Business growth and decline Flashcards
What are the stages of the business life cycle?
Establishment, Growth, Maturity, and Post-maturity.
What are the characteristics of the establishment stage?
The business first enters the market, makes decisions on location, product, staff, and legal structure, and incurs high costs for acquiring inputs.
What are the main challenges during the establishment stage?
Sourcing finance, choosing location, developing market strategies, and ensuring regulations are followed.
What are the characteristics of the growth stage?
Increased sales and opportunities, gaining profit, and an increase in market share.
What challenges are faced during the growth stage?
Overstocking and outsourcing tasks to grow, such as hiring accountants.
What are the characteristics of the maturity stage?
Steady levels of growth, slowed market share increase, and increased competition.
What are the main challenges during the maturity stage?
Motivating staff, maintaining customer loyalty, ensuring a strong financial position, and keeping interest in the business.
What are the characteristics of the post-maturity stage?
Making key decisions for long-term growth which could lead to steady state, renewal, or decline.
What challenges are faced during the post-maturity stage?
Being aware of legal responsibilities, motivating employees, and maintaining interest in the business.
What is voluntary cessation?
When the owner decides to cease operations, such as due to retirement, inability to trade profitably, or the intention to operate for a short time.
What factors can contribute to business decline?
Lack of innovation, lack of finance, lack of business plan, poor inventory management, inadequate leadership skills, and poor location.
What is involuntary cessation?
When a business is forced to close, such as due to the owner’s death, bankruptcy, or insolvency (inability to pay debt).
What is liquidation?
The process of selling a business’s assets to generate cash to pay for liabilities and creditors.
What is receivership?
A situation where an outsider is appointed to assess the business, often in the context of financial distress.
What are the pathways of post maturity?
Renewal, steady, decline, cessation
