Ice Cream Industry
growing while others are declining, the performance of companies will depend amongother things upon the state of the industry as a whole and the economy. If the industryprosperous, the companies within the company may also be prosperous although a fewmay be in bad shape. The share price of the company is empirically found to depend upto 50% on the performance of the industry and economy. To analysis the industrial performance one should follow three steps.
Industry life cycle analysis
Study of the structure& characteristics of an industry
1.Industry life cycle analysis:(Product life cycle theory)
Many industrial economists believe that the development of almost every industrymay be analyzed in terms of life cycle with four well defined stages.
Pioneering stage :( Introduction stage)
The stage is characterized by introducing of a new product and uptrend inbusiness cycle which encourages new product introductions. Demand keeps on growingat an increasing rate competition is generated by the entry of new firms to grab themarket opportunities weaker firms face premature death while stronger over survive togrow and survive. This stage is mainly suitable for a speculator.
Rapid growth stage: (Expansion stage)
Firms which enter in pioneering stage will concentrate on expansion of theirsales & profits in this stage. It is suggest to the investor respond quickly & invest morein this stage. The market continues to grow but slowly offering steady and slow growthto sales of industry. It is a phase of consolidation wherein companies establish durablepolicies relating to dividends and investments.
School of Management