7 Flashcards
Company Life Cycle Model, Model + infos
1-4
1-5
- transitions not automatic
1 Foundations Phase (product development, marketing, financing)
2 Growth Phase (should be well planned; strategic, administrative, organizational problems; 1/7 succeed)
3 Maturity Phase
4 Decline Phase
Reasons for Growth
1-7
- key driver of company value
- survivability of company
- high growth = high evaluation of company
- growth essential for gaining market shares
- capital-intensive companies need external capital inflow for investors
- foundation phase has little or no revenue -> financial condition can’t be - long maintained and has to be compensated quickly
Economy contribution of young companies’ growth
1-6
- technological change through innovation of new products
- creation of new markets
- securing and creating of jobs
- innovation drivers for large parts of the German economy
- basis for economic growth in Germany
- increasing attractiveness of Germany for investors home and abroad
How to Measure Growth
1-2
Qualitative Measures
- statistical measurements
- input oriented (number of employees, total/fixed/current assets, investments, equity)
- output oriented (sales, profit, production amount, market share)
Qualitative measures
- not directly quantifiable and difficult to determine
- degree of innovation, production quality, customer relations, skills and knowledge
Variants of Growth Paths
bild!
1 exponential
- rare
- innovative, technology oriented companies
2 incremental + 3 episodic
- expansion into new markets
increase discontinuously
4 stagnating
- increasing competition in market
Growth Measurements in the Lifecycle of a company
Beginning: Input oriented quantitative measures
End: Output-oriented quantitative measures
all: qualitative measures
Growth Models
1-5
1 metamorphoses model (effect of changing corporate context on coordinations mechanisms)
2 crisis model (series of developments phases based on growth thresholds and crisis)
3 structural change model (changes in organizational and management systems)
4 behavioral change models (phase related attitude and behavior)
5 market development models (cumulative life cycle of products)
1 Metamorphoses Model by Lievegoed
1-3
1 Pioneer Phase
- dominated by founder
- lead, coordinates, directs, personal instruction
2 Differentiation Phase
- implementation of departments
- structural, technical systems are replacing personal leadership
3 Integration Phase
- individual work becomes flexible
- emphasis on team-building and autonomous work
Crisis Model by Albach
1-3
1 Early Phase:
- Foundation crisis (due to failure of the founders)
2 Growth Phase:
- Financing crisis (due to high interest charges)
- Management crisis (due to sticking to personal/informal management principles)
3 Maturity Phase:
- age crisis (maturity, succession problems)
Life Cycle Crisis Model by Greiner
X? Y?
1-5
Y: from little to large
X: from young to old
1 Management crisis: growth through creativity
2 Autonomy crisis: growth through strong management
3 Control crisis: growth through delegation
4 Bureaucracy crisis: growth through coordination
5 … crisis: great team spirit
Growth at different Levels in the Orga
1-3
with advanced growth/increasing size formalizes forms of management become more important
1 strategy & operative business
- extent, breadth of the task increase
2 personnel
- number of heterogeneity and involved individuals increase
3 organization
- complexity and diversity of management tasks increase
Specialization: High + / Low -
+ efficiency advantages
+ learning effects through repetition
+ lower level of personnel’s expertise required
- employee motivation sinks by small range of tasks
Delegation: Decentralized + / central -
+ relief of the founder
+ employee motivation
+ faster decisions
+ generating potential successor
- less control
- coordination problems
Coordination: Self + / S.o. else -
+ quick
+ flexibile decisions
- clear management
Churchill/ Lewis: About the changing of the company
- ball bilder die auseinander gehen
- remit of the founder shifts
- founder turns slowly into “Owner Manager”
- essential: will and skill of founder
Growth Management by Founder
1-4
- management of individual areas
- interdependence management: alignment of areas among themselves
- systems/structure/formal processes substitute time/energy/involvement of founder
- planning substitute real-time acting and decisions
Management Modes by Tasks
BILD
Management Modes by Area
BILD
Time Management
Bild
Problems of Growth
1-5
- Corporate Culture (risk aversion low motivation and flexibility)
- Frameworks (policy, legal)
- Overall economy
- Financing
- Competition
Ways to drive growth
1-4
1 word of mouth
- satisfied customers recommend product
2 side effects of product usage
- some products drive awareness when used: fashion
- viral products: customer drives new customers “PayPal”)
3 funded advertising
- advertising expenses must be sustainable (by revenue not one-time investments)
- Rule: marginal profit (capital to attract new customers) = marginal revenue (new customer) - marginal expenses (new customer)
4 repeat purchase/use
- designed to be repurchased (subscriptions, voluntary repurchases)
- many products one time (wedding planning)
Growth Drivers
1-3
1 sticky engine of growth
- attract/bin customer for long terms
- KPI: fluctuation ratio: growth = new customers > lost customers
- focus on existing customers/product
2 viral engine of growth
- customers takes part in marketing (product usage is marketing itself)
- KPI: viral coefficient: number of new customers because of usage of another
- focus on maximizing the viral coefficient (advertisement)
3 paid engine of growth
- direct investments (e.g. Adwords, salesforce)
- growth if: max (revenue p. customer) or min (expenses p. n. customer)
- focus on marginal profit: Customer lifetime value (LTV) - cost per acquisition (CPA)
Typical problem areas due to growth
1-4
1 missing delegation of decision-making authority to personnel (->wrong decisions by entrepreneurs)
2 lack of focus due to management problems (->lack of sense of key aspects)
3 loss of entrepreneurial spirit (-> half-hearted implementation of process)
4 funding problem due to lack of pre-financing plans (-> liquidity crisis)
Leadership
Bild
