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55 Cards in this Set
- Front
- Back
growth in both revenues and profits over a sustained period of tiem |
sustained growth |
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The study found that a company's growth typically follows one of several patterns (4) |
1. it might burst on the scene with years of expansion and then decelerate and decline 2. it might grow in fits and starts, possibly in sync with the overall economy 3. it might enjoy a brief boom and then plateau 4. it might achieve steady incremental growth repeated over time |
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The first thing that a business can do to prepare for growth is to... |
appreciate the nature of business growth |
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Not all businesses have the potential to... |
be aggressive growth firms |
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A business can... |
grow too fast |
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The overarching point is that growth must be... |
handled carefully |
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Business success doesn't always... |
scale |
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The second thing that a business can do to prepare for growth is to... |
stay committed to a core strategy |
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what it does particularly well |
core competencies |
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Successful businesses... |
keep their heads down and do one thing particularly well |
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The third thing that a firm can do to prepare for growth is to... |
establish growth-related plans |
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The biggest challenge (in a growing company) is... |
keeping your family happy and constantly deciding when to miss important family events because work demands it. |
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Working hard is not... |
a sacrifice as long as you achieve your ultimate objective |
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the rate at which it is growing on an annual basis |
pace of growth |
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Six primary reasons that firms try to grow to increase their profitability and valuation" |
economies of scale economies of scope market leadership influence, power, and survivability need to accommodate the growth of key customers ability to attract and retain talented employees |
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generated when increasing production lowers the average cost of each unit produced |
economies of scale |
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Two reasons economies of scale exist: |
If a company can get a discount by buying component parts in bulk, it can lower its variable costs per unit as it grows larger By increasing production, a company can spread its fixed costs over a greater number of units |
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the costs a company incurs as it generates sales |
variable costs |
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costs that a company incurs whether it sells something or not |
fixed costs |
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the advantage of a firm accrues comes through the scope of a firm's operations rather than from its scale of production |
economies of scope |
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occurs when a firm holds the number one or the number two position in an industry or niche market in terms of sales volume |
market leadership |
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A firm that stays small and relies on the efforts and motivation of its founder or a small group of people is vulnerable if those people... |
leave the firm or lose their passion for the business |
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The final reason that firms grow is to... |
attract and retain high-quality person |
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a company must actively and carefully manage... |
its growth for it to expand in a healthy and profitable manner |
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Five stages of the organizational lifestyle |
introduction early growth continuous growth maturity decline |
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the start-up phase where a business determines what its strengths and core competencies are and starts selling its initial product or service |
introduction stage |
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The main challenges for a business in the introduction stage are... |
to make sure the initial product or service is right and to start laying the groundwork for building a larger organization |
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A business's early growth stage is generally characterized by... |
increasing sales and heightened complexity |
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For a business to be successful in this stage, two important things must take place. |
1. the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor of every aspect of the business to a more managerial role. 2. increased formalization must take place. |
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The need for structure and more formal relationships increases as a business moves... |
beyond its early growth stage and its pace of growth accelerates |
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The toughest decisions are typically made in the.. |
continuous growth stage. |
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The importance of what increases during the continuous growth stage? |
developing policies and procedures |
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A business enters the maturity stage when its growth... |
slows |
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The firm typically focuses more intently on... |
efficiently managing the products and services it has rather than expanding in new areas. |
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It's important that a firm continues to.. |
adapt and that the founders, managers, and employees remain passionate about the products and services that are being sold. |
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It is not inevitable that a business enter... |
the decline stage and either deteriorate or die |
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Eventually all businesses' products or services will be threatened by... |
more relevant and innovative products |
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A business's ability to avoid decline depends on.. |
the strength of its leadership and its ability to appropriately respond. |
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The technology life cycle is associated with the concept of crossing the chasm, which explains why... |
some technology products reach mainstream markets while others don't |
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As a business grows and takes market share away from rival firms, there will be a certain amount of... |
retaliation that takes place. |
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The primary purpose of a firm is to... |
package its resources together with resources acquired outside the firm as a foundation for being able to produce products and services at a profit. |
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the set of opportunities the firm feels it's capable of pursuing |
productive opportunity set |
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The firm's administrative framework consists of two kinds of services that are important to a firm's growth: |
entrepreneurial services and managerial services |
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generate new market, product and service ideas |
entrepreneurial services |
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administer the routine functions of the firm and facilitate the profitable execution of new opportunities |
managerial services |
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When a firm's managerial resources are insufficient to take advantage of its new product opportunities, the subsequent bottleneck is referred to as the... |
managerial capacity problem |
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means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision |
adverse selection |
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means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours or may even try to avoid hard work |
moral hazard |
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The ability to increase managerial services is not friction free. It is constrained or limited by (4) |
1. the time required to socialize new managers 2. how motivated entrepreneurs and/or managers are to grow their firms 3. adverse selection 4. moral hazard |
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The reality of the managerial capacity problem is one of the main reasons that entrepreneurs and managers... |
worry so much about growth |
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There are a number of day-to-day challenges involved with growing a firm (4) |
Cash Flow Management Price Stability Quality Control Capital Constraints |
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It's almost a full time job staying on top of... |
who owes you what and who you owe, and then prioritizing those payments |
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If firm growth comes at the expense of a competitor's market share,... |
price competition can set in |
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If a business can't build its infrastructure fast enough to handle the increase activity... |
quality and customer service will usually suffer |
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The need for capital is typically the most prevalent in the... |
early growth and continuous growth stages of the organizational life cycle |