NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
During which stage of the industry life cycle do firms typically show rapid sales growth, but profits are still low or uncertain because of heavy investment and competition from many entrants?
This is the growth stage of the industry life cycle. Sales expand rapidly and many competitors enter, but heavy investment and competition keep profits low or uncertain. Maturity has slower growth, and decline sees falling sales.
- AIntroduction/early stage only, with negligible sales
- BGrowth stageCorrect
- CMaturity stage
- DDecline stage
Explanation
In the growth stage, sales expand rapidly and many entrants join, while firms invest heavily so profits are still uncertain. Maturity brings slower growth and stable margins, and decline brings falling sales.
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