The Concept of Industry Life Cycle and Development of Business Strategies
The situation in which firms are struggling with decreasing demand for their goods and services gives an incentive to explore strategic fractures that have caused it. It is therefore of great importance to search for the system of cause and effect that shapes and defines organizational adaptability and creativity of the firm and/or its parts, which in turn creates value both for the firm and its environment. The appropriate use of specific business strategies highly depends on the phase of the life cycle of the industry in which the firm and/or its parts operate. The purpose of the paper is to understand the significance of the concept of industry life cycle and explore the implications on the process of designing business strategies. The authors familiarise the readers with the most important research that has contributed to the development of business strategies fitted to each phase of the life cycle of an industry. The paper concludes with the notion that business strategies of firms vary depending on the corresponding stage of the industry life cycle, where each phase inherently requires a different, innovative business strategy. Therefore, the main precondition of sustainable development of a strategic business unit and/or firm is the willingness and capability of management to accept new knowledge about the interdependence between business goals and interdisciplinary knowledge required to achieve them.