CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment
Bharat Beverages studies its industry and finds that the market is in the growth stage of its life cycle. Which feature is most typical of this stage?
The growth stage of the industry life cycle is marked by rapidly rising sales as customers accept the product, and by new competitors entering to share the expanding market. Declining sales and exits belong to decline, while low sales and losses belong to introduction.
- ARapidly rising sales and entry of new competitorsCorrect
- BDeclining sales and exit of firms
- CVery low sales with heavy product development costs and no profits
- DStable sales with intense price cutting among a few survivors
Explanation
In the growth stage, demand expands rapidly, customers accept the product and new competitors enter. Declining sales belong to the decline stage, and low sales with no profits belong to the introduction stage.
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