Introduction to Growth
Growth is an important phenomenon for every business. It means expanding the current business definition in the term of the customer base, production capacity, investment size, labor force, technologies, market coverage etc. Business needs to make sure that their growth opportunities reflect the capability of the business as well as being sufficiently large to justify investment in time and resources. Growth is not about getting new customers. It is about getting a sustainable new business. Gaining new customers is far more expensive than retaining existing customers. In both cases, customers that are bought by the business are the most fickle and provide the lowest returns. Organisations that genuinely offer real and perceived customer value must ensure that all new growth opportunities are based has on the ability to generate future performance is one of the key factors that go into mercer’s assessment of the business management component of our rating of fund manager ‘s strategies. Thus, a focus on asset gathering is negative.
Because growth makes a firm bigger it begins to benefit from the advantages of size. The higher volume increases production efficiency makes the fun more attractive to suppliers and therefore increases its bargaining power. Size also enhances the legitimacy of the firm, because the legitimacy of the firm, because firms that are larger are often perceived by customers financiers, and other stakeholders, as more stable and prestigious. Therefore the growing of a business can provide the entrepreneur with more power to influence film performance.
The Objective of Growth
- Survival: Severe competition forces a firm to grow and gain competitive. Any business firm that fails to grow cannot survive for long. With increasing competition and shrinking profit margins, firms have to grow in order to maintain their existence. In a growing industry, a firm has to grow just to retain its present position. A growing firm tends to be an innovator and it can easily face business risks. It can easily absorb the shocks of market Growth provides protection security against a period of adversity such as depression by diversifying the range of its products and markets a firm can meet competition in the market and minimize its risks. This growth is a means of survival in a challenging and turbulent environment.
- Expansion of Market: Increase in demand for good and services have led business firms to expand in size population explosion and transportation led to a widening of markets which in turn resulted in mass Business firms grow to cater to large markets and to meet the increasing demand. Expand the size of the company.
- Owner’s Mandate: The owners of a company get the ultimate benefit the growth in the form of higher dividends and rise in the market value the market value of shareholdings. Therefore they may direct the management to ensure the growth of the company through continuous plowing back of profits instead of distributing the entire earnings. Capable management may on its own like to take carefully calculated risk and expand the size of the company.
- Technology: Business firms also grow in order to reap the benefits of modern Many firms invest in research and development to develop new product and new techniques. only a large firm can take full advantage of sophisticated machinery and equipment. Rationalization and automation result in the more efficient use of resources and a firm a grow to obtain them. With the advancement of science and technology there occurs growth in the scale of operations.
- Prestige and Power: Some businessmen have a just for economies and social power. Big business commands power and respect. Industrial magnets have great say in the economic and social life of people. Businessmen satisfy their craze for power by building business empires. They take in the growth of firms established by them. Other personal factors such as personal ambition, exceptional organization ability strategic genius, etc also lead to the growth of business firms.
- Government policy: in a planned economy, like India business firms operate under a plethora of control. A big firm is in a better position to carry out the various legal formalities required to obtain licenses and quotas. It can establish better political contracts or liaison with the bureaucrats. The government also provides several incentives in the form of subsidies and tax concessions to industrial units in backward areas and those producing goods for export purposes. A firm many grow to face government controls or to secure these incentives.
- Self-sufficiency: Some firms grow to become independent in terms of marketing of raw materials or marketing of products .they integrate the various stages of industry or acquire other firms to gain control over the supply of materials and marketing of finished products.
Types of Growth
1. Financial Growth: Quantitative measures are generally used as norms in the financial world to determine growth this is one of the reasons why most people relate to and report growth in financial terms . financial growth relates to the development of the venture as a commercial entity. Financial growth can be judged by the financial performance of the company. Financial reporting is the mechanism through which financial manager report the financial performance of the company.
2. Strategic Growth: Strategy refers to the long-term planning of a firm it determines how the firm will compete in a given market in the position itself among its competitors. It also indicates how the different resources will be allocated strategic growth refers to the changes that take place in the way a venture interacts with its environments. It is the way the firm develops its capabilities to exploit a presence in the marketplace. A firm must adapt and change its strategy as it develops and grows strategic objectives change as an organization moves through the stages of its life cycle. In the start-up and early growth stages the strategy is mainly aimed at then in the next stages, the focus is on developing customers, maintaining profit and obtaining resources. It is essential that an entrepreneur spend time on planning the strategy for his or her firm and set growth targets at different stages of its life cycle. Most firms do annual strategic planning sessions and quite often use independent facilitators for such sessions.
3. Structural Growth: Structural follows strategy structural growth relates to changes in the way a venture organizes its internal systems. Management an organization needs to develop and change its structure to meet the demands of change and each strategic phase requires an adaptation of the structure and process.
- Size: the larger the organization, the more complex its structure will the organizational structure needs to be adapted from time-to-time to meet the demands of a growing business.
- Operational technology: this is the way a business operates . some of its operations may be straightforward while others may be complex. Think about the different technologies required by Kentucky fried chicken and nationwide airways.
- Strategy: this refers to the way the organizations goes about competing for its customer’s attention. Strategy and action plans should address the structural requirements of the strategy.
- Environment: All firms operate within the given macro market and micro-environments. These environments have an impact on strategy and structure . while the environment provides resources it also produces challenges.
4. Organisational growth: It refers to the changes that take place in the process, culture, and attitude when a business grows and develops it also refers to changes in the entrepreneur’s role and leadership style as the organization moves from being a “small” to “large” firm.
Organisational growth is quite often a great challenge to entrepreneur s as it requires a mindset change from founder to the manager, founders of new firms are not always good organization members and may fail to appreciate the value of good management practices. The growing venture requires professional-level management. It cannot accommodate management that largely relies on past experiences rules of thumb and personal whims.