What is Mature Firm
A mature firm is 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.
BREAKING DOWN Mature Firm
Businesses are usually go through between four to eight phases: idea, emergence/start-up, growth, expansion, mature firm and finally decline. 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.
Characteristics of Mature Firms
- Mature firms often experience a leveling off in sales, since the revenue trajectory experienced during the high growth phase is often unsustainable. This alone can be a significant source of consternation for an entrepreneur who’s used to riding the wave of dynamic growth and exponential sales volume. Although cash flow is often more stable and predictable, many mature companies face the suddenly difficult prospect of sustaining some level of reasonable growth and profitability.
- Mature organizations have an effective planning and resourcing process. They also typically have the processes and technology in place to enable everyone to capture information consistently in a repeatable way. In fact, lack of process is the top cause of this pain but decreases by at least 10 to 20 percent as companies move up the maturity scale. In correlation, the lack of visibility drops by 15 to 20 percent for more mature companies. These processes may include how and where project managers and resource managers report information, use of time sheets, and progress reported against product timelines.
- Mature organizations not only have visibility into resources, but they also have the on-demand data needed to inform their processes for developing strategies for what-if scenarios. For example, if a competitor introduces a new product to the market, and the company needs to respond, leaders can see through their data how decisions might impact various products or projects.