Corporate Life Cycle

Product introduction begins after development and research to prepare the product to enter the life cycle process. During this phase, the marketing team focuses on the initial distribution and promotion of the product. At this point, products tend to have little or no competition (Porter, 1991). However, sales may be low because new products take time to be accepted by the market. Therefore, the company loses money while bringing the product to market. Cash flow is primarily represented by company expenses.

Growth

In the growth phase, the product seems to have been accepted in the market. As such, the sales tend to increase. There are few competitors, which makes the organization focus on improving the product so that it can survive market competition (Porter, 1991). The statement of cash flows depicts increase in sales volumes.

Maturity

In this phase, the sales volume of the given product tends to reach the peak. As such, the market is being filled with new competitors who have better alternative products. Market competition at this time is also fierce (Porter, 1991). The firm finds it complex to compete in the market. The statement of cash flows depicts stagnation in sales volumes.

Decline

This is the phase where the sales of the company begin to decline since they have reached their saturation points (Porter, 1991). As such, several products tend to be phased out from the market since the competitive pressure is high and the sales are declining. The product is no longer in demand. The statement of cash flows indicates reduction in the sales volumes.

Reference

Porter, M. E. (1991). Towards a dynamic theory of strategy. Strategic Management Journal, 12, 95-117.