Student Weekly Blog (10)

This week I also will work on the slide of preparing for and evaluating the challenges of growth. I will read the slide, and do some note that related to the chapter.

I knew that there were challenges of growth. Although growth has many advantages, it has many challenging and rigorous process. Firm growth often includes the raising additional capital, recruiting new employees, learning how to supervise a larger organization, accepting more risk, and increased anxiety for the owners and managers of a firm. There is also having many managerial capacity problems. The problem with managerial capacity is that firms are not always prepared or able to grow because of limited “managerial capacity.”

Managerial capacity problem in a firm’s administrative framework is a complex problem. It is because if a firm has insufficient managerial services to properly implement its new product and service ideas, it will not grow up. The additional challenges is when a firm grows, it is faced with the dual challenges of adverse selection and moral hazard. Adverse selection means that as the number of employees a firm needs increases. While the 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.

The typical challenges of growing a firm are the cash flow management, price stability, quality control, and capital constraints. Capital constraints are an ever-present problem for growing firms. The growth increases rather than decreases the challenges in this area. Besides that, there are also myths about growth. The first myth is growth companies are predominately technology and health care companies. While the second myth is rapid-growth firms emerge only in rapid-growth industries. The third myth is to grow quickly; you must have a first-mover advantage.

The attributes of successful growth firms are growth-oriented vision, commitment to growth, business growth planning, participation in business alliances, and geographic location that facilities knowledge absorption. For the growth-oriented vision, it is clearly communicates to relevant stakeholders the important of growth to an organization. The real mission will successful and it needs to change for more suitable if want to success in growth firms. Commitment to growth is a drive and commitment to achieve growth. It is frequently mentioned as a necessary precursor for successful growth. Business growth planning is a plan that helps a firm organize for growth and address the relevant managerial and strategic issues necessary to maintain growth.

Besides that, participation in business alliances will also help success in growth firm. Business alliances help firms share costs, increase speed to market, gain economies of scale, and gain access to essential resources, knowledge, and foreign markets. Ggeographic location that facilitates knowledge absorption is a firm located in a geographic area that is in close proximity to important external sources of knowledge. It will have better to access the knowledge.