industry life cycle analysis

Definition

A method for analyzing industries based on the idea that they go through a series of identifiable life cycle phases (e.g., introduction, growth, maturity). The information gained from defining where an industry is in its life cycle is used to determine the risk/reward ratio of a potential investment. For example, investing during the introduction phase is high-risk since future growth is uncertain. However, an early investment also has the potential for the greatest return.

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