Organizational Growth

1600 WordsJul 2, 20107 Pages
ORGANIZATIONAL GROWTH _______________________________________ Growth is something for which most companies, large or small, strive. Small firms want to get big, big firms want to get bigger. Organizational growth, however, means different things to different organizations. How, then, is growth defined? How is it achieved? How does a company survive it? PHASES OF GROWTH A number of scholars and management theorists have developed models of how organizations change and grow. One such model is that of Larry E. Greiner, a management and organization professor at the University of Southern California. In his 1998 Harvard Business Review article entitled "Evolution and Revolution as Organizations Grow," Greiner outlined five phases of…show more content…
ROI tells management whether the profits being generated are enough to compensate for the opportunity costs, the risks, and the time value of the money that the company has invested to produce those profits. A related metric is return on assets (ROA), which evaluates profits against the value of all the assets (capital, plant, equipment, etc.) the company has channeled into generating its income. For many companies, especially publicly held ones, the ultimate measure of growth is the creation of wealth for owners/investors. While net profits are an indication of wealth creation, companies (or their observers) may scrutinize their finances further to determine whether they are actually generating an economic profit, or a profit that exceeds the implicit cost of the capital invested in them. It is only after the cost of capital is met that the company may be said to create new wealth. This growth may also be expressed in terms of market value added, a more direct measure of shareholder wealth creation. ACHIEVING GROWTH While there are many academic models depicting the growth stages of a company, management guru Tom Peters strongly suggests several real-world ways for companies large and small to achieve organizational growth. The business press routinely reports on the activities of companies employing these suggestions. JOINT VENTURE/ALLIANCE. This strategy is particularly effective for smaller firms with
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