CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
A firm in the decline stage of its industry life cycle decides to cut all new investment and extract the maximum cash from its existing product while demand falls, eventually withdrawing. This approach is known as:
This is a harvesting strategy. The firm stops new investment and squeezes maximum cash from the declining product until it exits. Penetration and market development are growth strategies, and backward integration is about controlling upstream supply, so they do not fit a declining industry.
- AHarvesting strategyCorrect
- BPenetration strategy
- CBackward integration
- DMarket development
Explanation
Harvesting means minimising investment and maximising short-term cash flow from a declining business before exit. Penetration and market development are growth-oriented, and backward integration concerns moving upstream in the supply chain, so none suit a declining business.
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