ITPEC FE Morning October 2023 Question 66

Topic: Business Strategy Management

A company has products that are at the peak of profitability and sales. As a result, many competitors develop similar products to the market. Therefore, a company must develop new products to meet new demands and market opportunities. Which of the following is a state of such events in the product life cycle?

a)Decline stageb)Growth stagec)Introduction staged)Maturity stage

Explanation

Maturity stage — sales and profit are at their peak, competitors crowd in with similar products, and the company must develop new ones.

Stage	Sales and profit	Competition
Introduction	Low sales, often a loss	Few competitors
Growth	Sales rising fast, profit rising	Competitors start to enter
Maturity	Sales and profit peak, growth flattens	Many similar products; differentiation and new products needed
Decline	Sales and profit fall	Competitors withdraw

Answer (d)

Why not others:

•(a) Decline stage — sales and profit are falling, not at their peak
•(b) Growth stage — sales are still climbing towards the peak, and the market is not yet full of similar products
•(c) Introduction stage — the product has just been launched, sales are low and profit is usually negative

Key rule: Peak sales plus many imitators means maturity: the time to differentiate, cut costs and prepare the next product.

Business Strategy Management · AI-written, may contain errors

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