Everything that happens on the market has a specific time. Both the product or our brand is at a certain stage of its life. The life cycle of the organization also sets the framework thanks to which we know in which direction to develop.
What is the life cycle of an organization?
The life cycle of an organization is a model that informs how organizations develop, mature and decline over time. Just like in human life, organizations are born, develop, then decline and eventually die. Some organizations have a long lifecycle, while others will not survive long in the marketplace. Each phase has its own distinctive features, as the stages differ in the degree of competition, the degree of market saturation, the brand awareness of the organization, the sale of the organization's products, and the like. Thanks to the use of this model, managers can become fully aware of all phases through which their company is going through, which helps to understand the priorities of each phase and allows them to make the right decisions for the company.
Why is it important to know the life cycle of an organization?
It may seem that life cycle models are not needed at all for the good functioning of the company. Unfortunately - nowadays, when every year surprises us with something groundbreaking, and the intensity of technology development is incredibly fast, one should realize that cycles that used to last for years can now pass even in a few months. The market is constantly changing, especially in the last decade. If you do not take appropriate actions dedicated to a specific phase, you may fail on the market and your organization will collapse. Organization life cycle it allows you to deal with crises and choose the right marketing strategies to stand out on the market and survive. By recognizing the symptoms, you can take appropriate action. This understanding provides a lot of information about problems and how to solve them.
The phase of existence
The phase of existence, otherwise known as the phase of birth or start-up, means the beginning of the organization's existence. At this stage, the key is, of course, a well-prepared business plan along with a ready-made marketing strategy for the company, product and our brand. This is the stage on which you depend on whether to be or not to be. You need to accumulate adequate capital, hire employees, create teams and undertake a number of other activities. In this phase, the main goal is to achieve the first market success in terms of the product. Frequent changes in the strategy, features, quality of products or services are normal, as we are just trying our hand at a new market.
In the birthing phase, success is finding one target audience and a market that will generate income and allow you to grow. If the right actions are taken, the company can achieve very high growth, which will result in the need to hire new employees, adjust production, logistics and even the entire strategy.
Growth phase
The growth phase known as the survival phase is where two scenarios are possible. The organization may be successful, develop in the market and move to the next stage, but there will be enterprises which, by omitting certain activities or inadequate marketing activities they will not survive in competition. The growth stage is focused on your products as much as possible: expanding distribution, introducing minor modifications to products, identifying subgroups of customers and adjusting promotions under them. Companies mainly focus on large markets rather than niches to maximize their sales. The role of marketing is particularly important, as it will allow it to move to the next phase. Consumers already know our brand and products, so it is important to emphasize what makes you different from the competition and what needs your product can satisfy.
The maturity phase
The organization's life cycle also includes the maturity phase, i.e. the stabilization of the company on the market. This is because the market is saturated and the level of competition is high. At this stage, you do not focus on intensive expansion, but rather on securing your position and interests. Innovative activities are not often implemented because the organization focuses on maintaining the current efficiency, and not on implementing new solutions. Continue with your strategy to keep yourself functioning. Particular attention is paid to monitoring the market situation and controlling activities. The maturity phase can last for years if we manage our business well. As long as our situation is stable and we continuously achieve positive sales results, there is no need for any changes.
Knowing the life cycle of your organization allows you to implement appropriate actions
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Organization life cycle - decline phase
Sometimes an organization finds itself in a decline phase. It is then that Sr.failure of sale and profitability. This may be due to market stagnation, risk aversion or lack of innovation. The life cycle of the organization should be constantly monitored, so if you miss a moment, the company will unfortunately disappear from the market. You have to sense a situation where, at the end of the maturity stage, you need to take intense action to keep your position. These can be all kinds of innovations and technological novelties. An example of such a company is "Nokia", which focused so long on its traditional mobile phones that it slept through the transition to smartphones. As a result, it completely disappeared from the market for many years.