This article examines the meaning and implications of impermanence, the connection between impermanence theory and life-cycle-based theories in business and the implications that this connection has to business managers using recent examples from marketing issues worldwide to illustrate the point.
Many business marketing and economic theories embody the concept of impermanence. Taking the product life cycle theory as an example, each and every product may be considered to pass through the following stages each of which is impermanent: birth, growth, maturity and death, just as human beings do. The product 'development' stage that begins with the idea generation of a new product is just like the conception of a new being. The 'introduction' stage with slow sales growth and heavy expenses is no different from the birth of a baby. The 'growth' stage with rapid market acceptance and increasing profit is just like the growth of a child or youth. The 'maturity' stage in which the sales and profits reach the peak, but sale growth begins to slow down, is analogous to the maturity of a middle-aged man. Finally, the 'decline' stage in which sales fall off and profits drop parallels the aging toward death of an old man. These stages encompass the periods from a product's initial debut, to its increasing exposure and market share, to its gaining product maturity and finally to its eventual decline and exit from the market to make way for newer products.
Impermanence is also exemplified in the BCG Growth- Share Matrix management concept. The BCG Growth- Share Matrix is generally used to determine whether a firm is allocating its resources towards its various strategic business units (SBUs) in a healthy and profitable manner. Managers can use the BCG Matrix to classify a firm's SBUs into four categories - question marks, stars, cash cows and dogs, depending on the growth rate and market share of each SBU. The state of any product within the matrix is impermanent and subject to change depending on the market environment. A 'question mark', which is a low-share business unit in a high-growth market may, if it succeeds in growing into a market leader, become a 'star' that enjoys high market share. With a sustained market share, this 'star' would eventually become a 'cash cow' with low-growth but high- share, and reap large amounts of cash for the company. Then, due to changes in consumer tastes, advances in technology and competitors' strategies, these 'cash cows' may one day become 'dogs,' , becoming a low- growth and low- share business unit, declining in profitability until it is removed from the market altogether. This highlights the fact the position of any strategic business unit within the BCG Matrix is impermanent.
Example of Impermanence in Business:
Pfizer Pharmaceuticals
In recognition of the impermanence in the business environment, Pfizer, the largest pharmaceuticals company in the world, maintains its position by continual and simultaneous investments in multiple areas of pharmaceuticals research and product development to constantly churn out one new drug after another. Hence, while the cholesterol lowering drug Lipitor established itself as the world's most widely prescribed and highest revenue-yielding medication, Pfizer introduced the anti-impotence drug Viagra which was legendary both in its media coverage and its sales growth rate. As revenues from both Lipitor (28% growth in 2000-1) and Viagra (13% growth in 2000-1) start to plateau, the novel analgesic Celebrex came to the rescue with a 115% growth rate in revenue in 2000-1. This pattern of constant innovation and business development arising from Pfizer 's deeply rooted belief in impermanence in the business environment is one of the essential factors responsible for the company's continual success in the industry.
Impermanence theory is of particular significance to marketing managers, as they must understand that the apparent success of a strategic business unit or the entire company is the result of being at the right place at the right time. Thus, despite the success of a company's portfolio today, future success is not guaranteed. Consequently, managers need to possess a sense of danger, and to continually monitor the market environment for any trends that should prompt changes in the firm's business strategy.
This would not only serve the managers' own physical and psychological health well, but would also enable them to keep their minds open for market opportunities that may lead their companies out of their difficult positions.
Business cycles are getting shorter and shorter, and stated, "No company is safe. IBM is declared dead in 1979, the best of the best in 1982, and dead again in 1986." . To survive and prosper, managers must always bear in mind the impermanent nature of a successful business and its environment, which they must deal with by emphasizing a new set of working principles that include: striving to be the best in quality and service
Subjects : Marketing, Studies, Buddhists, Correlation analysis, Economic theory
Locations : Hong Kong
Author(s) : Alan Ching Biu Tse, Ka Chun Tse, Ka Ho Tse, Alan Au, Vane-ing Tian
Publication title : Innovative Marketing. Sumy: 2007. Vol. 3, Iss. 2; pg. 17, 5 pgs
Midterm I
Oytun Koçlar Abut
107672021
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