Question

How long do you suppose a business could continue a losing trend without falling into the hands of another business or going out of business? Please explain.

Answer 1

In a business that depends on trends for survival, such as fashion industry, innovation is very important. In fact, it is key to the organisation's survival.

The product life cycle is illustrated below.

At the time of introduction of a product, revenues are slow and costs are high.

During growth, there is a sharp upshoot in revenues.

At the time of maturity,a product has reached its peak. Costs are low, and revenues at their highest.

But at the decline stage, the sales drop, as the product is no longer in trend. The company can stay afloat for a reasonable period of time, but then will go under unless drastic measures are taken.

Some ways to extend a product's life cycle are differentiation, rigorous advertising, etc.