Question

List and describe the four stages of the organizational life-cycle.

Answer 1

Ans) There are four stages of organisational life cycle, namely÷

• Startup.
• Growth.
• Maturity .
• Decline.
• Death or revival. (This can be included as fifth stage).

Maturity Decline Revival Growth Death Birth

Stage 1÷ An organization is born when an entrepreneur sees an opportunity and takes advantage of it. In this stage, strategies are formulated, how to expand the business, marketing, advertising etc.

Stage 2÷ In this phase revenues start growing, more workers are hired, new services are developed etc. The firm grows by using new and creative ideas.

Stage 3÷ Maturity is when business is at its peak, getting good revenues etc.

Stage 4÷ Firms enter in decline phase when they fail to make transformational change. Here revenue declines, sales decline, debt increases etc. This can happen due to change in market structure, increased competition, inability to adapt to new changes etc.

Stage 5÷ Now there are two possibilities ÷ either the firm makes required changes and revives again or it is unable to improve its condition and is doomed and eventually dies.