CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment
Kerala-based SpiceRoute Foods sells packaged masalas. A strategist observes that the industry is in a stage where sales growth has slowed, most households already use branded products, competition is based on price and brand loyalty, and weaker firms are leaving the market. At which stage of the industry life cycle is the industry?
The industry is at the maturity stage. Slowing sales growth, market saturation, competition on price and brand loyalty, and the exit of weaker firms are the typical signs of maturity. Growth would show rapid rising sales, while decline would show falling demand.
- AIntroduction stage
- BGrowth stage
- CMaturity stageCorrect
- DDecline stage
Explanation
Slowing growth, market saturation, intense price and brand competition and the exit of weaker firms indicate maturity. In the growth stage sales rise rapidly with new entrants, while decline involves shrinking absolute demand. Here demand is slowing, not clearly falling, so decline is not indicated.
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