Topics: Economics, Macroeconomics, Stock market Pages: 7 (2543 words) Published: November 5, 2012
1. Introduction
From the paragraph, we know that Universal Auto is a large multinational corporation headquartered in the United States, which is a big market in the world and it is not easy to survive without a well development company. So that, the company must has their survival plan to make the company stay in the big market, but they need to make some changes to solve their losses problem, for example their passenger cars business has had weak operating results for the past several years. Even this business is not their primarily income, but they are still feel confident with that and believe that it will growth to the another level to help company to earn profits in the future. In the current year, they still have other business earning profit very stable like information processing services; it is stable income for the company in the past 15 years. Other than that, the company wants to use industrial life cycle and business cycle to show that how their businesses living in the big market and use their pricing strategies to set their product’s price to make sure it is suitable for the big market in the United States. The industry’s life cycle has different life stages in a particular industry. There are stages in everybody’s life like childhood, adult, middle age, and then old age. Likewise, there are four stages in every industry’s life cycle and there are introduction stage, growth stage, maturity stage, and decline stage in industry life cycle. There is different with industry life cycle, the business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables. A business cycle is not a regular, predictable, or repeating phenomenon like the swing of the pendulum of a clock. Its timing is random and to a large degrees, unpredictable. There are four phases of business cycle, such as prosperity phase, recession phase, depression phase, and recovery phase. Lastly, the company’s stocks and bonds investment timing is important for the investors.

2. Concept of an industrial life cycle

2.1 Introduction stage
At the beginning of an industry’s life cycle, the firm may be alone in the industry and it may be a small entrepreneurial company or a proven company which used research and development funds and expertise to develop something new. Perhaps a new unique product offering has been developed and patented. There are many types of firms with different efficiency levels and historical backgrounds. They want to experiment with new product varieties because there are lots of opportunities for technological innovation and there’s little or no product standardization. For automobile industry, there were so many firms in the United States and such a huge variety of products rolling out from their factory gates, each firm had to be satisfied with a small share of the market. Marketing refers to new product offerings in the new industry as “question marks” that is because the success of the product and the life of the industry in unproven and unknown. Many firms will use a focused strategy at this stage to stress the uniqueness of new product or service to a small group of customers. These customers also called as “innovators” and “early adopters” are typically referred to in the marketing literature. Besides that, they often attempt to establish early perceptions of product quality, technological superiority, and advantageous relationships with vendors within the supply chain to develop a competitive advantage. Because it costs money to create a new product offering, develop and test prototypes, and market the product, the industry’s profits are usually negative at position and help fund continued growth.

2.2 Growth stage
Same as introduction stage, the growth stage also requires a significant amount of capital. The life cycle curve will start to increase when the product is developing smoothly. The goal of marketing...
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