Stages in the Business Cycle
Yr.11 Business Studies
Every business goes through the four business stages, whether it be a successful or unsuccessful enterprise. These stages are:
These four stages are the lifecycle of a business. A business goes through these stages from when it starts, till its cessation, and its length is determined by the skill and creativity of the entrepreneur, and the success of the business.
Establishment Stage - This stage is when the business is at a high risk of failure, as it is its first stage- its birth, and it needs to gain a high income to cover the cost of setting up the business, and create a positive cash flow.
Strategies such as good planning and market research are essential at this stage for the business to succeed.
As you can see in the diagram, this is the stage where the business is still trying to get a foothold in the industry, and needs to use marketing tricks to beat the competition and get a good name.
Growth Stage - This is the stage when the business is accelerating and income is generally high. The business has a good name, and can afford a bit of slack, but to gain the advantage, the business must remain dynamic, and the entrepreneur can't relax.
Growth can happen in a number of ways:
Merger - when two separate companies agree to work together
by combining their resources to form a new company and achieve a greater benefit.
Takeover - this occurs when one enterprise overtakes another by
purchasing and controlling interest.
Mergers and takeovers occur when companies have the desire to expand. The advantages...