Organizational Growth

RETURN ON ASSETS (ROA) Formula Description: You determine return on assets by dividing net profit by your total asset base. What Does Return On Assets Tell You?

Implementing an innovative growth strategy that can achieve expected growth, while maintaining a value based employee model.

* Return on assets (ROA) – ROA shows how successful a company is in generating profits on the amount of assets they own. Since assets consist of debt and equity, ROA is a measure of how well a company converts investment dollars into profit. The higher the percentage, the more profit a company is generating per dollar of investment. Similar to ROS, this ratio needs to be looked at compared to the industry as different industries have different requirements that can affect ROA. For example, companies in the airline and mining industries need expensive assets to operate so will have lower ROA’s compared to companies in the pharmaceutical or advertising industries.

Stages of business growth theories see the development of an organization as a process with several stages and try to understand the features of different stages and the accompanying problems. All the models try to solve the following three big questions: How to mark the stages of business growth? How many stages the business experiences in its development? What are

Growth – The process of improving some measure of an enterprise’s success. Business growth can be achieved either by boosting the top line or revenue of the business with greater product sales or

Companies are interested in developing the skills of their employees in their attempt to improve their performance. This objective is reached with the help of learning and growth strategies. The measures of learning and growth strategies are reflected by companies' financial performance, customer satisfaction, business development, and others.

When a company is evolving from a start up to a major corporation, it will probably have to grow through the stages of

Return on Assets (ROA): “Return on assets is the ratio of annual net income to average total assets of a business during a financial year.” (Irfanullah, 2013) In short, it measures a company’s

Organizational change encompasses many challenges to both the individual, and the organization. An organization is a living system, as Flower (2002) states “living systems cannot survive without change, challenge, variety, and surprise” (Flower, 2002, p. 16). An organization requires the ability to adapt in to survive as Darwin states in The Origin of Man, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change” (Read Me First, 2013, p. 1). It must adapt to the changing market, global economic pressures, stakeholder demands, and the diverse needs

Although the Greiner model is quite useful for analyzing organizational growth, it doesn’t consider organizations whose parts seem to be in different phases

The learning and growth perspective uses the organization’s resources to adapt to the changing wants and needs of customers. The organizations must ask itself whether it can continue to improve and create value for its customers (Kinney and Raiborn 2013, 11). An organization’s ability to innovate and improve their products or services directly affects its value. An organization can create economic growth by developing new products and services, improving existing products and services, and developing more efficient operations (Kaplan and Norton January/February 1992, 75).

When a company grows it achieves economies of scale, it increases its market shares and thus wipes out competition. A company starts making more profits and can use these in constructive ways such as employing specialist workers and improving the variety and quality of products, by delving more into research and development. These are only some of the

Steps have to be taken to diagnose the need for change. Larry E. Greiner developed a theory helpful in change management. This theory shows five stages of growth that an organization goes through. The phases are creativity, direction, delegation, control and collaboration.

Return on investment (ROI) measures the rate of return generated by an investment center’s assets (Jackson, Sawyers, Sweeney, & Anderson, 2008). ROI is broken down into two components margin and asset turnover. Margin is a measure of operating performance and asset turnover is a measure of how effectively assets are used during a period (et. al. 2008).

To increase and maximize the wealth/value of shareholders, it is necessary that the company is competitive in their market and can reliably “earn a considerable return on its investments above their cost of capital” (Doyle, 2000). The increasing rates of return of well performing companies attract new investors who invest money to become shareholders. These outside funds from investors are essential for growth of businesses and the expansion into new markets. Measurements of generated shareholder returns over a certain time period deliver the company useful information on whether their objectives have been achieved or should be new adjusted (Atrill, 2009).