NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
In the industry life cycle framework, which stage is typically characterised by slowing growth in sales, consolidation among competitors, and stable but strong cash generation by leading firms?
The maturity stage fits this description. Growth slows toward the overall economy's pace, competitors consolidate, and leading firms generate stable cash flows with modest reinvestment. Early stages feature heavy investment and fast growth, while decline involves shrinking sales.
- AMaturity stageCorrect
- BPioneering (start-up) stage
- CRapid expansion stage
- DDecline stage with falling absolute sales
Explanation
In maturity, growth rates approach that of the economy, weaker firms exit or merge, and leaders earn stable cash flows with limited reinvestment needs. Start-up and expansion stages show high growth and heavy investment, while decline shows falling sales.
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