Business Life Cycle Essays

Business Life Cycle Essays Business Life Cycle Essay Business Life Cycle Essay The Business life cycle can be split into 4 main stages. These are- Establishment, Growth, Maturity and Post-maturity. Post-maturity can be split into a further 3 â€Å"options†. These are- Establishment is when the business is created. In the phase, it is vital to create a strong foundation and secure income. You must make sure the expenses do not outweigh your income. You find it difficult to getting finance, due to low profit and sale levels from poor customer awareness. This can be very problematic, as there are often high start-up costs for new businesses. During establishment, you must decide what structure to follow (sole trader, partnership ) Employ workers, find a facility to mass produce your product, factoring in production costs vs. Final profit, Work out the market value for your product, too high and you will lose out to your competitors, too low and you will not be able to cover the costs of production and generally functioning as a business. All this and you must work out how to let the public know about your product (advertising) and setting up the appropriate bank accounts, dealing with employee and business taxes and arranging insurance for everything. Growth is when long term plans for the business must be made. Sales increase, you have a solid customer base and you have larger production levels. These pose a problem, as more finance, employees and equipment may be required to meet up with supply-demand. During this time, the decision may be made to change business structure to allow for smoother running, or easier ways of getting money. This increase of just about everything creates a lot of management stress, and occasionally outside parties must be hired to deal with it. Maturity is when the company is established on the market and needs to innovate continuously to stay competitive, and your long-term plans are met. There is more competition, profits and sales level off and if you have saturated your market, the business may be required to alter or create a new, better product to keep up with the market. How the business should be operated must be re-thought to ensure your business survives. This could sometimes mean dramatic changes, such as a complete re-structure of the business, or something small such as the business becoming a more formally organised structure. Post maturity is where a business goes after maturity. There are 3 different ways to go. These are Renewal, Steady state and Decline. The decline ultimately ends in the business closing down. It becomes harder o compete with other products, yours may have become obsolete, and your employees may leave to look for better opportunities. A business in a steady state is in exactly that- a steady state. It is neither expanding nor declining. This is not necessarily a bad thing, but eventually it will lead to either a decline or renewal, as competitors will try to buy you out or take your customer base. To get into renewal, you must tap into new markets and meet new requirements in your customers’ life. This takes enormo us effort from both the owners and employees. This sometimes requires leaving behind old products, creating new ones, or re-designing your brand, coming at it at a different angle. You know you have succeeded when profit levels reach all time highs, and although cash flow may decline as costs for research into new markets begins, in the long term you end up with more capital. Westfarmers. (bussiness example) Westfarmers was founded by farmers and focused on the distribution of services and farming equipment to the rural community of Western Australia. It is currently in a state of post-maturity renewal. In the 1940s the company did things like being wheat and general merchants; country distribution for Commonwealth Oil Refineries Ltd; wool, live stock, skin and produce auctioneers; grain fruit exporters; insurance underwriters; acquiring agents for the wheat pool of W. A. Westfarmers had set-ups in different locations in the Perth central business district. In the 1940s there headquarters was at 563-571 Wellington Street. They also had headquarters at Newman Street in Fremantle. In 1985 Westfarmers restructured itself from a co-operative to a public company and was listed on the Australian Stock Exchange. Wesfarmers is now in a constant state of renewal, from buying out stores such as K-mart, Coles, Officeworks, Bunning’s warehouse, Target and Houseworks. If it keeps going on buying out more and more companies they will become extremely profitable, and very hard to contend with. Bibliography- http://en. wikipedia. org/wiki/Wesfarmers wesfarmers. com. au/people_home. aspx fairfaxcounty. gov/dpsm/osb/start_up. htm fairfaxcounty. gov/dpsm/osb/growth. htm Pg 28-31, 35-36, 38-39, â€Å"business studies in action† S. Chapman, N. Devenish, M. Dhall.