What is Corporate Life Cycle?

Definition of Corporate Life Cycle

Corporate Life Cycle can be defined as the movement of the organization as it evolves and develops through the typical stages of its existence in the corporate world.

The entire life cycle of the business starts with the birth or the incorporation stage, growth stage, expansion stage as it explores the new markets, maturity stage, and eventually the death or a decline stage as the interest of the customers worn out from its product offerings and as the key employees of the company depart. 

The stages of Corporate Life Cycle :

1) Courtship Stage

Courtship stage is the first and foremost stage of the Corporate Life Cycle and can be defined as the stage just before the birth of the organization. An individual or group of individuals come together and share a common vision and passion to start something new and that is novel in nature.

The idea is a result of identifying the significant needs of the market that are unmet and creating something unique and distinguished will create a demand in the market by the virtue of value offerings. It is also a result of the witnessing that the market segment is underserved or poorly served.

Whatever the reason may be, the founder or the founding group is committed to building something unique and valuable and starts generating funds for the initial launch phase. The individual or individuals working on the idea are extremely entrepreneurial in nature having realistic and unrealistic ideas and goals at this stage.

2) Infancy Stage

At this stage of the Corporate Life Cycle, the organization is born as is in its infancy stage. The organization is driven by sales as it is in the dire need to generate cash flow. Along with the battle to generate cash for the ongoing business operations, the organization also continue to invest in the creation and refinement of the product offerings to match the demands and expectations of the target market.

If the organization is undercapitalized, it may sell its products at any price and cost just to generate enough and required cash flow. Plus the founders will also find themselves stretching with over commitments and will start considering the resources that are required to fulfill the commitments.

The entrepreneurial spirit of the founders is at all time high with the main focus on the increasing the production and generating the high amount of sales.

3) Go-Go Stage

This is the most exciting and energetic stage of the Corporate Life Cycle as everyone is busy completing the tasks and things are moving at the very quick pace and in some cases, priorities can also get lost very easily. Opportunities seem endless as the processes of manufacturing and selling are running at a fast pace.

There is a factor of growth that is imperative and vital for the success of the organization but there is also a need of clear direction of the work processes, structuring within the organization, concreting the processes, working on the priorities, evaluation, and the overall execution.

There is a need for some vital administration skills and it is the time to decide if the founders possess the skills to provide the clear administration to their staff or they need someone professional to be hired from the outside world to complete the tasks for the management of the processes. There also arises a dilemma that many founders find it difficult to step aside and delegate the responsibilities to others as there can be a loss of entrepreneurial risk under such circumstances.

4) Adolescence Stage

The Adolescence stage of the Corporate Life Cycle can be defined as the stage that parents face when their children hit their youth life cycle. In this phase, the administrators start rising in terms of the power taking care of the chaos generated in the Go-Go stage.

Growth is taking place as a stable pace but with the rise of new administrative norms and policies, there is a variety of problems that arise with the risk of damaging the growth pattern if those problems are not addressed in a proper manner. There is also a resistance to embrace the new policies and procedures. The founder may find it difficult to delegate the responsibilities and have fear of losing the power of authority and control over the organization.

As the new structure is put into place, there are certain confusions and issues in terms of mismatch of talents and roles. In this stage, crucial and key decisions must be made so that the organization is on track and aligned with the mission, core values and with the emerging leadership team.

5) Prime Stage

The prime stage in the Corporate Life Cycle is the desired state of every organization and this stage shows the signs that the organization is maturing and evolving naturally. Founders, producers, and administrators are in complete sync with the business processes and the important decisions that allow continued growth with its management and consistency.

In this stage, integrators rise as well and see the witness the value of long-term commitment to the systems and interdependent relationships of the various departments and allied processes and they integrate efforts on each and every front. At this stage, there is also a spin of new products or new organizations that start at an infancy level as the company reproduces new products to cater to growing demands of the market and capitalize on the new opportunities for growth and development.

This is also the stage where it is easy to fail to plan for the succession in case of losing any of the key personnel or the failure of developing talented workforce within the organization. This is one of the best stages in the entire life cycle of the business, but this stage also requires investments to be made for the future. Many organizations get into this stage and get overconfident owing to the quick success and growth.

6) Late Prime Stage

This stage is a very subtle change from the stage of PRIME and it is the stage of stability. The business is running but innovation begins to fade as many of the entrepreneurs get the feeling of being too controlled, grow complacent, and leave the organization because of their known success and demand for their talent in the outside world.

The objective of finance takes the center stage and becomes the key measurement and producers and administrators keep moving forward by managing finance. The real trap of this stage of the life cycle is that key members of the management fail to notice that the organization is starting to age and grow complacent owing to the lack of innovation and novelty.

The main emphasis and focus lay on return on investment, financial performance, and maintaining the status quo in the industry.

7) Aristocracy Stage

In this stage of the Corporate Life Cycle, aging gains full momentum and the organization enjoys the fruits of all labor. The organization maintains the status of its success by building offices, building and protecting its brand image, and through various other forms.

The organization acquires new business to grow the balance sheet rather than innovating and coming up with new products or organizations. Owing to the overestimation of the value of such business acquisitions, debt can become one of the issues and bottlenecks in the overall growth. The fear of surviving in the future starts to arise within the organization.

8) Reincarnation Stage

As the stage of Reincarnation occurs, customers are considered as a nuisance to deal with and many within the organization wish to get their paychecks, pay their bills, and not complain about the issue within the company.

The administrators and founders work hard to keep the things in place and together and some integrators are still around but in a frustrated sense of mind owing to the lack of innovation and the value of their work is not quite apparent as the organization continues to cut costs to survive. There is finger pointing and the chair of leadership keeps on revolving as investors try one leader after another to manage the chaos but many a time this strategy fails.

9) Bureaucracy Stage

At this stage, the primary focus is on the administration as it is all about survival in the market. There are various rules and policies framed in an attempt to control costs. Many of the talented members have left the organization for better opportunities and those left are on the constant lookout and are just staying back to get their paycheck.

Product lines end with the leaders focusing on the high margins aspects of the business. Last efforts are made to sell the products but there is the rapid loss of customers owing to the low levels of commitment from the organization. Customers find new sources that are more responsive and are capable to cater to their needs with innovative offerings.

10) Death Stage

The organization is dead and the business operations are closed down completely. This can happen due to many different reasons connected to external forces or internal issues within the organization.

Leadership Forces at work within the Corporate Life Cycle:

Producer: He is focused on attaining the short-term goals and immediate results.

Administrator: He is focused on minimizing the waste in the ongoing business activities.

Entrepreneur: He is focused on seeking out and recognizing new opportunities for the growth and development of the organization.

Integrator: He is focused on coordinating shared resources and formulating shared systems.