Lecture 4 2 
Financial Strategy and Governance
Taught
by
Dr.Viktor Manahov
Financial Strategy and Governance
Lecture 4: Financial strategies from growth to maturity to decline.
Learning outcomes
At the end of this lecture students should be able to:
•Understand the transition from growth to maturity.
•Outline key aspects in the mature business profile.
•Understand the relationship between perceived risk and the return required in a mature business.
•Identify the most appropriate financial tools for mature business companies.
3
Dr.Viktor Manahov
Lecture 4
7/19/15
Learning outcomes
At the end of this lecture students should be able to:
•Identify the key aspects of a declining business.
•Understand the transition from maturity to decline.
•Understand the relationship between perceived risk and the return required in a declining business.
•Analyse ways in which a company may delay its decline and reduce its debt ratio.
4
Dr.Viktor Manahov
Lecture 4
7/19/15
The transition from growth to maturity
•When a company moves to its mature stage a change in managerial focus is required to maintain the high level of sales it has achieved.
•Management must recognise that the demand for their product may decline.
•Management incentives based on growth should not be used during the mature stage of a business.
5
Dr.Viktor Manahov
Lecture 4
7/19/15
The transition from growth to maturity
•As a result of lack of consumer demand many companies seek to reposition their products. For example: -Coca – Cola was suffering from the falling demand for soda – based drinks and as a result was forced to produce series of new products.
-McDonalds suffered from bad press and relocated its brand name with a new healthy – living marketing campaign. 6
Dr.Viktor Manahov
Lecture 4
7/19/15
The transition from growth to maturity
•In order to minimize the decline in product demand some companies are transferring their brands to another product, which is in or entering the growth stage. For example:
Taught
by
Dr.Viktor Manahov
Financial Strategy and Governance
Lecture 4: Financial strategies from growth to maturity to decline.
Learning outcomes
At the end of this lecture students should be able to:
•Understand the transition from growth to maturity.
•Outline key aspects in the mature business profile.
•Understand the relationship between perceived risk and the return required in a mature business.
•Identify the most appropriate financial tools for mature business companies.
3
Dr.Viktor Manahov
Lecture 4
7/19/15
Learning outcomes
At the end of this lecture students should be able to:
•Identify the key aspects of a declining business.
•Understand the transition from maturity to decline.
•Understand the relationship between perceived risk and the return required in a declining business.
•Analyse ways in which a company may delay its decline and reduce its debt ratio.
4
Dr.Viktor Manahov
Lecture 4
7/19/15
The transition from growth to maturity
•When a company moves to its mature stage a change in managerial focus is required to maintain the high level of sales it has achieved.
•Management must recognise that the demand for their product may decline.
•Management incentives based on growth should not be used during the mature stage of a business.
5
Dr.Viktor Manahov
Lecture 4
7/19/15
The transition from growth to maturity
•As a result of lack of consumer demand many companies seek to reposition their products. For example: -Coca – Cola was suffering from the falling demand for soda – based drinks and as a result was forced to produce series of new products.
-McDonalds suffered from bad press and relocated its brand name with a new healthy – living marketing campaign. 6
Dr.Viktor Manahov
Lecture 4
7/19/15
The transition from growth to maturity
•In order to minimize the decline in product demand some companies are transferring their brands to another product, which is in or entering the growth stage. For example: