Exam 13: Preparing for and Evaluating the Challenges of Growth

Sometimes firms are compelled to grow to accommodate the growth of a key customer.

Only ________ of the businesses that make Inc. magazine's list of the 500 fastest growing private firms in America repeats the following year.

Kelly Andrews owns a company that makes office furniture. Recently, a favorable article was written about Kelly's company in a business magazine, and as a result, Kelly has seen a spike in his orders. Although Kelly is grateful for the additional orders he is worried about one thing. An increase in activity means that his firm must handle more service requests and paperwork and contend with more customers, stakeholders, and vendors. Kelly knows that if he doesn't handle this increased activity properly, the workmanship of his products could decline. The day-to-day challenge of firm growth that this example illustrates is:

The majority of businesses go through a discernable set of stages of growth referred to as the:

The process of writing a business plan greatly assists in developing growth-related plans.

What is the organizational life cycle and why is it important?

Sustained growth is defined as growth in both revenues and employees over an extended period of time.

As a business moves beyond its early growth stage and its pace of growth accelerates, the need for structure and formalization decreases.

The main challenges for a business in the early growth stage are to make sure the initial product or service is right and to start laying the groundwork for building a larger organization.

When a firm's managerial resources are insufficient to take advantage of its new product and service opportunities, the subsequent bottleneck is referred to as the:

The ________ stage of the organizational life cycle is the start-up phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

________ costs are costs that a company incurs whether it sells something or not.

Moral hazard 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.

The main challenges for a business in the introduction stage of the organizational life cycle is to:

________ are similar to economies of scale, except the advantage comes through the scope (or range) of a firm's operations rather than from its scale of production.