Lecture 8

Question 1

Why do some firms not want to grow?

Answer 1

• growth may attract the attention of competitors

- many are concerned with maintaining independence so don’t want to be taken over

Question 2

What are some ways to measure growth?

Answer 2

• business survival
• employment
• sales turnover
• ROI
• number of new products/ innovations

Question 3

What are some growth strategies?

Answer 3

• replication: more of the same
• diversification: related or unrelated
• organic growth vs acquisitions
• franchising, alliances (licensing, joint ventures)

Question 4

Greiner’s growth model: what are the issues with this model?

Answer 4

• one size fits all approach
• implies that growth is only upward
• closure is the norm in some business cases which is not shown on the model
  However, stochastic models of firm growth suggest that growth is random and not in stages like in Greiner’s growth model - entrepreneur is therefore the one with the winning ticket

Question 5

What is the resource based view on growth?

Answer 5

growing businesses have the following attributes:
- valuable
- rare
-imperfectly imitable
- non-substitutable
resources are important but so are capabilities
However: assumes continuous returns to learning whereas growth is spotty

Question 6

What are the advantages of firm growth?

Answer 6

• “work is more fun with a growing company”
• employee promotion opportunities
• achieves efficient scale
• growth often associated with profit rise

Question 7

What are some blocs to taking on growth?

Answer 7

• loss of control
• risk aversion
• lifestyle firms in the comfort zone
• restricting sales to avoid spoiling the market