An Empirical Investigation of Success Strategies for Businesses Along the Product Life Cycle
AbstractSince the introduction of the concept of the product life cycle (PLC) some decades ago a great deal has been written on the subject and several empirical studies have been conducted. However, empirical research to date is often limited in scope. It is oriented towards the analysis of the growth and saturation stages and focused primarily on the study of consumer goods. Furthermore, the application of the PLC concept in strategic planning is largely disappointing, the normative orientation of most of this literature being somewhat naive and misleading. The aim of the present research is to study the efficiency of different strategies for achieving market share and cash flow objectives. This study is performed on different types of businesses producing both consumer and industrial products situated at various stages on the product life cycle: growth, maturity and decline. A sample of approximately 1,100 businesses (217 in the growth stage, 315 in the maturity stage, 569 in the decline stage) is drawn from the PIMS data base. A cluster analysis is run to identify natural groups of homogeneous businesses. For each of the nine identified groups, linear regression models are estimated to study the influence of strategic actions---finance, marketings, production, R&D, personnel---on two criteria of performance: market share and cash flow. The research indicates that strategies not only depend on the life cycle stage but also are influenced by the goal orientation of the firm---short-term (cash-flow) or long-term (market share)---and that success strategies appear to be contingent upon the business and the environmental characteristics.
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Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 30 (1984)
Issue (Month): 12 (December)
organizational life cycle; corporate strategy; product life cycle;
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