ACCA Strategic Professional · Strategic Business Leader · Environmental issues
Veltrix Ltd makes smart home thermostats. Industry sales have grown by 40% a year for three years, product designs differ widely between firms, many new entrants have appeared, and most firms are still making losses because of heavy investment in capacity and marketing. Which stage of the industry life cycle does this industry best fit?
The industry is in the growth stage. Sales are rising rapidly, new competitors are entering and firms are investing heavily in capacity and marketing, which depresses profits. Introduction would have low volumes and few rivals, while maturity would show slowing growth and consolidation.
- AIntroduction
- BGrowthCorrect
- CMaturity
- DDecline
Explanation
Rapid sales growth, new entrants and heavy investment are typical of the growth stage. Introduction would show low volumes and few competitors. Maturity would show slowing growth, consolidation and price competition. The fact that losses persist reflects investment, not decline.
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