Satisfying all stakeholders when the business is competing in mature Essay - 1

Satisfying all stakeholders when the business is competing in mature product markets is difficult. Discuss - Essay Example Another handicap facing mature products is that the markets they operate in are likely to be mature as well, making growth prospects for the product as well as industry very tough. The rest of this essay will present various factors that have a bearing on stakeholders when a business is competing in mature product markets. Shareholders are one of the main (if not the most important) stakeholders to a company’s prospects. And equity markets are the arena where they can hope to claim their rewards. But increasing share price on a consistent and non-volatile manner is very difficult in mature product markets. For example, â€Å"Equity markets both reward companies that outpace growth in their sector and that show significantly higher price/earnings multiples than their competitors. But, since 80 per cent of equity markets grow only as fast as their country's gross domestic product - that is, at a rate that rarely pushes beyond the low single digits, an organization that seeks to outpace a mature equity market and achieve double-digit revenue growth faces a steep uphill climb. A company can attempt to take market share, but competitors in a mature market will work just as vigorously to defend their customer base. Higher revenue does not always signal success anyway, since revenue gains almost always hurt margins, and can precipitate a price war that devalues the entire market.† (Magrath, 2005) The telecommunications industry offers opportunities for studying marketability of mature products. This is so because, although digital and satellite communications technology were invented only a couple of decades ago, the rapid rate of growth ensured maturity of both the industry as well as its products. The recent developments in the telecommunications industry in the Middle East illustrates common challenges faced by mature products and mature markets. The quarterly performance of these telecom companies after the first quarter of 2009 shows how growth can be stagnant or in decline for mature product markets. During this period, Saudi Telecom reported a whopping 69 percent dip in its net profit figures. Etisalat, another major firm in the region, reported a 20 percent drop in profits in the same period. Smaller players too, including Maroc Telecom and Zain, performed likewise. (Hadfield, 2009) These examples illustrate how difficult it has become for managements to satisfy stakeholders in a mature product business. It is a sign of problems identified with mature markets that investors are looking at opportunities in emerging markets. An increasing share of the world’s capital is now being directed to equities and other derivative products in emerging economies. In the era of globalization, the flow of financial capital is a vital parameter. Financial products and derivative products transacted via stock exchanges trans-nationally have matured as a product over the years. This means that there is now vast empirical data to draw theories upon. This has also had the effect of increasing the degree of volatility in these markets. Investment firms and individual investors look toward emerging markets despite their high volatility due to the following reasons: higher average returns, lower correlations than developed markets, and more predictable returns. Each of these characteristics has made the volatility