Strategic Review

Strategic Review

Introduction

Product life cycle is the stages through which the category or the product passes. From just a simple product introduction to its growth, it maturity, its decline or reduction in the demand. Not each product in this category reaches its final stage some tend to grow for a small period and then it fall arises (Niemann, Tichkiewitch and Westkai, 2009). On the other hand there are product that tend to rise reach its peak and then mature. Thus, the entire products have their own timings of fall and rise.

There are three products, which we are going to analyze. We are going to analyze the product and see in which category they fall and what the returns from them and what new changes can be made in the process.

What is a Product Life Cycle?

A product life cycle can be divided into four different categories. They are as following Introduction, Growth, Maturity and decline. The Introduction is the period when the goods are researched in the laboratory and then brought to the markets. If the goods are accepted by the market than they enter the growth stage. The growth is achieved when the innovation of a product is accepted by the general masses. This results in the flowing of profits in to the company (Niemann, Tichkiewitch and Westkai, 2009). This is the time when the company can experiment various ideas and innovation. This new experiments are allowed due to the company monopoly in the market. Company at this time should keep its product consistent so that complete market capturing and sustainable growth and returns are achieved.

In the next stage, there comes the maturity, this stage can be seen in the form of declining sales and fall in the growth rate. The product has achieved its full acceptance in the market. At this time, there are various companies in the market fighting for the product. Fierce competition and especially low margin is prevailing in the market. More and more competition in the market causes a great reduction in the profit (Vogel, 2007). This step is leading to the last stage of product life cycle.

Declining stage is the last stage of all. In this stage the product is seeing a slow death due to low or negative growth. Many of the companies share the same market this is the reason the new entrant cannot maintain a sustainable level of sales. Not all the product reach this stage, as most of them can't stand the pressure of time and fail before reaching here.

Product Analysis

Profit Statement Year wise

 

 

 

 Total

 

 

 

 

 

Variable Name

2011

 

2012

 

2013

 

2014

 

2015

Revenue

 

 

 

 

 

 

 

 

 

Total Quantity

1,531,940

102%

3,102,177

46%

4,517,754

1%

4,555,686

-44%

2,561,744

Revenue

518,232,275

104%

1,055,294,575

49%

1,574,590,782

2%

1,609,006,739

-47%

846,644,152

Cost

 

 

 

 

 

 

 

 

 

Variable Costs

300,161,138

103%

610,720,740

51%

921,995,320

3%

946,707,952

-49%

478,445,847

Fixed Costs

112,500,000

33%

150,000,000

0%

150,000,000

0%

150,000,000

0%

150,000,000

R&D Costs

24,000,000

0%

24,000,000

0%

24,000,000

0%

24,000,000

0%

24,000,000

Total Costs

436,661,138

80%

784,720,740

40%

1,095,995,320

2%

1,120,707,952

-42%

652,445,847

Profit

 

 

 

 

 

 

 

 

 

Total Profit

81,571,138

232%

270,573,835

77%

478,595,462

2%

488,298,787

-60%

194,198,305

Total Profitability

16%

63%

26%

15%

30%

0%

30%

-23%

23%

Total Quantity Sold

The company in the year 2011 had the lowest sales of goods. This was due to the low marketing done by the company. The total goods sold in the year 2011 were around 1,531,940 this doubled in the next year that is it grew by 104%. Strong growth in the sales was also seen in the year 2013, that is the company sold 4,517,754 products; ...