Question

With respect to the business life cycle - a business that is experiencing peak sales, declining profits, and a stable, then declining number of competitors, is in the _______ phase of the business life cycle?

Answer 1

During the shake-out phase, sales continue to increase, but at a slower rate, usually due to either approaching market saturation or the entry of new competitors in the market. Sales peak during the shake-out phase. Although sales continue to increase, profit starts to decrease in the shake-out phase. This growth in sales and decline in profit represents a significant increase in costs. Lastly, cash flow increases and exceeds profit.

Hence the correct answer is

Shake-out phase.