industry life cycle. It has also given recommendations to organisations going through the four phases and concluded with an all-inclusive conclusion.
Table of Contents
2Abstract
41.0 Introduction
42.0 Industry Life Cycle Framework
52.1 Embryonic Industries/ Fragmentation Stage
62.2 Shake Out Stage
72.3 Maturity Stage
72.4 Declining Life Cycle Stage
83.0 Industry Level Analysis
931 Embryonic Life Cycle of Airline Industry
93.2 Shake Out Stage of Airline Industry
103.3 Maturity Stage of Airline Industry
113.4 Decline Stage of Airline Industry
114.0 Conclusion
125.0 Recommendation
13References
Industry Life Cycle
1.0 Introduction
Just like other living creatures, industries, and products have a life cycle framework. The industry’s lifecycle is just like a human lifecycle. The major stages involved in an industry’s lifecycle comprise of fragmentation stage, shake out, then maturity and finally the decline stage (Argyes & Bigelow, pp.1332-1335). The life-cycle framework works well in assisting portfolio managers, analysts, and investors to identify the main valuation issues as well as related managerial tasks in order to enhance shareholder value (Madden, 2010, p. 150). It is also important in ensuring competitive advantage on various companies is attained. It is the duty of every industry to evaluate their life cycle and focus on areas of weakness. This will guarantee productivity and solid market entry. This treatise will focus on discussing airline industry life cycle model in relation to the four stages. It will also give recommendations on the same.
2.0 Industry Life Cycle Framework
An imperative determinant of the competitive forces and strength in an industry is the main changes that take place over a period. The differences and similarities between companies in a particular industry have become pronounced over time and the strategic group structure has modified. The nature as well as strength of each of the competitive forces has also evolved (Hill & Jones, 2011, p. 69). Agarwal and Audretsch (2006, pp. 37-40) asserts that an industry life cycle model is an imperative tool in analyzing industry’s evolution. Argyres and Bigelow (2007) and Henry (2008, pp. 207-209), identify five major sequential stages that are present in the evolution of a company which lead to four distinct kinds of industry environment. The stages are namely embryonic stage, the shakeout stage, mature and finally decline stage.
2.1 Embryonic Industries/ Fragmentation Stage
The first stage of emerging industries is the fragmentation stage. Kyung (2006, pp. 1765-1767) affirms that during this stage, the new industry arises when the entrepreneur overcomes the major problems of invention and innovation and works on how new products or services can be brought in the market. For instance, most airlines in Europe were sold to target markets at a raised price. In that case, majority of airline’s consumers in Europe were the people with high incomes and those that had enough money to pay for faster travelling mode.
During the embryonic stage, growth is always slow because of various factors like consumer’s unfamiliarity with the products of the industry, high prices because of failure of industries to reap imperative economies of scale as well a meagre distribution channels (Hill & Jones, 2009, p. 58). Competition during this stage is not based on the prices but rather on educating the consumers, opening various distribution channels, as well as ensuring that the design of the product is in perfect shape. Such competition or rivalry is sensitive as companies who focus on solving design problems have a major prospect to enhance a worthwhile market position. A fragmented industry can equally be the creation of a company’s innovative strategy as happened with industries like FedEx, microprocessors, Xerox and Google. In such a scenario, such industries have a major opportunity to ensure they capitalize on lack of competitive factors, and ensure they focus on building a strong market.
It is hence clear that the works of Argyres and Bigelow (2007) and Henry (2008, pp. 207-209) in explaining fragmentation stage has helped a lot in understanding the industry life cycle framework. The industry life cycle is imperative in offering an understanding of the competitive analysis. By analysing the fragmentation stage, it has helped to note that competition during this stage is not the key point but it is rather ensuring that consumers are made aware of the existence of the product in the market. This will help create competition as the rate of sales and earnings will increase, and the already identified products in the industry will lower their value because of the new product.
2.2 Shake out Stage
Shake out stage is the second process that the industry goes through. During this stage, the value of the industry rises (Hill & Jones, 2011, p. 71). For instance, most people tend to die and suffer because of smoking cigarettes. Therefore, a country like UK decided to start a campaign-advising people not to smoke. Nicorette one of the major companies produced various nicotine products such as Nicolette gums, lozenges and patches...