Mature Firm

AAA

DEFINITION of 'Mature Firm'

A company that is well-established in its industry, with a well-known product and loyal customer following with average growth. Mature firms are categorized according to the business stage it is currently in. These types of firms have passed the stage of rapid growth and tend to grow at the same rate as the overall economy. They also tend to have several equally well-established competitors, making price competition a significant factor in their ability to increase profits.

INVESTOPEDIA EXPLAINS 'Mature Firm'

Businesses are usually thought of as going through between four to eight phases. For example: Idea, emerging/startup, growing, expanding, mature and finally declining. The stocks of mature firms often pay dividends because the companies are past the point of needing to reinvest all their profits in the company, like they did when it was growing rapidly. Coca-Cola, Pepsi Co., Johnson & Johnson and Procter & Gamble are examples of mature firms. They have been around for many years and sell products that consumers use on a regular basis, but they also face ongoing, significant competition.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Barriers To Entry

    The existence of high start-up costs or other obstacles that ...
  3. Life Cycle

    The course of events that brings a new product into existence ...
  4. Growth Company

    Any firm whose business generates significant positive cash flows ...
  5. Industry Lifecycle

    A concept relating to the different stages an industry will go ...
  6. Declining Industry

    An industry where growth is either negative or is not growing ...
RELATED FAQS
  1. How can investors in the Internet sector most directly profit from the growth of ...

    Investors in the Internet sector can most directly profit from the growth of e-commerce by investing in the common stock ... Read Full Answer >>
  2. What's the difference between old- and new-economy stocks?

    Old-economy stocks represent large, well-established companies that participate in more traditional industry sectors and ... Read Full Answer >>
  3. What key U.S. economic indicators do economists track to determine if the conditions ...

    To determine if conditions for stagflation are present in the U.S. economy, analysts primarily consider the following indicators: ... Read Full Answer >>
  4. What are the main factors that drive share prices in the automotive sector?

    The main factor that drives share prices in the automotive sector is the expected future cash flows of the companies that ... Read Full Answer >>
  5. How does the law of supply and demand affect the oil industry?

    The law of supply and demand primarily affects the oil industry by determining the price of oil. The price, and expectations ... Read Full Answer >>
  6. What are the primary factors that led to the difficult period of stagflation during ...

    Stagflation is a type of economic malaise in which a stagnant economy coincides with high inflation for a period of time. ... Read Full Answer >>
Related Articles
  1. Investing

    The Ups And Downs Of Investing In Cyclical Stocks

    This strategy can be profitable but only if you know when to dump these stocks.
  2. Investing Basics

    Conglomerates: Cash Cows Or Corporate Chaos?

    Huge companies may not be as infallible as previously assumed. Find out why bigger isn't always better.
  3. Active Trading

    Market Cycles: The Key To Maximum Returns

    You need to understand the various phases of the market cycle to avoid bubbles and make the best investments.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Bonds & Fixed Income

    Conglomerates: Risky Proposition?

    Investing in a corporate giant may not be as safe as you think.
  6. Economics

    Selecting A Second-Tier Company

    Find out why an industry's "little guys" can be big winners.
  7. Economics

    Gambling on Macau: Too Risky?

    Macau was once heralded as the new Las Vegas for casino investors. Is it too late?
  8. Mutual Funds & ETFs

    6 ETFs to Fight Your Recession Jitters

    Are you worried about a recession? If so, consider these 6 ETFs.
  9. Economics

    Worried About a Recession? Then Buy These 5 Stocks

    What makes these stocks so resilient? And how did they perform during the last crisis?
  10. Investing

    Can Europe’s QE Be A Stimulus For U.S. Investors?

    Finding value in today’s markets has been difficult, so many investors are turning to opportunities outside of the U.S. But where should they look?

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center