Question

Briefly describe the stages of corporate development.

Answer 1

There are 4 stages of corporate development:

1. Startup stage: It is similar to the birth of a new venture where the founders put in their mental, physical, capital and emotional energy into the startup. In this phase, the company uses much of its time to acquire more and more customers, more employees and purchase fixed assets. This is a phase of many sleepless nights and risks of failure.

2. Growth stage: In some time, when the company establishes enough reputation and name, and, has increased demand, it is said to have entered this stage. Here, both problems and opportunities are available for a firm. The company may raise money through equity share or debt in this phase.

3. Maturity stage: In this phase, the company experiences a stable position in the industry with a sufficiently large customer base. Now, the owners do not need to invest so much of their energy in the small aspects of the company. Sometimes, they can choose to stay in the business or can set up a new management.

4. Decline stage: This is considered to be the end of a business. It may have reasons like poor management, losses and govt policies. We see declining sales, reduced profits, high debts and increased costs in this phase. Finally, it leads to closure.