Business Growth and Decline Flashcards
What is the first stage of the business life cycle?
Establishment
In this stage, the business is created and begins operations.
What challenges does a business face during the Establishment stage?
High costs and low revenue due to setup expenses and lack of brand recognition
High risk of failure due to uncertainty in market demand.
What is a key focus during the Establishment stage?
Developing a business plan, securing funding, and establishing a customer base.
What happens during the Growth stage of the business life cycle?
Sales and customer base increase as brand awareness grows
Business begins to generate consistent profits.
What must management do to sustain growth during the Growth stage?
Effective financial management and operational efficiency.
What is a characteristic of the Maturity stage?
Business stabilises with steady revenue and a loyal customer base.
What may slow growth during the Maturity stage?
Market saturation
Requires innovation to remain competitive.
What decisions must management make during the Maturity stage?
Whether to sustain current operations or expand into new markets.
What are the three possible directions a business can take in the Post-Maturity stage?
Renewal, Steady state, Decline.
What does Renewal entail in the Post-Maturity stage?
Business innovates and reinvents itself to regain market growth.
What should businesses focus on during the Growth stage?
Scaling operations efficiently to meet increasing demand
Differentiating products or services to stay competitive.
What is a key focus area during the Maturity stage?
Operational efficiency and cost reduction.
What is a factor that can contribute to Business Decline?
Poor management decisions
Lack of vision, poor financial planning, and ineffective leadership.
What causes Involuntary Cessation?
Business is forced to close due to external pressures
Causes may include bankruptcy, insolvency, or legal issues.
What is Liquidation?
Process of selling business assets to pay outstanding debts.
What distinguishes Voluntary Cessation from Involuntary Cessation?
Voluntary Cessation is chosen by business owners, while Involuntary Cessation is forced by external pressures.
Fill in the blank: During the Growth stage, businesses may need to invest in _______.
staff training and technology improvements.
True or False: A business in the Maturity stage does not need to innovate to remain competitive.
False.
What should businesses do if decline is inevitable?
Manage closure or transition effectively.
