KENYA TECHNICAL TEACHERS COLLEGE

COURSE: HIGHER DIPLOMA IN SECRETARIAL MANAGEMENT

SUBJECT: ENTREPRENEURSHIP EDUCATION

ASSIGNMENT: THE BUSINESS LIFE CYCLE

(Meaning of business life cycle, Stages in the business life cycle, challenges faced by anEntrepreneur at stage of the business life cycle and strategies that an entrepreneur mayAdopt at each stage of the life cycle)

SUBMITTED TO: MRS. NJENGA

NAME:GRACE KAMUNGE -2014BE30004

RUTH J. ROTICH - 2014BE29920

G R O U P EIGHT

BUSINESS LIFE CYCLE

It refers to the various stages of development of a small business. A business goes through stages of development similar to human race; parenting strategies that work for your toddler cannot be applied to the teenager. A business will also require different financing sources as it grows.

The following are the stages of a business life cycle.

1. STAGE 0 THE ASPIRATIONAL STAGE.(SEED) People in this stage want to start a business and like the idea of it, but they havent committed to becoming entrepreneurs.

2. STAGE 1 ESTABLISHMENT.(START UP) People in this stage have decided to start a business and are actively building their market and offers. They might not have many or any customers, but theyre no longer sitting on the fence about being an entrepreneur.

3. STAGE 2 THE GROWTH STAGE. Entrepreneurs in this stage have a business plan and are growing their revenue streams with new clients and customers. These entrepreneurs are not booked solid or running at full capacity yet, but theres no longer a question that they have a viable business model.

4. STAGE 3 MATURITY. Entrepreneurs in this stage are at the delightfully frustrating point at which theyre booked solid and working at full steam, but the demand for their goods and services outstrips their ability to meet it. Something has to give, but entrepreneurs often dont want to let go of the business activities that have gotten them to this stage.

5. STAGE 4 POST MATURITY. Entrepreneurs in this stage have figured out what it was that kept them bottlenecked and constricted at Stage 3, have fixed it, and are now running full steam ahead. They have the team and support they need in order to focus on their core competencies, or if they dont, they have a specific plan in place to get those resources.

CHALLENGES PRESENTED AT EACH STAGE OF THE BUSINESS CYCLE.

STAGE1. ESTABLISHMENT

The challenges facing the entrepreneur at this stage are; High costs associated with the setup of the business. Difficulties in obtaining the necessary funds for the business. Slow growth in sales putting pressure on cash flow. Difficulties in attracting staff with appropriate skills. High costs associated with the promotion of the business.

If the business can conquer these challenges it will experience growth, move into the second phase of the business cycle and be confronted with a whole new set of decisions to be made.

STAGE 2. GROWTH

The challenges for business operators during the growth phase include: Ensuring the quality of service or production is maintained as output grows. Developing appropriate accounting and financial information systems which provide management with detail about the business. Managing the cash flow and being aware of the financial requirements involved in expanding the business. Sustaining growth and not letting the successes of the business create a sense of self-satisfaction or laziness. Redefining the role of management so that the managers workload is not overwhelming. Recruiting new employees and delegating responsibility.

STAGE 3: MATURITY

The challenges for business operators during the maturity phase include: Staying responsive to changes in consumer demands. Identifying opportunities for innovation in products and services. Rationalizing business operations and minimizing costs. Sustaining the motivation of management and staff and avoiding laziness and complacency.

STAGE 4: POST MATURITY

Understanding the changing tastes and needs of the customer base. Shifting into new or related markets where there are greater growth opportunities. Orienting the management and staff towards change.

STRATEGIES THAT AN ENTREPRENEUR MAY ADOPT AT EACH STAGE OF THE LIFECYCLE

During the Introduction phase, there will most-likely be heavy promotional and advertising activity designed to raise awareness of the new product, and to seek sales among early adopters adventurous consumers who like to own cutting edge products.

Depending on the nature of the product, it will either have a premium price so that its development costs can be recouped quickly (this is the approach used with most high-tech products) or be priced low to encourage widespread adoption what marketers call market penetration. Moving on to the Growth Phase, promotional activities will tend to focus on expanding the market for the product into new segments usually either geographic or demographic and supporting this by expanding the product family, for example with new flavors or sizes (cartons of fruit drinks specifically sized for kids lunch boxes, for instance.

By the time a product reaches its Maturity Phase, the company producing it needs to reap considerable rewards for the time and money spent developing the product so far.

The products features may continue to be refreshed from time to time, and there will still be some promotion to differentiate the product from the competition and increase market share. However, the marketing activity and expenditure levels may be much lower than earlier on in the lifecycle.

Finally, once the product begins to Decline, marketing support may be withdrawn completely, and sales will entirely be the result of the products residual reputation amongst a small market sector. (Elderly people, for example, may go on buying brands that they started using forty or even fifty years earlier.)

By this stage, the most important decision that needs to be made is when to take the product off the market completely. It can be tempting to leave a declining product on the market especially if it served the company well in its time, and theres a certain sentimental attachment to it. However, it is essential that the product is not allowed to start costing its producer money, and this can easily happen if production costs increase as volumes drop.

More importantly, the old products very existence can absorb managers time and energy, and can discourage or delay the development of a new, potentially more profitable replacement product.

Reference: Internet

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