The Development Of Life Cycle Concepts

Life cycles cannot be viewed independently of the entire business operation as there is considerable cause and effect at work. The diagram in Figure 7.1

Feedback loop

Feedback loop

Direct influence

Figure 7.1 Influences on the organization

Direct influence

Figure 7.1 Influences on the organization provides some indication of the influences of the various life cycles. In this diagram, there is only a dotted line for the feedback loop to show the influence the typical small biotech business has on its environment. This is because, though much has changed for small business, it is still rare to see them influence their external environment. Pioneers in markets - the entrepreneurial biotech companies - provide the exception to this rule as they can significantly influence a small evolving market. Therefore the market in which they operate is so small that they can exert market power. Of course this will only be maintained until the market grows, usually at a greater rate than the individual business, so that their market share diminishes over time.

Taking a broader view of the product we look at product cycles and the implications of the product life cycle analysis for the firm product positioning. The concept of the life cycle as applied to business has been evolving since Schumpeter, who based his ideas and analyses on earlier work by the Russian economist Kondtratieff on long-wave business cycles (Schumpeter 1939). This evolution has inevitably resulted in the establishment of new branches in the life cycle literature tree. The literature on life cycles from Emery and Trist (1965) to more recent observers such as Specht (1993) and Aldrich (1990), observes the organization as it moves through its various life stages. The needs of the organization differ at each stage, as do the appropriateness of management processes and practices.

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