The Business Life Cycle

What are the four stages in the business life cycle?

• Introduction, Peak, Decline, Exit

• Planning, Launching, Expansion, Closure

• Establishment, Growth, Maturity, Post-Maturity

• Startup, Development, Plateau, Conclusion

What must a business do when it first starts?

• Find a location, gather resources, find customers

• Develop a marketing plan, hire executives, go public

• Secure loans, purchase equipment, hire staff

• Create a website, develop a product, start advertising

What are fixed costs?

• Costs that are only incurred during the establishment stage

• Costs that vary depending on production levels

• Costs that remain constant regardless of sales, such as rent and loan repayments

• Costs associated with marketing and advertising

What is the break-even point?

• The initial phase of the business

• The stage where the business starts making a profit

• The final stage of the business life cycle

• The point at which total revenues equal total costs

What is undercapitalisation?

• Lack of access to sufficient funds to sustain the business

• A strategy to minimize investment in the business

• Having more capital than needed

• Investing too much capital in non-essential assets

What happens in the growth stage of the business life cycle?

• The business starts to cut costs through innovation

• The business prepares to exit the market

• Sales, revenues, and profits begin to increase

• Sales and revenues start to decline

What is horizontal integration?

• Merging with a company in a different industry

• Expanding the business vertically in the supply chain

• Buying out a competitor in the same part of the production chain

• Splitting the company into smaller, more manageable units

What characterizes the maturity stage of a business?

• Rapid growth and expansion

• Sales start to plateau and profits stabilize

• The business starts to decline and lose market share

• Initial establishment of the business model

What is an oligopoly?

• A market dominated by a single firm

• A fully regulated market with no competition

• A market dominated by a few large firms selling similar but differentiated products

• A market with unrestricted competition

What can lead to the renewal process in the post-maturity stage?

• Failure to adapt to market changes

• Decreasing sales and revenue

• Maintaining a steady state without changes

• Innovation, redesign or mergers, and takeovers