This post nicely complements our discussion about Apple’s recent performance. We look at the impact of an industry’s life cycle on a company.
The PLC: The Impact of an Industry’s Life Cycle on a Company
“Every industry goes through a life cycle beginning when the industry first comes into existence. Obviously, some industries’ startup phase occurred decades or even centuries ago, such as homebuilding or restaurants. However, even within those industries, we see special niches that continually come into existence — sub-industries. For example, homebuilding as a business goes back centuries. Yet, environmentally friendly homebuilding with recycled materials and solar energy remains a relatively new niche.”
“Next comes a phase of rapid growth. Inspired by the success of industry pioneers, other entrepreneurs may launch companies in that field. Eventually, the industry reaches maturity. It may not be brand new and exciting anymore. But, it offers stability and a good chance for success.”
According to Lesonsky, three types of industry decline may occur:
Rapid Decline. “Often precipitated by some drastic event, or combination of events. Such as the way the travel industry, and in particular travel agencies, declined after 9/11. At the same time, the growth of online travel search and booking sites helped those who needed to travel to book without an agent.”
Slow Decline. “Slow declines represent the most common industry transformation. They occur for many reasons, including changing demographics or attitudes. New inventions or technology. Or dwindling resources the industry needs. Print publishing exemplifies an industry in slow decline. Although print magazines and newspapers still exist, online publishing made print less profitable.”
Reinvention. “Sometimes an industry starts to decline, then reinvents itself. Thereby, leading to a new lease on life. TV broadcasting reinvented itself due to the popularity of online video and streaming services. Traditional broadcast networks now offer at least some of their content in a similar way..”
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