© 2000 John Petroff
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© 2000 John Petroff |
A company that is satisfied with its steady state is a company that has no future. There will eventually be a product that will capture customers attention and leave no income for the old basic item (e.g. decline of passenger rail when automobile and air travel became common). The production of basic items can also fall in the hands of producers satisfied with such small margins that other producers will pull out of the market. Supposedly, no company would stick to a product approaching obsolescence. It ought to seek new product opportunities with research and development long before facing such predicament.
The product life cycle has been criticized for its simplicity. In truth, it does not apply well to any particular product because all products are continuously evolving, and it does not apply to any individual firm because firms do not have just one product. The life cycle of most products has recently been accelerating witness for instance the cellular phone which is said to have reached maturity before even the end of the century, within less than ten years, where as steam engines took over one century. Yet, despite the differences and shortcomings, the model is useful because it vividly shows that managerial strategies are very different depending on what type of and competitors the firm is facing.
See review questions Q-14B6.1 through Q-14B6.3.
See research assignments R-14B6.1 and R-14B6.2.
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