Erfolg und Misserfolg von Wachstumsstrategien

Table of Contents

Declaration in Lieu of Oath

I. Executive Summary

II. List of Figures

1. Introduction

2. Corporate Growth as a Strategy

3. Growth Strategies – Chasing Growth in Sales
3.1 Framework for Sales Growth
3.2 Implementation of Sales Growth Strategies
3.3 Sales Growth Strategies: What Can Go Wrong!

4. Conclusion

III. Bibliography

IV. ITM Checklist (360-degree analysis)

Declaration in Lieu of Oath

I hereby declare that I produced the submitted paper with no assistance from any other party and without the use of any unauthorized aids and, in particular, that I have marked as quotations all passages, which are reproduced verbatim or nearby-verbatim from publications.

Also, I declare that the submitted print version of this thesis is identical with its digital version. Further, I declare that this thesis has never been submitted before to any other examination board in either its present form or in any other similar version.

I herewith agree that this thesis may be published. I herewith consent that this thesis may be uploaded to the server of external contractors for the purpose of submitting it to the contractors’ plagiarism detection systems.

Uploading this thesis for the purpose of submitting it to plagiarism detection systems is not a form of publication.

Cologne,

Signed in the original

I. Executive Summary

Growth is an expression of the competitiveness and performance of companies. Growth of sales, profit and employment improve the economy and are fundamental requirements of social progress. We can hardly imagine Mr. Schmidt rejecting growth after running a bakery successfully instead of preferring that everything stays the way it is.

Indeed companies normally pursue growth, the opposite approach is rare. But first and foremost companies grow to survive¹. Globalization, decreasing margins due to competitive pressure and prospects for employees force companies to grow. Companies simply cannot afford to stand still. Therefore, their central focus of attention lies on obtaining increased sales (and profits). Not for nothing in business circles it is said that “a company can only sleep peacefully as long as the sales are fine”.

But higher sales cannot simply be achieved by demanding them. The increase of sales has to be approached strategically. In that manner, companies have to know where they stand, before they decide where to go. Referring to sales growth strategies they need to execute a sales growth program, which starts off with an analysis of key aspects, like market, customers, products, competencies and costs. The whole project can take up to 2 years and demands high professionalism, endurance and effort. At the same time, the pursue of higher sales come at certain risks and companies make many mistakes – either in terms of the analysis and concept development or the planning and implementation.

This paper deals with growth strategies from the perspective of sales increases. It explains the framework of sales growth strategies and their implementation (using a company, which wants to improve their sales on the medium-term, as a conceptual model). The description of mistakes which are often made in this process round up this paper.

II. List of Figures

Figure 1: Strategic Alignment of a Company Figure 2: Market Performance Matrix

Figure 3: Strategy for a Medium-Term Sales Increase

Figure 4: Questions About the Actual Condition of the Company

1. Introduction

More than ever corporate growth is a central topic in the business management debate of research and corporate practice. Indicators for that are the great numbers of newly released books on this topic as well as the fact that growth is the main theme of almost every annual general meeting. The bigger significance of corporate growth is related to the fact that sustainable performance increases can only be achieved by positive changes in a company. As a consequence, many managers feel corporate growth is the solution.

However, growth is not a universal remedy. It is very decisive how the company grows. The initial situation of a company, the direction of growth, the availability of management capacities as well as the height and the consistency of growth has to fit together, in order for the strategy to be successful.

Growth strategies of companies can have different objectives. They can aim at improving their product innovation, increasing in diversification, internationalization, raising customer figures and sales². The primary goal of companies is to achieve growth of sales in combination with growth of profits. Hereto, Allan Stewart, former CEO of the billion-dollar company GTE in Stanford (USA) said: “Holen wir zuerst den Umsatz, dann machen wir ihn profitable”³.

This paper will examine growth strategies in the context of sales increases. At the beginning “corporate growth as a strategy” will be assessed, which is vital for the further discussion. However, the main focus is on the implementation of sales growth strategies and therefore I assume a successful company is seeking to increase its sales in the medium-term. Similarly, I will look at circumstances that may jeopardize sales increases.

2. Corporate Growth as a Strategy

Scientific literature differentiates between quantitative and qualitative growth. Quantitative growth occurs whenever a measureable variable (e.g. progression of employees, production capacities) which is used to quantify the size of a company, increases. In terms of qualitative growth, it is more difficult to measure the involved criteria, because they can only be quantified indirectly. Qualitative growth appears, for example, when a company has improved its success and consequently certain criteria in the field of success⁴. In some cases qualitative growth is even associated with increasing quality of products or customer relations⁵ (without changing the size of the company in terms of inputs).

But no matter if growth is to be achieved in a quantitative or qualitative way, it demands a fundamentally sound strategy. In the opinion of J oel Ross and Michael Kami this is vital for the company´s success, as “without a strategy the organization is like a ship without a rudder”⁶ that won´t be able to accomplish growth.

But why do we pursue growth? An easy answer is: “Who wants to work for a company that is stagnating? Growth is the source of prosperity – not only of companies, but also of states. It generates more jobs and more tax receipts. Furthermore, the stock market interprets corporate growth positively, rewards it with rising stock market prices and in the end with a higher stock exchange capitalization. Against this backdrop, growth has become a central figure in the business world. It stands for sustainable corporate success and continuity. Or in other words, with the help of growth strategies companies aim at improving themselves quantitatively or qualitatively in a specific strategic area.

3. Growth Strategies – Chasing Growth in Sales

What happens when companies have nearly reached their full cost minimization potential? Although a permanent cost control remains important, the saving opportunities are very little⁷. For these companies it is time for a new approach – increase of sales. Due to fixed costs structures of companies, the increase of sales usually leads to disproportionate growth in profit. For this purpose companies have to create the right conditions.

3.1 Framework for Sales Growth

The first step after a company decided to increase its sales is a close examination of its capabilities. According to Hennerkes/Leach this phase includes the following fields: strategy, market performance, products/service, staff and financial support⁸.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Strategic Alignment of a Company⁹

[...]

¹ McKinsey&Company 2007, https:// www. mckinseyquarterly.com/Strategy/Growth/The_granularity_of _growth_ 1993, 27th of November 2010.

² Czotscher, Eric 2006, p. 3.

³ Hennerkes/Leach 1999, p. 15.

⁴ Cf. Hutschenreuter 2006, p. 34.

⁵ Cf. Steria Mummert Consulting 2006, p. 3.

⁶ Thompson Jr./Strickland/Gamble 2008, p. 2.

⁷ Cf. Tomasko 1997, p. 18.

⁸ Cf. Hennerkes/Leach 1999, p. 16.

⁹ Cf. Ibid., p. 18.