1. THE LIFE CYCLE OF A BUSINESS

2. LIFE CYCLE OF A BUSINESS
Every business goes through 4 basic stage before it reaches full maturity.
Stages 3 and 4 tend to
continue to occur in
mature companies.

3. LIFE CYCLE OF A BUSINESS
A. CONCEPTUAL/
ESTABLISHMENT STAGE
B. START-UP/GROWTH STAGE
C. STABILIZATION STAGE
D. Post-MATURITY
STAGE

4. The four phases of the business life cycle
There are four phases of the business life cycle:
establishment
growth
maturity
post-maturity.

5. A. CONCEPTUAL/ ESTABLISHMENT STAGE
This stage is divided into four steps:
1. HAVING AN IDEA or RECOGNIZING AN OPPORTUNITY:
Opportunities are found where needs or problems exist. The need or the problem is the opportunity. The skill of identifying these needs or problems is a skill that can be
developed when one becomes
aware of their surroundings.

6. A. CONCEPTUAL STAGE 2. ANALYSING THE IDEA
Gather information and ask questions designed to assess the opportunity.
3. ORGANIZING THE RESOURCES
Weigh the money-making potential against the costs of its start up and maintenance.
4. MOBILIZING THE RESOURCES
Prepare for day-to-day running of business. (i.e., rent space). Once this stage is complete business is born

7. A. CONCEPTUAL STAGE
THE ULTIMATE SUCCESS OF ANY VENTURE IS DETERMINED BY HOW WELL THE ENTREPRENEURS EXECUTE THE FOUR STEPS OF THE CONCEPTUAL STAGE.
THE CONCEPTUAL STAGE CAN TAKE A FEW WEEKS, BUT ON AVERAGE, 6 – 9 MONTHS

8. B. THE START-UP STAGE Vision is tested
Business Plan needs revision because everything usually takes longer and cost more to implement than was originally planned.
MOST CRUCIAL stage in the life cycle
BACK TO THE
DRAWING
BOARD!!!

9. C. STABILIZATION STAGE
When a business reaches stabilization, the cash flow is relatively stable and the financial statements may start showing a profit.
It is during this period
that an organization’s
structure begins to take
shape.

10. D. POST-MATURITY STAGE
Entrepreneur decides if they want to take business beyond the stabilization stage.
Re-enters planning mode & may require additional financing.
Needs long-term strategies
May start delegating tasks to others.
May need more of the following:
structure, employees, funds, expansion.
Advertising budgets & new technology
become important to stay competitive
May end up closing/downsizing .

11. The four phases of the business life cycle
Post-maturity phase
The post-maturity phase is the final stage of the business life cycle. There are four very different stages in the post-maturity phase: steady state, decline, renewal and cessation

12. The four phases of the business life cycle
Cessation
Cessation refers to the closure of a business.
Voluntary cessation occurs when the owner of a business decides to cease the operations of the business.
Involuntary cessation occurs when the closure of the business is forced on the owner. The most common cause of involuntary cessation is the inability of the business to repay its debt.

13. The four phases of the business life cycle
Bankruptcy
Bankruptcy occurs when a sole trader or business partnership is unable to repay the financial obligations (debt) of the business.
A business will enter liquidation when an independent party is appointed by the court to sell the assets of the business so as to recover all outstanding debt owing to the business’s creditors.

14. INTERNAL AND EXTERNAL BUSINESS ENVIRONMENT

15. INTERNAL ENVIRONMENT
These are factors from inside the firm that could affect performance.
Finance Available – without money the firm may not be able to do what they wish.
Ability of Staff – the more capable staff are the more productive they will be.
Information Available – the better the information the better the decisions made.

16. ICT Availability – this can influence the quality and quantity of what is produced
Ability of Management – good managers will make good decisions
Changes in Costs – increases in wages or raw materials can affect the profitability of the firm

17. EXTERNAL ENVIRONMENT This is summarised as: Political Economic Social
Technological
Environmental
Competitive

18. The 21st Century Emergence of the “Global Village” New opportunities
New global challenges 2

19. The 21st Century Macroenvironment Microenvironment
Broad societal forces that influence every business and nonprofit marketer
Microenvironment
Consists of its customers and the economic institutions that shape its marketing practices 3

20. Macroenvironmental Influences on the Marketing Mix
Physical
environ.
Science
&
Tech.
Marketing
Mix
Economic
&
Competition
Socio-
cultural
Demo-
graphic
Political
&
Legal

21. Macroenvironment: Physical Environment
Ecological systems
Natural resources
Climate
Geography
Pollution levels
Water & Air 4

22. 3.2
The General Environment and Environmental Forces Affecting Organizations
The General Environment
Cultural Forces
Political - Legal Forces
Technological Forces
Ecosystem
Competitive Forces
Political System
Organization
Economic System
Demographics
Adapted from Figure 3.1 3

23. The General Environment
Sometimes called the macro-environment.
Are external factors, such as inflation and demographics, that usually affect indirectly all or most organizations.

24. Factors in the General Environment
Type of economic system and economic conditions
Type of political system
Condition of the ecosystem
Demographics
Cultural Background

25. POLITICAL
Laws passed in the different countries can affect the what a business does.
E.g. shops are not allowed to sell alcohol on Sunday mornings or the smoking ban in public places.
Failure to follow laws will result in fines.
Other ways the government can influence is through setting taxation rates and investment in infrastructure.

26. Roles of Government in Business
In Canada, the US, and others, the government acts as a watchdog over business
Provides direction in areas such as:
antitrust,
monetary policy,
defense,
human rights
environmental matters

27. ECONOMIC
This includes changes in interest rates, exchange rates, inflation and the economic cycle.
If interest rates are high this could stop firms from borrowing money also customers are less likely to borrow or use credit cards to make purchases.

28. If the dollar is high against other currencies this makes it hard to export goods abroad, reducing the number of sales.
If inflation is high, the prices of raw materials can be expensive which can reduce profits.
If the economy is in recession, people tend to be unemployed or worried about losing their job, therefore not spending money on luxury goods.

29. The Economic System
Western countries have an economic system in which there are:
privately controlled markets
based on supply and demand
free market competition
private contracts
profit incentives
technological advancement

30. SOCIAL DEMOGRAPHIC CHANGES
This is to do with the size and distribution of the population of a country.
E.g. Many countries have an ageing population, this has led to a rise in products aimed at older people and firms recruiting older workers

31. Slides prepared by: Joe Rosagrata
Demographics
The statistical study of human population and its distribution. E.g. age, gender, income, religion.
Ageing population—baby boomers (pre-1965)
Generation ‘X’—mid-1960s–1970s.
Generation “Y” – early 1980s-2000
New Generation “Z” » now
Single people.
Two-person household.
Increasing cultural diversity.
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata

32. Demographics
Characteristics of a population such as age, race, gender, ethnic origin, and social class
determine the characteristics of work groups, organizations, specific markets, or nations population.
Demographics influence marketing, advertising, and human resources decisions.
Such as the number of individuals the ages of 18 to 25
They change all the time.

33. Macroenvironment: Key Trends
The changing population
Migration
Urbanization
Sunbelt growth
Age & Generations
Aging “boomers”
Generation “X”
Generation “Y”
Changing household
Family & household income
Multicultural population 10

34. Demographics: Age Segments https://www.youtube.com/watch?v=IfYjGxI6AJ8
Seniors
Pre-1946 X
Generation X
Generation Y ? Y
Baby Boomers

35. Macroenvironment: Changing World Populations
Europe
Pacific Rim
South and Central America
Asia 13

36. World Population Growth
1987
5 billion
Billions of people
1820
1 billion
1930
2 billion

37. Cultural Forces
Culture is the shared characteristics, values, and beliefs of a group that distinguishes them from another group
Such as religion, language, and heritage

38. Social and cultural forces
Business are faced with changing socio-cultural patterns, lifestyles, social values and beliefs.
Changes that have significant marketing implications:
Emphasis on quality of life.
Changing gender roles.
Attitudes towards health, nutrition and well-being.
Impulse buying.
Desire for convenience and a premium on time.
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata

39. SOCIO-CULTURAL CHANGES
This is about changes in lifestyle and attitude.
E.g. More women working has seen a rise in ready meal and later opening hours
More concern about the environment, forcing firms to maybe use recycled products.
People have more leisure time, changes in attitude to single mothers have also affected the types of products offered.

40. Our changing world https://www.youtube.com/watch?v=JFR99KoMxrk
Changing attitudes to
Work.
Leisure.
Lifestyle.
New gender and family roles.
Communication revolution.
Tougher market conditions.
Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Marketing: A Practical Approach 5/e by Peter Rix
Slides prepared by: Joe Rosagrata

41. TECHNOLOGICAL
Firms need to keep up-to-date with the latest technology in order to remain competitive.
Have seen a huge growth in e-commerce (buying and selling online)
Use of machinery in the production process – more efficient and cheaper.

42. Impact of Technology What is technology?
knowledge, tools, techniques, and actions
used to transform material , information, and other inputs into finished goods and services
plays pivotal role in creating and changing an organization’s task environment

43. Impact of Technology cont...
Role in Strategy :
creates strategic options not feasible with older technologies
approaching those of traditional large-scale manufacturing facilities
marketing over the internet
online, real-time financial management systems
can determine profit and loss on a a daily basis
improved access to services (e.g. Banking)

44. ENVIRONMENTAL
Firms are aware that they have to be more environmentally friendly, not only because that is what customers want, but can be forced by the government to do so.
It can also include storms, floods, noise. All these can affect how a business operates.

45. Environmentally-Conscious Business Practices
3.3
Environmentally-Conscious Business Practices
Cut back on environmentally unsafe operations
Compensate for environmentally risky endeavors
Avoid confrontation with state and federal pollution control agencies
Comply early with government regulations
Promote new manufacturing technologies
Recycle wastes

46. COMPETITIVE
What the competition is doing can affect how a business operates.
Firms now not only face domestic competition but also foreign.
Have to keep up or be better than your competition to keep your customers.

47. Competitors Importance and Effect of Competitors
competitors are an important day-to-day environmental force facing organizations
rivalry among competitors leads to
price cutting
advertising promotions
enhanced customer service or warranties
improvements in product or service quality