Dec
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Industry lifecycle is a theory linking the intensity of competition in a particular market with the time since the breakthrough innovation that made that market possible.

These exist different variations of Industry Lifecycle model<ref>Industry Lifecycle</ref>:

Philip Kotler suggests 4 stages of Industry Lifecycle: fragmentation, shake-out, maturity and decline.

Fox (1973) suggests 5 stages: Pre-commercialisation, introduction, growth, maturity and decline.

Wasson (1974) suggests 5 stages: market development, rapid growth, competitive turbulence, saturation/maturity and decline.

Anderson & Zeithaml (1984) suggest 4 stages: introduction, growth, maturity and decline.

Hill & Jones (1998) suggest 5 stages: fragmentation, growth, shake-out, maturity and decline.

The lifecycle passes through 5 distinct stages:

  • I - dormant stage with low numbers of competitors enjoying high monopoly profits
  • II - “takeoff” stage with soaring entry and virtually non-existent exit from the market
  • III - high turnover stage with many firms entering the market and leaving it
  • IV - “shakeout” stage with mass exit via mergers, bankruptcies, etc.
  • V - stabilization stage during which a stable oligopoly emerges

Industry lifecycle is commonly correlated with Product lifecycle and process innovation. Other factors that may launch industry lifecycle include:

  • government intervention (e.g., deregulation),
  • liberalization of external trade,
  • lower transportation costs.


References

<references/>

  • Michael Gort, Steven Klepper. Time paths in the diffusion of product innovations. Economic Journal, vol.92, no.367. (September, 1982) Pp.630-653.

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