What Is a Growth Company?

Enterprise growth is just like human growth. It is a process from quantitative change to qualitative change. It is a growth "gene" that promotes the continuous differentiation of organizations and functions within the enterprise system, thereby promoting the continuous expansion, metabolism, and continuous adaptation of the environment of the enterprise system. And form a positive interaction with the environment. The specific manifestations are the expansion of the enterprise scale, the continuous improvement and maturity of the internal structure of the enterprise, the optimization of enterprise functions, and so on. The growth of a company is in stages. Experts and scholars believe that there are life cycles, that is, the entrepreneurial period, expansion period, maturity period, and aging period. Of course, different scholars have different division methods and results.

Business growth

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Enterprise growth is just like human growth. It is a process from quantitative change to qualitative change. It is a growth "gene" that promotes the continuous differentiation of organizations and functions within the enterprise system. And form a positive interaction with the environment. The specific manifestations are the expansion of the enterprise scale, the continuous improvement and maturity of the internal structure of the enterprise, the optimization of enterprise functions, and so on. The growth of a company is in stages. Experts and scholars believe that there are life cycles, that is, the entrepreneurial period, expansion period, maturity period, and aging period. Of course, different scholars have different division methods and results.

The growth of an enterprise is mainly the continuous improvement of its structure and functions, that is, the "qualitative" change of the enterprise, and not just the size of the enterprise. Although there is no pure volume growth, a company that is expanding rapidly in the short term should not be called "growth."

The scale of an enterprise is the carrier of its structure and functions. If the scale of an enterprise is too small, it cannot have the perfect structure and functions that people imagine. However, on the one hand, there is only a certain correlation between the size of the enterprise and the structure and function of the enterprise, rather than a linear relationship, and it is impossible to absolutely correspond; on the other hand, the structure and function of the enterprise are relative to a certain size Existence, it does not exist absolutely good or bad, mainly because it adapts to the environment and the requirements and changes of the enterprise itself. In addition, the structure and function of a company are closely related to its strategy (Chandler, 2002), and it is also affected by the company group in which the company is located.

What is the structure and function of the enterprise? The structure of an enterprise mainly refers to the organization, system, and culture of an enterprise and its interrelationships; the function of an enterprise mainly refers to the role played by the organization, system, and culture of an enterprise and its ability to respond to and adapt to the environment. After a certain period of growth after the establishment of an enterprise, the most important thing is that the organizational structure of the enterprise can adapt to the size of the enterprise, the institutional framework of the enterprise is compatible with the organizational structure of the enterprise, and the corporate culture and organizational structure of the enterprise Fusion. That is, the organizational structure, institutional framework, and corporate culture of an enterprise can be integrated and can withstand relatively large environmental fluctuations and enterprises.

The performance of each stage of the theory of corporate life cycle growth

1. Founding stage

Business registration begins operation, that is, entering the establishment stage. In the founding phase, the company faces the challenge of survival, which makes the company

Has the following characteristics:

(I) Weak strength and strong dependence. During the establishment stage of the enterprise, resources are scarce and the company has not yet established a foothold in the market.

Face support.

(2) The product direction is unstable and the turnover rate is high. High bankruptcy rate. Relevant information shows. 200,000 U.S. failures annually

55% of small businesses are new businesses that have been in business for less than 5 years.

(3) Strong innovation spirit. Companies can not only provide innovative products and services that meet market gaps, but also have flexibility

Business strategy.

(4) The management is not standardized and the management level is low. There is often a phenomenon that there is no rule to follow and there is no rule to follow.

(5) Financial aspects usually show negative net cash flow, large investment, low income, insufficient cash, and

The ability to predict and control cash income and expenditure is often low.

2. Expansion stage

If an enterprise can survive after its establishment and obtain corresponding development, it will generally enter the expansion stage. The expansion phase is a corporate development

The key period of the exhibition: On the one hand, the strategic focus of the company has shifted from survival to competition for development opportunities and resources; on the other hand, the decision makers of the enterprise must maintain a sober mind, objectively evaluate the company's strength, and avoid the blind expansion of the company. In trouble.

The main characteristics of enterprises in this stage of development are:

(i) The enterprise has entered the expansion stage, and the survival problem has been basically solved. At this time, the enterprise has strong vitality and corresponding development performance.

Force, so it usually develops fast and has small fluctuations. At this stage. Enterprises are more competitive in terms of capital, number of personnel, and technical level.

The establishment stage has improved significantly, but the management and utilization of resources has become a new issue in enterprises.

(2) Enterprises form their own leading products, and their sales often account for more than 7096 of total sales revenue. Turnover rate of enterprises dropped

low. According to Japanese experts' analysis, the rate of change of enterprises in the expansion stage is more than 60% lower than that in the establishment stage.

(3) The level of enterprise specialization has increased, and companies have begun to focus on developing joint relationships with other enterprises, which has strengthened their collaboration capabilities.

(4) Enterprise management systems formed during the establishment stage often do not adapt to the pressure of scale-up during the expansion stage. Even face

Danger of collapse.

(5) In terms of finance, enterprises show large investment, abundant income, and positive or negative cash flow. At this time the company is expanding

Management often chooses debt development. Therefore, ensuring debt repayment ability is the key to corporate borrowing and development.

3 Maturity stage

After the development of the expansion stage, the enterprise has entered the mature stage, and its main characteristics are:

(1) With the expansion of the scale of the enterprise, its development has gradually shifted from extension to connotation, from extensive management to intensive management. This has slowed down the development of the enterprise and even stopped it. However, the efficiency of the enterprise has not decreased, and it has often increased.

(2) At the same time as the scale of the enterprise, management becomes more and more complicated, and the call for formal and scientific management of the enterprise is increasing.

(3) The company has increased its product awareness during the years of operation and formed its own distinctive products, even brand-name products. In order to further develop and avoid operational risks, companies usually choose to develop in a diversified direction, that is, the product changes from simplification to diversification. In this way, the requirements for corporate financing and investment capabilities have been further increased.

(4) After years of operation. The company has gradually formed its own business philosophy, cultivated the spirit of enterprise with its own characteristics, created an enterprise brand, and established a good image among the public.

4 Integration phase

The main characteristics of enterprises at this stage are:

The operating business is gradually developing towards diversification. There may be three levels of business at the same time. The first level refers to the core business of the enterprise. It's a business that enables customers to associate it directly with the company's name. These businesses usually bring most of the profits and liquidity to the business. They have a close relationship with the company's recent performance. Although they may have growth potential, they will eventually run out of energy. Decline.

The second level is the emerging business. These businesses are characterized by rapid development and entrepreneurship and high growth. Enterprise

The industry often invests heavily in the development of second-tier businesses to maintain its rapid growth. To make it develop the first level in the near future.

The third level contains tomorrow's business and future business. These projects may be research topics, market pilots, small investment attempts, and efforts to deepen industry understanding. The purpose of a large number of third-level businesses is to ensure that there will be enough excellent business to develop to the second level plaque and up to the first level in the future.

These three levels of business are coordinated with each other and co-exist in the enterprise.

(2) As enterprises gradually develop towards a group, the number of operating units is increasing. The company's original centralized management method is increasingly unsuitable for the management of group companies, so the degree of decentralization has become the focus of corporate management.

(3) Shareholders and stakeholders are paying more and more attention to the benefits that companies can bring to them, rather than the expansion of the scale of the company, so maximizing the creation of corporate value will become their requirements for the enterprise.

5. Metamorphosis

There are two kinds of future for enterprises entering the transformation stage:

The first future is decline (shown in dotted lines in Figure 2-1). At all stages of a company's growth, there are various reasons

Bankruptcy makes a company die, but this bankruptcy can only be considered a "death"; and bankruptcy after entering the transformation stage is caused by the aging of the company's body, so it is called decline.

The second future is recovery. Like the transformation of some insects, the recovery of the company is to change its shape and continue to survive.

What needs to be explained here is that for A-type enterprises, the possibility of declining after entering the metamorphosis period is greater, because their scale is small, and they are vulnerable to external influences and suffer the crisis of bankruptcy. But for B-type and C-type enterprises, due to their large scale, the impact of the external environment on them is not so obvious, so the vast majority will not die, but complete recovery in the transformation stage.