Business Life Cycle

What are the four stages in the business life cycle?

• Planning, Launching, Expansion, Closure

• Startup, Development, Plateau, Resolution

• Introduction, Peak, Decline, Exit

• Establishment, Growth, Maturity, Post-Maturity

What type of costs remain the same even if there are no sales?

• Incremental costs

• Variable costs

• Operational costs

• Fixed costs

What is the break-even point?

• The initial stage of a business

• The maximum profit point

• The point at which total revenues equals total costs

• The end of the business life cycle

What could cause a business to never get past the establishment stage?

• Too much innovation

• Undercapitalisation

• Lack of a business plan

• Overcapitalisation

During which stage do sales begin to increase significantly?

• Maturity

• Post-Maturity

• Establishment

• Growth

What is an example of horizontal integration?

• Merging with a supplier

• Buying out a competitor

• Expanding into new markets

• Splitting the company into smaller units

What happens at the maturity stage of a business?

• Sales and profits begin to decline

• Sales start to plateau and profits stabilize

• Rapid increase in sales

• Initial setup of the business

What market form is characterized by a few large firms selling similar but differentiated products?

• Monopoly

• Perfect competition

• Oligopoly

• Monopolistic competition

What characterises a business entering the post-maturity:renewal stage?

• Innovation and mergers

• Increase in variable costs

• Expansion in fixed expenses

• Decrease in sales

What is a key factor for a business to survive and grow?

• Constant reduction of costs

• Focusing only on sales

• Careful management and focus on operations and the market

• Avoiding taking any risks