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Chapter
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1
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Introduction
to Managing Growth
Growth is a natural function of both living things and organizations.
Uncontrolled growth can be dangerous. Growth needs to be planned.
Growth requires resources just as living things need nourishment.
Growth should be incremental rather than spectacular.
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2
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What
is Meant by Managing Growth?
Growth occurs when an organization uses transformation
to add value and uses the profits made to advance further
additional activities. Growth can be achieved internally by
increased activity or by acquiring other organizations. Organizations,
like humans, products, and services, undergo a life cycle.
Certain points in the life cycle are more conducive to growth
activities than others. Organizations can enter periods of
growth after apparent decline.
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3
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The
Evolution of Growth Management
The first forms of organizational growth occurred in the public
sector, as rulers sought to provide for their subjects. Growth,
as we know it today, needed different forms of finance to
be developed. Investment in companies by the general population
began to occur in the eighteenth century. Different industries
have grown at different times in response to changes in the
market.
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4
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The
E-Dimension of Managing Growth
Many businesses have used the Internet to facilitate their
growth. A Web presence is now an expected norm. As faith in
the security of payment systems over the Internet grows, so
will e‐commerce. The Internet has provided a growth
opportunity for organizations providing Internet-linked services
and products. It is no use gaining new customers via the Internet
(or any other means) if increased demand cannot be met. A
Webpage may be the first contact a potential customer has
with an organization and so must be of high quality.
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5
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The
Global Dimension of Growth Management
Business, amongst other things, is done differently in other
countries, and this must be kept in mind when planning to
grow by global expansion. Local culture must be taken into
account when growing on a global basis. The Starbucks model
of incremental linked steps in global expansion coupled with
steady growth in the original market carries fewer risks than
an attempt to penetrate global markets too swiftly.
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6
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State-of-the-Art
Management of Growth
Organizations can grow either organically or by mergers and
acquisitions. Organic growth may occur by portfolio expansion,
horizontal diversification, vertical diversification, or a
mixture of all three. Alliances and franchising are less risky
means of achieving organizational growth. Growth should be
in line with the organization's mission and vision. Growing
organizations need to prepare a business plan. Organizational
and external analysis allow the organization to identify opportunities
and threats that will affect growth. Successful growth depends
upon the control and monitoring of resources and finance.
Effective communication is an important factor in managing
growth. People are the most critical aspect of the growth
process. Growth often involves expanding the staff numbers.
Organizational structures and systems may have to change as
the organization grows. Growth involves changes in organizational
culture as well as the more tangible aspects of organizational
design.
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7
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Growth
Management Success Stories
This chapter provides case studies of the following companies.
Wal-Mart, Dixons Group, Hyundai.
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8
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Key
Concepts and Thinkers on Growth
This chapter provides the following information. A glossary
of growth and growth-related concepts. Details of key thinkers
on growth.
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9
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Resources
for Growth
This chapter lists the following information: Resources for
studying growth; General texts; Specific texts; Journals and
magazines; Websites.
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10
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Ten
Steps to Managing Growth
The 10 steps to managing growth are: know what you want to
do; find out about your customers; find out about your competitors;
keep an eye on the cashflow; know when to diversify; know
when to acquire; take your people with you; know your investors;
stay friends with the bank; and know when to divest.
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