Industry Evolution

The basic tool for identifying the industry evolution is the “Product Life Cycle,” which portrays the phases that products follow in the market. The industry is seen as an information feedback system whose dynamic behavior is captured by the industry life cycle concept. The dynamic behavior is controlled by two feedback loops: a reinforcing loop that controls the growth and decline of companies, and a balancing loop that determines the evolution of the market. Market development can be measured by the total cumulative sales of a product, which usually follows an S-shaped growth curve. Markets follow three stages: introduction, growth, and maturity. The role of management science in the area of strategic management is to provide different design options for the strategies based on “what if” situations addressing uncertainties and potential changes in the forces driving the evolution of the industry.