Example of company life cycle management

[subornaakter40]

A specific example of how a company's life cycle is managed can be shown. Let's say we are talking about a certain company "X" that started selling baby products and opened a store in a small town for this purpose. At first, the assortment included only baby food. It sold well, and turnover quickly improved. There was virtually no competition: baby food in this town could only be bought in pharmacies or small departments of grocery stores (with a very modest selection). Therefore, the specialized store became popular.

Life Cycle Phase "Startup" Strategic objectives
Product and number of retail iran business email list outlets for its sale

There is only one store, selling only baby food, but in a wide range

Management, personnel, management system

The founders of the business themselves decided all organizational issues; they hired 1-2 salespeople for the store.

Administrative structure diagram

The staff were not assigned strictly defined functional responsibilities

Financial situation

No additional money was allocated for advertising or expansion; the store gradually began to recoup the funds invested in the business.

Thus, this specific range and competently set prices together gave an excellent result. The store received its regular customers and a good sales volume. Now the business can be gradually expanded. The owners opened 4 more stores, where they began to sell children's clothing, shoes, toys and even large-sized goods. At this stage of the company's life cycle, baby food (where it all began) is no longer the main product and most of the profit is also not brought by this product. In addition, competing stores (specifically for baby food) appeared in the region, with a wide range of products and selling quite cheaply.

Life Cycle Phase "Growth" Strategic objectives
Product and number of retail outlets for its sale

Adding new product groups, opening new stores, focusing on the sale of children's goods.

Management, personnel, management system

Expanding the staff, defining a specific place of work (store) and a clear range of responsibilities for each seller. Introducing a motivation system. Strict accounting of balances. The owner himself is engaged in purchasing and distributing goods to retail outlets.

Administrative structure diagram

The organizational structure is quite clearly defined, each employee is subject to a specific job description, which lists the work to be performed and sets priorities.

Financial situation

The profits generated by the stores are enough to pay rent and salaries. There are funds for advertising campaigns, which will allow information about the product to be conveyed to a wider audience.

At the next stage ("Maturity"), sales volumes gradually decrease. The entire possible audience has already been covered, and there are more competitors. Large federal stores have opened, with a wide range of children's products and very attractive prices for consumers. The company stays afloat only due to loyal regular customers. It was necessary to launch a loyalty system and change the distribution of the assortment among stores. Now each outlet began to sell one specific type of children's goods.

As the business expands, purchase volumes increase (and this is additional work for the manager), resulting in fairly large inventory balances, which are also important to manage competently. It is difficult for the company owner to keep track of inventory in all retail outlets.

Life Cycle Phase "Maturity" Important tasks of the strategy
Product and number of retail outlets for its sale

In each district of the city the company has its own store with a wide range of any children's goods. The remains accumulate in waves, unevenly, so it was necessary to reconsider the approach to their management.

Management, personnel, management system

The staff has been expanded. The sellers are responsible for receiving and recording incoming goods. The management of inventory is carried out according to a specially developed system.

Administrative structure diagram

The staff was reorganized, the positions of senior and junior salesmen were introduced. The management of the business is in the hands of the founder.

Financial situation

The period of stagnation in sales was accompanied by additional expenses. As a result, income and profit became smaller.

If we talk about organizational problems, the following were urgent: it was necessary to review the functional responsibilities and incentive measures for sellers, as well as improve the technologies for managing the remaining goods.

In order to avoid entering the phase of business decline (after which the organization would cease its activities), it was decided to carry out all possible modernizations:

The business was brought online and began to be sold online. As a result, the product became closer to the buyers, plus the company was one step ahead of the competitors.

It was decided to leave only a limited selection of goods as a permanent assortment and then work on preliminary orders. This allowed us to offer customers a wider assortment and not accumulate large balances.

In order to retain customers and increase the average bill, all sorts of attractive promotions were constantly organized.

The product range included items that are not available (or are almost not available, or are presented in a very limited form) in federal chain stores.

The sales and inventory accounting process was automated.

A system of additional motivational measures was developed for salespeople, and some of the functions that the manager had previously performed himself were transferred to senior salespeople.