Convenience

Sales volume
Introduction
Time
Stages
Growth
Maturity
Decline
High
Low
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F I G U R E 3 . 3
The Product Life Cycle
Managers can use the framework of the product life cycle—introduction, growth, maturity,
and decline—to plot strategy. For example, management may decide on a differentiation
strategy for a product in the introduction stage and a prospector approach for a product in
the growth stage. By understanding this cycle and where a particular product falls within
it, managers can develop more effective strategies for extending product life.
76
Part 2:
Planning
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FORMULATING CORPORATE-LEVEL STRATEGIES
Most large organizations are engaged in several businesses, industries, and markets.
Each business or set of businesses within such an organization is frequently referred
to as a
strategic business unit
(SBU). An organization such as GE operates hundreds
of different businesses, making and selling products as diverse as jet engines, nuclear
power plants, and lightbulbs. GE organizes these businesses into approximately
20 SBUs. Even organizations that sell only one product may operate in several distinct
markets.
Decisions about which businesses, industries, and markets an organization will
enter, and how to manage these different businesses, are based on an organization’s
corporate strategy. The most important strategic issue at the corporate level concerns
the extent and nature of organizational diversification.
Diversification
describes the
number of different businesses that an organization is engaged in and the extent to
which these businesses are related to one another. There are three types of diversifi-
cation strategies: single-product strategy, related diversification, and unrelated
diversification.
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