Introduction
Business development is a complex and multi-stage process that requires profound knowledge in many areas. These fields include economics, management, strategic thinking, crisis management, marketing, finance, etc. Moreover, the growth of any company is associated with certain stages, beginning with startup and ending with renewal or decline. Each of these stages is accompanied by its own characteristics, development strategies, and difficulties. The wrong approach to each stage can lead to non-compliance of balanced development and bankruptcy at the initial phases. An equally demanding task is to maintain positions in the subsequent stages of growth. A striking example of the proper approach to all stages of development may be the Apple company, which has turned into an international organization from a team of several people in a garage. The aim of this presentation is to identify four key stages of an organization’s growth and to analyze their peculiarities.
The life cycle of an organization
The lifecycle of an organization formulates the stages that a firm goes through from the start to the end of its activity (or until it reaches a prolonged stage of stability). One may draw an analogy with living things: namely, becoming, growth, maturity, and death. However, the difference is that a firm or product does not have to disappear for organizations. At the end of one, several options may be expected, namely displacement by competitors, merging with a larger company, or reaching stability. The latter constitutes a challenge, and not all companies can overcome all the difficulties and pressures. In any case, it starts with a start-up, then the company occupies a niche in its segment, after which a decline in performance is expected and either a revival or an end to the activities.
Four key stages of an organization’s growth
In the history of various companies’ emergence and disappearance (or continuing activity), one may distinguish four main stages in the lifecycle of companies. According to The Hartford Company (2021), these stages include startup, growth, maturity, and renewal or decline. Each of these phases requires not only knowledge and leadership skills but also creative thinking. This is due to the fact that each phase of growth is accompanied by specific challenges, which often require non-standard methods to solve. Moreover, it is problematic to reach the initial threshold of organizational survival when the company enters the independent stage. In other words, it is a period when an enterprise has formed its own ecosystem, and the pressure from other companies weakens.
The initial stage
Certainly, the startup, which is the initial stage of a business, formulates many challenges for development. According to U. S. Bureau of Labor Statistics, only 80% of startups with employees survive the first year (The Hartford, 2021). It may seem that the statistics show a low level of risks, however, one should remember that a period of one year is taken into account. Many companies do not survive for less than a year, which constitutes the significance and complexity of the startup phase. Indeed, a good idea is essential in a startup, and many aspects determine its quality. In Apple’s case, the idea wasn’t just interesting, it was revolutionary in its nature, which led the company to such a success. Moreover, at the startup stage, one applied non-standard strategies and solutions, which made it possible to become one of the most expensive companies in the world.
The growth stage
If one successfully goes through the initial stage, one will follow the growth phase. This period is characterized by customers’ knowing about your product, increasing market shares, and revenue growth (The Hartford, 2021). During this phase, the main task is not to lose the set pace, being impressed by the success. Primarily, it is necessary to analyze the pace of development and maintain a balance in expansion/demand. One should create a development plan, financial reserves (in case of miscalculations in the demand balance), and realistic, accurate forecasts (The Hartford, 2021). In this regard, Apple also successfully established itself in the market after initial success, expanding its products with iPods (Kumar, 2017). It breathed new life into the company in the first recession in 2000.
Business maturity
This stage is characterized by relative safety and comfort. In this phase, the products are well known to the customers, and the company has firmly taken its position in the niche. The financial turnover has reached high values, which opens up new opportunities for expansion or acquisition of other young companies. However, there are also threats at this stage that can lead to a decline in popularity and an attack from competitors. Namely, the stagnation, which is characterized by monotonous and similar performance at the market. It is crucial to consider the speed of development, as Apple did: expand its products due to the popularity of the brand (Kumar, 2017). They began to release software, headphones, watches, cameras, keyboards, tablets, and many other gadgets.
Renewal or decline
Unfortunately, every business faces this period at some point. Various reasons formulate it: improved products from competitors, unforeseen circumstances (for example, the COVID-19 pandemic), or, as described above, stagnation. In any case, in such a situation, there are two ways out, namely, to sell the business or reinvest in it (The Hartford, 2021). It is necessary to work with reliable people when selling a company since it is a responsible operation. If one decides to reinvest in the organization, it is vital to analyze the reasons for the recession and act precisely in the chosen directions. Successful reinvestment will lead to renewal and the second wave of revenue and expansion of the customer base due to new products (if it was the reason for the recession). Again, the example of successful reinvestment is Apple company and its production enlargement after the recession in the 2000s.
Conclusions
To conclude, launching and maintaining the business is complex process. It requires the profound knowledge in different areas and the ability to act nonstandard. The organization’s growth is usually characterized by four stages: startup, growth, maturity, and renewal or decline. Startup is challenging phase as one needs to create the qualitative idea. Maintaining the positions is also vital since one may face the stagnation. Although maturity stage may seem comfortable and safe, one needs to develop its business in order to keep the market place. One will definitely face the phase of decline, although, it may lead to renewal of the company. It is vital to analyze the reasons of downturn, and to work through the certain points.
References
Kumar, R. (2017). Strategic financial management casebook. Academic Press.
The Hartford. (2021). 4 stages of business growth. Web.