Article Review of When Growth Stalls
Review of: Olson, Matthew S., Van Bever, Derek ,Verry, Seth. 2008. When Growth Stalls. Harvard Business Review, 51-62.
The article raises the issue of revenue growth stalls that affect even the most successful companies. The article focuses on four major causes of the crisis. The first cause is the premium-position captivity that is”the inability of a firm to respond effectively to new, low-cost competitive challenge or to a significant shift in customer valuation of product features” (p.54). The second reason is the innovation management breakdown that is”some chronic problem in managing the internal business process for updating existing product and services and creating new one” (p.56). Third reason is the premature core abandonment that means “the failure to fully exploit growth opportunities in the existing core business” and “acquisitions of growth initiatives in areas relatively distant from existing customers, products, and channels”(p.56). Finally, the fourth cause is the talent bench shortfall that is “a lack of leaders and staff with the skills and capabilities required for strategy execution” (p.58). Authors emphasize that these causes are mainly within management control since they result from “a choice about strategy or organizational design” (p.54).
They point out that awareness and understanding of these causes assist companies in avoiding the growth stalls. In addition, the article demonstrates few practices that some companies use to predict and prevent the problem.
The article provides examples of companies that have faced the crisis. For instance, the premium position captivity reason was among the main factors causing Levi Strauss to lose its share of market. ...
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...when the company focused on further improvements of its pickups and SUVs instead of focusing on innovations required by the changing demand. If the management had not been ignorant and would have developed sound strategy as soon as it spotted the change, the company would have avoided the crisis. However the company just recently adjusted its production plan and plans to continue realigning its manufacturing capacity, product mix and cut costs to fix the situation (“Ford Adjusts Production”).
References:
Ford adjusts production plan but still loosing money in North America. Automotive Digest Weekly. Retrieved June 4, 2008 from http://www.automotivedigest.com/weekly.shtml#6
US auto sales slide in May as buyers spurn trucks. CNBC. Retrieved June 4, 2008 from http://www.cnbc.com/id/24949794/site/14081545?__source=aol%7Cheadline%7Cquote%7Ctext%7C&par=aol
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Ford Motor Company current mission statement is “committed to provide personal mobility for people around the world”. With that in mind their vision is to become the world’s leading Consumer Company for automotive products and services. By improving everything they do, the company provide superior returns to their shareholders (Vision, Mission, Values).
Growth strategy is the organisation formulating their plan to accomplish their objectives and goals to grow in revenue and size of the business. However according to (Bridge, O’Neill and Cromie 2003), she defines growth strategy as a “...the movement of the business into bigger premises, taking on more staff, significant increases of turnover, taking on a new product line or lines, buying another business, and so on” Growth Strategies are important for businesses as they allow the business to move in a formal direction. Businesses can easily be affected by the smallest of changes for example new customers or the arrival of new competitors which could have a negative impact, so planning is very important and takes care of additional effort and resource for faster growth. With these growth strategies, organisations try to achieve numerous things for example, obtaining economies of scale, attaining market leadership and retaining talented staff.
...s Growth." US News. 11 Nov. 2011. U.S.News & World Report. 14 Jan. 2014 .
...(Boudette, and Dolan, 2010). Ford is about to launch its smaller vehicles; less than two years ago Ford motor’s plant in Mexico was building big pick-up trucks. But it has retooled to produce Ford’s small Fiesta car, due to go on sale in America for the first time in June. (Simon, 2010).Mulally is the architect of Ford’s remarkable recovery in its fortunes.
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