Most organizations naturally want and need to grow and develop. However, not all have the facility to stay. Transcend the boundaries of time due to the intense competition that exists in the market. The impact of political, economic and social aspects or the deficient strategy and vision that is internally in the Own organization.
Both the growth and the development of the company refer to an evolution which the company modifies its size or the field of activity in which it acts but are terms that can’t be used as synonyms.
The growth of the company refers to increases in size in variables such as volume of assets, production, sales, profits or personnel employed. It is one of the key ingredients in defining your corporate strategy. This is due to several reasons:
- Growth is interpreted as a sign of health, vitality and strength.
- In such dynamic and competitive environments, companies have to grow and develop continuously.
- The growth target is closely related to the utility function of the company’s managers.
The concept of development of the company goes a little further by proposing both quantitative and qualitative changes. It is broader than growth because it includes qualitative variations of the company. Although it is usually accompanied by growth in most cases, this is not always the case. Development strategies must be oriented towards creating value, can create value with or without growth through restructuring.
The development strategies therefore refer to the decisions that the business management adopts in relation to the future evolution of the field of activity both in terms of its quantitative (growth) and qualitative aspects (composition of the portfolio of business).
The management had several options that are generated from the response to the two basic problems:
- Development direction: Refers to which direction to follow in the development of business, i.e. decide whether the company should focus or specialize in the activities it is carrying out, develop new ones or restructure the whole of its business. Decide on whether or not to modify the activity field.
- Method of development: Once the direction is chosen, it is necessary to decide on the method. Form or way to achieve the objectives marked in the direction of development chosen. The basic options here are the internal or organic development. The external and the cooperation agreements or alliances as an intermediate form between the two previous ones.
These are the concepts that must be taken into account to differentiate the growth of business development.