Industry Growth Cycle Analysis Paper

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4.0 Industry Analysis

4.1 Growth cycle of industry

Growth cycle of the technology industry has four stages which are introduction, growth,

maturity and decline.

In the introduction stage, the technology company will facing high risk. During this

stage, the company will produce new product or software and it need a huge amount of money

to do the research and development (R&D). The process of R&D is quite time consuming as

the ideas need to be tested and verified considering various internal and external factors. This

stages also known as bleeding edge as the income from the inputs being put in making the

technology are negative in nature and the chance of failure of technology are high in nature. So,

at this stage it is very important to take the feedback on technology developed from experts and

understand the demands of the market.

Next is the growth stage. At this stage, the technology company will start to recover the

costs and expenses that have been incurred. The sales of the new technology will begin to grow

in the market and begins to gather strength and get accepted in the market. The company will

promotes the technology through various channel like in social media or the company’s website

page to gain attention from the public.

After that is the maturity stage. During maturity stage, the company will gain a high and

stable profit but there is also a point of saturation. At this stage the technology developed is

well accepted by the public but at the same time the market will reached the point of saturation.

This is because there are a lot of competitors are well aware and they may produce the same

technology with the company. Besides that, the sales will started to slow down as technology

developed starts to become another commodity in the market. So, in order to survive in this

industry, the company needs to keep on making the innovation and improvement on the

technology so that the technology suit the demands of the customer.

Lastly is the decline stage. At this stage, the company will facing the problem of

decrease in sales of products due to its replacement with another technology that is better and

innovative in nature catering to the current demands of the target market. Most of the companies

during this stage had reach the point where the profit is very low and further development are

also not profitable. So, the company will decide to move out from the current technology and

plan to produce new technology that would gain more profit.

4.2 Evaluate the competitive position of technology industry

In the last decade, technology industry has become the largest segment of the market,

eclipsing all other industry and nowadays, technology industry is associated with innovation

and invention and it is now integrated into all other existing industry like financial, health, real

estate and manufacturing. In today’s digitalized world, the technology industry has the most

growth prospects for the future. The industry is growing fast as by 2020, 50 billion smart

devices will be collecting, analyzing and sharing data and there are almost 4383 million internet

users in world. Besides that, Global AI market is expected to reach $89.8 billion.

To understanding the competitiveness of the technology industry and identifying the

strategy’s potential profitability, we can use Porter’s five forces analysis to make the analysis.

There are five forces in this model which are power of buyers, power of suppliers, threat of new

entrants, threat of substitution and competitive rivalryThe bargaining power of buyers in the

technology industry is strong. In the technology industry, the buyers refers to almost everyone

in the world as majority of the people nowadays have technological products like mobile phone

and computer and can access to internet. As the number of buyers in this industry is large, it

means that the buyers can control the technological industry. There are so many firms in the

technology industry so the buyers will have many choices. It indicates that the switching costs

is low. Besides that, the company will usually purchase technological products in large amount

to operate their business or to facilitate their work, those companies are powerful and important

to the technological company.

Next, the bargaining power of suppliers in the technology industry is low. The

bargaining position of suppliers is weakened by the high number of potential suppliers. The

company or customers is free to choose from among a large number of potential suppliers that

are suitable for them. The switching cost for the company to exchange one supplier for another

is relatively low and not a significant obstacle. If the particular company like Apple become the

major customer for most of its suppliers, therefore one of its suppliers are very reluctant to risk

losing. This will strengthens the company’s position in negotiating with suppliers, while

conversely weakening their positions.

Apart from that, threat of new entrants in technology industry is low. The technology

industry is attractive to new company to enter because of its rapid growth and appealing

customer base. However, at the same time this industry is hard to enter because the large amount

of capital is needed to start the business and the additional high cost of establishing brand name

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4.0 Industry Analysis 4.1 Growth cycle of industry Growth cycle of the technology industry has four stages which are introduction, growth, maturity and decline. In the introduction stage, the technology company will facing high risk. During this stage, the company will produce new product or software and it need a huge amount of money to do the research and development (R&D). The process of R&D is quite time consuming as the ideas need to be tested and verified considering various internal and external factors. This stages also known as bleeding edge as the income from the inputs being put in making the technology are negative in nature and the chance of failure of technology are high in nature. So, at this stage it is very important to take the feedback on technology developed from experts and understand the demands of the market. Next is the growth stage. At this stage, the technology company will start to recover the costs and expenses that have been incurred. The sales of the new technology will begin to grow in the market and begins to gather strength and get accepted in the market. The company will promotes the technology through various channel like in social media or the company’s website page to gain attention from the public. After that is the maturity stage. During maturity stage, the company will gain a high and stable profit but there is also a point of saturation. At this stage the technology developed is well accepted by the public but at the same time the ma ...
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