Growth and Scalability as a Strategic Goal

Cite this article as:"Growth and Scalability as a Strategic Goal," in The Business Professor, updated April 28, 2017, last accessed June 2, 2020, https://thebusinessprofessor.com/lesson/growth-and-scalability-as-a-strategic-goal/.

Back To: BUSINESS STRATEGY

Strategic goals or objectives?

The most basic strategic goal of any business is growth. You may have heard the refrain, “if a business is not growing, it is dying”. This is true because of competition. Competitors will enter any given market until it becomes oversaturated. As such, every business must generally develop a strategy to maintain or grow.

Methods of Growth

Growth may take place in any number of methods, including: bringing in more revenue, increasing current market share, developing new products or services, entering new markets, or any combination thereof. The methods for achieving growth may be organic or inorganic. Organic growth occurs through a business’s operations. The business may become more cut costs or increase revenue. Each of these result in capital that can be used to acquire new customers for existing or new value propositions. This is normally done by focusing on the company’s core competencies. Inorganic growth, in contrast, is growth by combining with (merging or acquiring) a new business. This requires the combined company to combine and employ the core competencies of the acquiring and acquired companies.

Growth and Scalability

A concept closely related to growth is scaling or scalability of a business value proposition. Growth relates to the size of the business (revenue, assets, personnel, capitalization, etc.). Scalability relates the core value proposition that the business provides to customers and the ability to generate repeated or recurring revenue from the same or slightly greater effort. For example, creating software is scalable because it (the business’s value proposition) can equally provide value to ten or ten thousand individuals. Many technology companies are inherently scalable. A product or service business may not be scalable, as every service provider is limited by time and every product must be replaced once sold. These types of business may be able to employ business models that make them scalable. That is, they identify aspect of the value proposition that can be replicated quickly with little additional resources (costs or efforts). Imagine a service business that sells access to recorded lessons delivering the service rather than delivering the service in person. The company made the value proposition scalable. All businesses must employ a strategy for growth. The essence of a “startup” or “startup venture”, in contrast to a traditional business or lifestyle business, is that it has a scalable business model.

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