Briefly Explain the Generic Life Cycle of an Industry

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The Answer is Industries don't last forever. Much like humans, they have life cycles-they're born, they grow, they decline, and they die. The earliest stage of an industry is a time of rapid innovation and change as young firms struggle to become the industry standard-bearers with their technology. As these entrepreneurial firms achieve noticeable levels of success, more and more firms desiring to capitalize on the potential for success enter the industry. As the industry grows, it generally becomes more fragmented as a result of so many firms competing for position. Then, at some point consolidation begins to occur as the stronger firms begin to acquire the smaller firms and the weaker firms die out. Eventually, the number of firms in the industry stabilizes and the firms mature. If innovation in the industry ceases to occur, the industry output may actually begin to decline. However, if new, disruptive technology is introduced, the industry may have a new platform on which to innovate and grow again.

Briefly Explain the Generic Life Cycle of an Industry

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