can corporate growth have a downside? explain. how might drawbacks be addressed? course hero

What are the drawbacks of Corporate Growth?

How might drawbacks be addressed? Yes, corporate growth can have a downside. Loss of control : You are most likely invested in overseeing and controlling all fundamental aspects of the business as a leader, but this is harder to maintain during times of quick growth and expansion.

Do you know the corporate growth strategies that work?

Understanding the corporate growth strategies that actually work can mean the difference between your business’ success and its failure. There are several corporate growth strategies to consider. While all have merit, there may be one that is more relevant and effective for your particular industry, product, and market.

What happens if you grow your business too quickly?

If your business grows too quickly, or expands too much, you could experience financial, legal, staffing, resource and supplier problems. For business growth to be successful, it should be sustainable. You could outgrow your premises in the short-term.

Is your business growth sustainable?

For business growth to be successful, it should be sustainable. You could outgrow your premises in the short-term. There may not be enough space for everyone to work efficiently. Morale may drop if staff cannot cope with the extra work.

What happens if a business grows too quickly?

If your business grows too quickly, or expands too much, you could experience financial, legal, staffing, resource and supplier problems. For business growth to be successful, it should be sustainable.

What are the problems of rapid growth?

Common problems caused by rapid growth 1 You could outgrow your premises in the short-term. There may not be enough space for everyone to work efficiently. 2 Morale may drop if staff cannot cope with the extra work. Productivity can decrease. 3 There may be a shortage of cash to meet expansion costs. Taking on more and more work to generate more income places additional pressure on your premises and staff. 4 Management may be under pressure, operating reactively rather than proactively. 5 The quality of your products and services could drop, causing an increase in customer complaints. You may even lose customers to your competitors. 6 Staff turnover may increase due to heavy workloads. Vital knowledge could be lost as staff leave. Hiring and training new staff takes time and money. 7 Your business may lose touch with competitors' activities.

Why do you want to grow your business?

Do you want to grow your business because you are responding to strong competition, smaller margins or falling sales? Growing your business may help you to overcome these problems and attract new customers if you move to larger premises and increase your resources and stock.

How can a business become a market leader?

Your business may become a market leader if you take advantage of strong opportunities. You can capitalise on your success, expand into other locations, and employ more staff to cater for increased demand. But if you expand too quickly you risk your business becoming unsustainable.

Why does morale drop?

Morale may drop if staff cannot cope with the extra work. Productivity can decrease. There may be a shortage of cash to meet expansion costs. Taking on more and more work to generate more income places additional pressure on your premises and staff.

Why does staff turnover increase?

Staff turnover may increase due to heavy workloads. Vital knowledge could be lost as staff leave. Hiring and training new staff takes time and money. Your business may lose touch with competitors' activities. Read more about responding to rapid growth.

Is management under pressure?

Management may be under pressure, operating reactively rather than proactively.

What are the areas that SMEs don't consider when looking at significant growth?

One area that a number of SMEs don’t consider when looking at significant growth is the internal structural changes which need to be made. A larger business won’t be able to operate in the same way that a much smaller one can; quite often smaller businesses have ways of managing employees and dealing with HR in ways that aren’t scalable.

How does insurance affect business expansion?

Expansion can have a major financial impact for any company; financial investment and time to grow in a new marketplace before making significant profits are the most notable implications. The right kind of insurance can make or break your growth and market expansion, providing that all-important financial protection to minimise business expansion risks.

Why is expansion important for a business?

As with any major company changes and business restructures, it opens up a slew of risks and these can simply be amplification of existing ones or new risks created due to expansion.

Who raised the issue of pay restructuring?

Web entrepreneur and business writer Ada Ivanoff raises the issue of pay restructuring which may be a noticeable risk of expansion. She says:

What happens when a company is successful?

A funny thing happens when your company is successful--others recognize the opportunity and enter the industry. Many small business owners are unprepared for the realities of fierce competition, and they quickly lose their way in an attempt to respond .

Why is failure important in marketing?

Failures are an important part of business growth and owners must train themselves to recognize where they occur, divert resources accordingly and learn from those mistakes.

Why do small businesses go bust?

Cash flow problems are the second most common reason why small businesses go bust, according to research from CB Insights. Owners have to spend money to make money during a growth period, but this concept can quickly get out of control and leave you in a precarious position.

What is the riskiest strategy for growth?

One of the riskiest corporate growth strategies, diversification is when a company sells new products to a whole new market. This requires involved planning and research to ensure that this method will have positive results for your business.

What is the strategy of expanding your company beyond its current market?

As the name implies, this strategy requires expanding your company beyond its current market. This may mean either finding a new target audience who would need your product, or finding new uses for your current product that could expand its reach.

What is acquisition in business?

Finally, if you’re serious about growth, acquisitions may be the right move for you. Acquisition means purchasing and absorbing a competitor to expand your business. Of course this is not a decision to be made lightly and may not be realistic for your business depending on the circumstances, but it can allow your company to absorb a previous competitor which provides you access to that company’s existing customers.

Why is product expansion risky?

It is particularly risky because it is almost as if you were creating a whole new business again. With product expansion you are at least able to use the research and knowledge you have about your current customers to generate and market a new product they will actually use. With diversification you do not have that luxury.

Why is creating a new product important?

Creating a new product generates more opportunities to to sell a to your current audience, while increasing your revenue . Producing a product that makes sense for your current customers is a great way to expand your business because you are already familiar with your customer base and their needs. 4. Diversification.

Does BizTraffic help with business?

If you’re feeling inspired to take your business to the next level, BizTraffic can help. You’ll have a faster, friendlier website to capture and convert new leads. You will connect with marketing and growth strategy experts who have a proven track record with multiple businesses. And, you’ll have more time to do what you do best: manage your business. A free, no-obligation consultation is just a call or click away!

Is there a realistic strategy for business growth?

The trouble is, while most business owners can see the end goal, they have no realistic strategy in place for actually achieving successful growth. Understanding the corporate growth strategies that actually work can mean the difference between your business’ success and its failure.

What happens when two companies merge?

When two firms merge, it is more than a coming together of two names or brands – it is a real merger of people who bring along a specific corporate culture. If two firms have very different corporate cultures, conflicts can arise. For example, if an innovative, entrepreneurial company with a flat hierarchy were to merge with a highly hierarchical, conservative and traditional organization, the employees in the new organization would be likely to have difficulties working together.

How does merging two businesses affect the labor force?

While this can provide cost savings for the company, it can also have a negative effect on employees. Employees may become fearful of losing their job and may lose their trust in the organization. This can decrease employee motivation and reduce productivity.

What happens if an environmentally friendly soap company merges with an industrial detergent manufacturer?

For example, if an environmentally friendly soap company were to merge with an industrial detergent manufacturer with a poor environmental track record, it may alienate the customers of the environmentally friendly soap company who don't want to support a company that is not environmentally responsible.

Why is it important to merge two companies?

Merging two companies can provide the firms with synergies and economies of scale that can lead to greater efficiency and profitability , but it is important to note that mergers can have a downside too. It may be harder for the combined organization to cooperate and communicate, and there's a risk that companies with a too-large market share will ...

Why do businesses merge?

When businesses merge, it is often to achieve economies of scale. Larger organizations are typically able to produce goods and services more efficiently and at a lower per-unit cost than smaller businesses because fixed costs are spread out over a larger number of units. This is not always the case, however. Sometimes when two firms merge, being larger will actually create dis-economies of scale, where per unit production costs increase because of increased coordination costs.

Why is price competition important in mergers?

Even without monopoly creation within an industry, less competition often leads to increased pricing to consumers. While some increases reflect the increased costs involved in dis-economies, the ultimate result yields dissatisfaction to the buyers of goods and services. Business mergers often have to balance increased pricing with potential layoffs to prevent high consumer costs.

What are the advantages and disadvantages of a leadership development program?

Among the disadvantages is that a leadership development program can be costly and disappointing if poorly planned or executed.

What is the benefit of leadership development?

Creating greater employee engagement can be one advantage of an effective leadership development program as evidenced by a 2009 “McKinsey Quarterly” survey of 1,047 employees and executives. The survey found that senior leadership that values employees, and employees having opportunities to lead projects themselves are two of the biggest non-financial motivators that improve employee engagement at work.

HR Issues & Employee Management

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