Capital decay

Capital decay,

Definition of Capital decay:

  1. Estimate of revenue lost due to obsolete technology and/or negligent or outdated business practices. It indicates the degree of non-competitiveness of a firm, industry, or economy.

  2. Capital decay is an economic term referring to the amount of revenue that is lost by a company due to obsolete technology or outdated business practices. A failure to adapt with the times and reinvest accordingly can lead once-loyal customers to jump ship, weighing on sales and the future viability of the company.

  3. The business world is competitive. Things change, production techniques get better, and new, more efficient technologies arrive on the scene to displace those that came before it. Companies that fail to innovate or at least keep up with the latest developments risk losing market share, being stripped of their revenue, and being effectively pushed aside by their hungrier rivals.

How to use Capital decay in a sentence?

  1. Capital decay is an economic term referring to the amount of revenue that is lost by a company due to obsolete technology or outdated business practices.
  2. A failure to adapt with the times, rejig business models, and reinvest accordingly can lead once-loyal customers to jump ship and a company's income sources to dry up.
  3. Companies that utilize older business models and that are locked into them due to management inflexibility or high fixed/sunk costs are most at risk.
  4. Capital decay is often a problem in industries where technology tends to move very quickly or where barriers to entry are low.

Meaning of Capital decay & Capital decay Definition