Wk 9: Business Life cycle


Stage 1: Market Dev

  1. Product development (complete from technical feasibility to marketability); &

  2. Up to seeking seed funding (financing startup);


Stage 2: Growth

  1. Growing market for viability of products (both developed and to be developed);

  2. At this stage, businesses grow by improving management;

  3. Concerned w/ breaking even and profitability 

    1. Although profits typically lag behind sales

  4. Substantial capital required

    1. E.g: Initial Public Offerings (IPOs);



Stage 3: Maturity

  1. Market competition ↑ = market saturation↑

  2. More payouts to investors & larger amounts of debt taken on;


Stage 4: Reinvention/decline

  1. Decline increases risk of default → bankruptcy (extreme case)


Stakeholders’ info needs over Bus Cyc:


Case Study: Apple

  1. Market dev:

  • Founded 1976 (Jobs, Wozniak, etc.);

  • Development: Apple-1 introduction (8-bit personal computer);

  • Startup funding: $250k invested by Mike Markkula 1977, $600k by Arthur Rock and Sequoia Capital + other investors 1978

  • Info required:

    • Founders + management: next product (Apple II) how to price and innovate;

    • Founders, management and Venture Capitalists (VCs): liquidity of company, ability to meet short term obligations w/o running out of cash;

    • VCs: sales volume required to cover overhead costs & current sales projections;

    • Lenders & creditors: availability of collateral (and what kind) + ability to repay debt


  1. Growth:

  • Acquiring capital: IPO raises $100 million USD ($380 million today);

  • Management growth:  new CEOs, Mike Markkula (1981-1983), John Sculley (1983-1993)

  • Innovation: Macintosh release

  • Info Required:

    • Equity Investors: 

      • What business model is & how it works;

      • What assets create most value;

      • Obligations of company to other capital providers;

      • Current and future profitability;

      • Concern: Current CEO (Sculley) not a founder or main owner, concern alignment of his interests w/ owners regarding capital use

    • Founders/Management: methods to reduce excessive spending

    • Investors/shareholders: improving or deteriorating unit economics which come w/ company’s growth;

    • Lenders/Creditors: validity of debt covenants due to potential mismeasurement of asset recognition


  1. & 4. Maturity & Decline:

  • Decline: reduction in Apple’s market share & profitability; due to

    • Increased competition: from IBM & Microsoft; &

    • Several poor product releases;

  • Attempts at renewal:

    • Launches of new products: Macintosh II, Classic, IIsi, LC, Newton PDA

    • Presumably: due to lower profitability being outpaced by debt, 90 days away from bankruptcy (1997)

  • Stakeholder info required (MATURITY):

    • Management:

      • Stability of costing systems;

      • Methods to improve efficiency;

      • Alignment of employee compensation contracts w/ business strategy

    • Shareholders: 

      • Ability of company to distribute dividends; or 

      • Reinvest earnings for future growth;

    • Creditors:

      • Ability of company to meet payment terms & contractual obligations;

      • Have debt covenants been violated;

    • Employees:

      • Alignment of their compensation w/ business strategy (probably other way round tbh);

      • Is there a necessity to reskill or upskill due to redundancy or lack thereof of current skillset;

      • Now: impacts of AI on job

  • Stakeholder info required (DECLINE):

    • Management:

      • Innovation: analyse need for new products or efficiency improvements;

    • Shareholders:

      • Is management approach optimal profit maximisation:

      • If not, is there a need for new CEOs/executives

    • Creditors:

      • Viability of business’ current financial model going forward;

      • Should creditors be concerned about getting their capital back;

    • Employees:

      • Is it prudent to find another job before being fired


  1. Renewal:

  • Innovation: new products;

    • Apple watch;

    • iMac;

    • iPhone;

    • iTunes;

    • Apple watch, etc.

    • New services too (fitness, music, streaming apps)

  • New Management: Steve Jobs rejoins as CEO, Tim Cook takes over after he dies

  • Stakeholder info required:

    • Due to detrimental societal & environmental impacts of Apple;

    • All Stakeholders:

      • Sustainability of businesses (ensure company retains “social license” to operate);

      • What does company do to uphold stakeholder interests (employees, investors, local communities, natural environment, etc.)