Industry Life Cycle

In an evolving market, the introduction of goods and services follows a trend that somehow
repeats itself over and over again in other industries. At least in general terms, it is necessary for
us to understand the process because the strategy of any company works better if it's tailored to a
particular phase of the industry.

This introduction marks the Emergence of the industry: the stage where a handful of innovators
start putting together primitive versions of the product, trying to find a sizable market for it, in
the pursuit of getting a pioneer advantage in the upcoming industry. During the Emergence
phase, it might not be clear yet to the developers which target customers the product fits best,
and they may not even know what problem it solves. But with its annealing, an industry is poised
to transition into a Growth period, leaving its Emergence behind as the adoption of the dominant
design starts gaining traction and the revenues of the industry grow, in many cases exponentially.
During Growth, innovators try to make their products more appealing to larger audiences within
the market, to capture bigger slices of the demand the new industry is creating. In some
industries, particularly those with a high technology content, the growth phase may happen in a
very abrupt, rapid way, giving origin to a particular pattern which many have come to call an “S”
adoption curve or the hockey stick because of its steep slope [CITATION Str19 \l 1033 ].

Throughout the phases of Emergence and Development, official action is generally low as
regulators seek to get their heads around the new approach and its consequences for society (and
its constituents).When government becomes more informed about the market, they are
researching ideas about how to monitor the industry's actions and its participants, opening up
possibilities for experienced players to collaborate with policymakers to influence how to
regulate the industry. For example, the car sharing company Uber is well known for its
aggressive lobbying campaigns seeking to influence how the relevant jurisdictions will regulate
and manage its emerging business.

As the industry matures, margins continue to decline to a steady level as well. Stable
productivity, effective regulation and stable market climate are characteristic of a mature
industry. Companies operating within mature industries are facing competition but still find ways
to distinguish their goods and benefit from credible barriers to new entrants, modest growth and
a steady inflow of stable demand. The view ahead is maybe bumpy, but smooth and clear.
Maturity is usually the longest phase in most industries, lasting for decades or even centuries in
some cases like in construction and fine dining [CITATION Str19 \l 1033 ].

Nevertheless, after some time, the capacity for additional growth of an industry may begin to
slow down and differentiation becomes harder to achieve, which inevitably agitates competition
and rivalry among competitors, clear signs that the industry has already past its prime. Besides
that, the industry is beginning its stage of decline, a time of sluggish or negative growth,
declining margins and loss of market relevance.

During Decline, businesses usually fight with each other over the limited market pie, engaging in
all kind of maneuvers, price wars, deceptive marketing and dark magic tricks to win over
customers. In most cases, the transition from Maturity to Decline happens at a very slow pace, so
inconspicuous that it may go unnoticed to incumbents for years, especially powerful players
whose dominant position allows them to produce healthy margins even when the warning signs
are evident, and while the less fortunate go out of business[CITATION Str19 \l 1033 ].
Phases of the industry life cycle [CITATION Str19 \l 1033 ].

Uber’s Current Stage

Uber is in the growth stage of the business cycle. Economic growth is in essence a period of
sustained expansion. Hallmarks of this part of the business cycle include increased consumer
confidence, which translates into higher levels of business activity. Because the economy tends
to operate at or near full capacity during periods of prosperity, growth periods are generally
accompanied by inflationary pressures”[CITATION Aar15 \l 1033 ]. Even though Uber is at the
business cycle's growth point, the inflationary pressures are of great concern. Prices for the surge
was directly in line with inflation. If the customer is not able to pay the spike price, instead Uber
will rely on other ways of making money and keeping up with the inflation costs.

The next round of business is decline. Uber may also be at the forefront of decline by not
sticking to the needs and demands of technology and customers. A decline is “referred to as a
contraction or downturn, a decline basically marks the end of the period of growth in the
business cycle. Declines are characterized by decreased levels of consumer purchases” [CITATION
Aar15 \l 1033 ].

Uber's "surge" pricing market model is still a new idea but has succeeded to this stage. The
increased pricing during peak periods has allowed Uber to keep more drivers on the road with
less customer waiting times. Understanding that the comfort and reliability during peak hours
will come with a heavy price tag. Overall, Uber conquered several obstacles to taxi cab entry and
built an entry barrier for existing and emerging ridesharing firms. For Uber the surge-pricing
model was successful. We'll expect Uber to keep up with the demand that will build new and
innovative ways to enter into new markets.
 References

Aaronson, D. (2005). Uber: What are the real economic gains? Conversable economist.

Strategy for Executives. (2019, March 13). Retrieved from Strategy for executives web site:

https://strategyforexecs.com/industry-life-cycle/