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over time. As Figure 3.3 shows, the cycle begins when a new product or technology is
first introduced. In this introduction stage, demand may be very high and sometimes
outpaces the firm’s ability to supply the product. At this stage, managers need to
focus their efforts on “getting product out the door” without sacrificing quality. Man-
aging growth by hiring new employees and managing inventories and cash flow are
also concerns during this stage.
During the growth stage, more firms begin producing the product, and sales continue
to grow. Important management issues include ensuring quality and delivery and begin-
ning to differentiate an organization’s product from competitors’ products. Entry into
the industry during the growth stage may threaten an organization’s competitive advan-
tage; thus, strategies to slow the entry of competitors are important.
After a period of growth, products enter a third phase. During this maturity stage,
overall demand growth for a product begins to slow down, and the number of new
firms producing the product begins to decline. The number of established firms
producing the product may also begin to decline. This period of maturity is essential
if an organization is going to survive in the long run. Product differentiation concerns
are still important during this stage, but keeping costs low and beginning the search for
new products or services are also important strategic considerations.
In the decline stage, demand for the product or technology decreases, the number of
organizations producing the product drops, and total sales drop. Demand often
declines because all those who were interested in purchasing a particular product
have already done so. Organizations that fail to anticipate the decline stage in earlier
stages of the life cycle may go out of business. Those that differentiate their product,
keep their costs low, or develop new products or services may do well during this
stage.
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