Introduction
Every company, regardless of its size and overall performance, experiences the phase of startup, growth, maturity, and either death or revival. Each stage makes an organization face unique challenges. For the owners, it is essential to be aware at which stage the organization is because this would help to develop an appropriate growth strategy. In the current paper, I will describe each of the mentioned stages and provide examples to illustrate them.
According to the U.S. Bureau of Labor Statistics (2019), about 80 percent of startups are doomed to fail during the first years of being open. Therefore, this stage is characterized by a high rate of failure. The failure mainly occurs due to the lack of finance, problems with team management, technological issues, and the lack of experience of doing business. At this stage, it might be recommended to focus on the attraction of clients and developing unique features that would help a company to take a strong position in the market.
Now, I would like to give you some examples of companies that survived this first stage and became immensely prosperous. Probably, the most well-known example of success is AirBnB – a service for renting housings all around the world. The annual profit of Airbnb is about $10 billion. The commonly used social media, such as WhatsApp, Snapchat, Twitter, Facebook, Instagram, and Linkedin are also examples of startups that managed to survive and turned into companies with multi-billion profits. The success did not come in the first years of establishment. However, these businesses illustrate that survival depends on being unique and working hard.
Growth
The second stage of an organization’s development is called growth. It is characterized by the maintenance of relationships with multi-year clients, constant reinvestment of money back into the company, substantial profits, and high competitiveness. The research conducted by Scott and Bruce (1987) reveals that despite the profitability, at the stage of growth, owners usually do not receive any significant personal income as money is reinvested into the company’s further development. The problems at this stage are connected with the fact that demand might exceed supply.
The stage of growth could be illustrated by the examples of Goggle, Tesla, and Amazon. Indeed, it is erroneous to think that these companies are at the stage of maturity. All of the mentioned companies keep on investing in expansion and the implementation of new technologies. Another fact that unites these companies is that all of them are tightly connected with the field of technologies and innovations. Since digital technologies are constantly developing, it might be suggested that these companies would remain growing even in the distant future.
Maturity
At the stage of maturity, companies that fail to adjust to the ever-changing environment and innovations can notice the first signs of the coming decline. More precisely, the sales might decrease, employees might lose their motivation and resign. In addition to that, companies at the maturity stage are frequently criticized and accused of losing momentum. Due to these challenges, it might become more difficult for the company to compete with newcomers with a new vision and innovative ideas. The administration of an organization that experiences this phase is recommended to pay more attention to maintaining the corporate culture that would keep employees inspired. Additionally, the owner should not forget to control the recent trends and the business environment to prevent the company from becoming outdated.
Ford Focus was established more than a century ago, in 1903. Currently, the cars produced by this company have a reputation of being of high quality. Despite this, Ford Focus has already reached the peak level of market penetration. The demand for the cars produced by Ford is being threatened by cars manufactured by Tesla or other companies that manufacture electric cars. From one point of view, Ford constantly presents re-designed and better-equipped cars. This technique allows the firm to stay at the top of the market. From another point of view, the traditional cars filled up with petrol are gradually substituted by electric cars.
Decline // Revival
After the stage of maturity, any company has two possible scenarios. If it fails to adapt to the new realities, it will decline. If it adjusts successfully, it will experience revival. Kodak is an example of a company that failed to promptly modify itself and, therefore, experienced a decline even though it was a great business in the 1990-s. Netflix, on the contrary, tells a story of success. It was founded in 1997, and at those times, it was not an online service with movies and series. Netflix managed to shift from the company selling DVDs to a company that all of us are familiar with.
References
Scott, M., & Bruce, R. (1987). Five stages of growth in small business. Long-range planning, 20(3), 45-52. Web.
U.S. Bureau of Labor Statistics (2019). Table 7. Survival of private-sector establishments by opening year. Web.