Size matters
ta
becomes very difficult, if not impossible. Unable to grow on their
own, those companies acquire other firms. For example, Cisco Systems
has acquired over 100 different companies since its inception.
There are a number of problems with this practice, including:
-- It stifles innovation. Many times, firms acquire other firms for
the sole purpose of squashing the technology, which competes with
their existing products.
-- It stifles competition. When companies take over their rivals,
there is less competition in the marketplace. And competition is one
of the hallmarks of a "free market" economy.
-- It hurts customers. Less innovation and competition results in
fewer (and often poorer) choices in the marketplace.
Under what circumstances is it a) necessary and/or b) desirable to
have only a few large producers of a service or product, and why?
tg
It may be useful in establishing a technology---as we have seen with
IBM/Microsoft and PC's. At some point, proprietary models become
burdensome to the consumer.
But the question is interesting in relation to your previous posts on
empire, isn't it. And with respect to the two-party system, and the
political structure of the US.
Good one.
-tg
3877
> Once a company grows to be a certain size, organic growth generally
> becomes very difficult, if not impossible.
That is not correct, plenty continue to grow organically.
Unable to grow on their
> own, those companies acquire other firms. For example, Cisco Systems
> has acquired over 100 different companies since its inception.
That is just the alternative to organic growth.
> There are a number of problems with this practice, including:
>
> -- It stifles innovation.
Not necessarily, most obviously when a particular operation refuses to be acquired.
Many times, firms acquire other firms for
> the sole purpose of squashing the technology, which competes with
> their existing products.
Not that often in fact.
> -- It stifles competition. When companies take over their rivals,
> there is less competition in the marketplace. And competition is one
> of the hallmarks of a "free market" economy.
And most modern first world countries have constaints on that sort of stifling of competition.
> -- It hurts customers. Less innovation and competition results in
> fewer (and often poorer) choices in the marketplace.
It does not necessarily hurt customers, most obviously when
a company essentially buys innovative products and incorporates
the ideas from them into the range of products they sell.
> Under what circumstances is it a) necessary and/or b) desirable to
> have only a few large producers of a service or product,
That hardly ever happens.
> and why?
You get economies of scale and save on overheads when those are not needed in a host of operations.
Les Cargill
Past history shows that firms like to standardize on buying
from a handful (or as few as one) large firm. This can
be for reasons of perceived financial stability, standardization
or simply "nobody ever got fired for buying IBM" - herd
mentality/fear.
--
Les Cargill
*Anarcissie*
> ta wrote
>
> > Once a company grows to be a certain size, organic growth generally
> > becomes very difficult, if not impossible.
>
> That is not correct, plenty continue to grow organically.
Can someone present some evidence?
3877
> On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>> ta wrote
>>
>>> Once a company grows to be a certain size, organic growth generally
>>> becomes very difficult, if not impossible.
>>
>> That is not correct, plenty continue to grow organically.
>
> Can someone present some evidence?
One obvious example is Wal-Mart.
tg
> On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>
> > ta wrote
>
> > > Once a company grows to be a certain size, organic growth generally
> > > becomes very difficult, if not impossible.
>
> > That is not correct, plenty continue to grow organically.
>
> Can someone present some evidence?
>
Sure, if you can specify what would constitute evidence.
-tg
Fred Weiss
> On Jan 2, 5:55 pm, "*Anarcissie*" <anarcis...@gmail.com> wrote:
> > Can someone present some evidence?
>
> Sure, if you can specify what would constitute evidence.
It's not necessary if you are willing to let the market decide.
The historical evidence however suggests that it is very, very
difficult for any company to maintain market dominance indefinitely.
The reason is probably a natural tendency to become smug and
complacent. In the process you don't see and/or tend to dismiss the
significance of competition.
The paradigm is Henry Ford's famous slogan, "You can have any color
car, so long as its black".
Fred Weiss
*Anarcissie*
>
> > On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>
> > > ta wrote
>
> > > > Once a company grows to be a certain size, organic growth generally
> > > > becomes very difficult, if not impossible.
>
> > > That is not correct, plenty continue to grow organically.
>
> > Can someone present some evidence?
>
> Sure, if you can specify what would constitute evidence.
1. Define size.
2. List companies considered to be in the
domain of the size->organic growth function.
3. List history of companies, relating "organic
growth" to size of company. Show correlation
or lack of correlation.
Rod Speed
> tg <tgdenn...@earthlink.net> wrote
>> Anarcissie <anarcis...@gmail.com> wrote
>>>>> Once a company grows to be a certain size, organic
>>>>> growth generally becomes very difficult, if not impossible.
>>>> That is not correct, plenty continue to grow organically.
>>> Can someone present some evidence?
>> Sure, if you can specify what would constitute evidence.
> 1. Define size.
Dont need to. Walmart is clearly bigger than the original claim.
> 2. List companies considered to be in the
> domain of the size->organic growth function.
Dont need to do that either. Walmart clearly qualifys.
One is all you need when its by far the biggest of the lot and it did that by organic growth.
> 3. List history of companies, relating "organic growth" to
> size of company. Show correlation or lack of correlation.
See just above.
Rod Speed
>>>> ta wrote
>>>>> Once a company grows to be a certain size, organic
>>>>> growth generally becomes very difficult, if not impossible.
>>>> That is not correct, plenty continue to grow organically.
>>> Can someone present some evidence?
>> Sure, if you can specify what would constitute evidence.
> It's not necessary if you are willing to let the market decide.
> The historical evidence however suggests that it is very, very
> difficult for any company to maintain market dominance indefinitely.
Organic growth is however perfectly possible and
not even very difficult and Walmart proves that.
> The reason is probably a natural tendency to become smug and complacent.
That clearly did not stop Walmart or Microsoft.
> In the process you don't see and/or tend to dismiss the significance of competition.
That clearly did not stop Walmart or Microsoft.
> The paradigm is Henry Ford's famous slogan,
> "You can have any color car, so long as its black".
Nope.
*Anarcissie*
Walmart might be an outlier. I'd like to see a more
general treatment of the principle proposed here, but
based on facts taken from the measurable world.
They shouldn't be very hard to get. Has size
damaged Coca-Cola? J. P. Morgan Chase? Goldman
Sachs? IBM? Verizon? Time-Warner? Yes? No?
But first, what is size? Number of employees, value
of the stock, market share, net worth, gross income,
number of senators bought or rented? What is
growth -- an increment in this figure, or something
else?
Rod Speed
> Rod Speed <rod.speed....@gmail.com> wrote
>> Anarcissie wrote
>>> tg <tgdenn...@earthlink.net> wrote
>>>> Anarcissie <anarcis...@gmail.com> wrote
>>>>> 3877 <3...@nospam.com> wrote
>>>>>> ta wrote
>>>>>>> Once a company grows to be a certain size, organic
>>>>>>> growth generally becomes very difficult, if not impossible.
>>>>>> That is not correct, plenty continue to grow organically.
>>>>> Can someone present some evidence?
>>>> Sure, if you can specify what would constitute evidence.
>>> 1. Define size.
>> Dont need to. Walmart is clearly bigger than the original claim.
>>> 2. List companies considered to be in the
>>> domain of the size->organic growth function.
>> Dont need to do that either. Walmart clearly qualifys.
>> One is all you need when its by far the biggest of the lot and it did that by organic growth.
>>> 3. List history of companies, relating "organic growth" to
>>> size of company. Show correlation or lack of correlation.
>> See just above.
> Walmart might be an outlier.
Nope, there are plenty of others that have chosen to grow by organic growth.
> I'd like to see a more general treatment of the principle proposed
> here, but based on facts taken from the measurable world.
Its a bit hard to quantify his original 'generally becomes very difficult, if not impossible'
> They shouldn't be very hard to get.
They are on quantifying his original 'generally becomes very difficult, if not impossible'
> Has size damaged Coca-Cola? J. P. Morgan Chase?
> Goldman Sachs? IBM? Verizon? Time-Warner? Yes? No?
He didnt say damaged.
> But first, what is size? Number of employees, value
> of the stock, market share, net worth, gross income,
All of those are fine.
> number of senators bought or rented?
Too hard to measure.
> What is growth -- an increment in this figure,
A significant increment, anyway.
> or something else?
Nope.
Dan Clore
> *Anarcissie* wrote:
>> On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>>> ta wrote
>>>
>>>> Once a company grows to be a certain size, organic growth
>>>> generally becomes very difficult, if not impossible.
>>> That is not correct, plenty continue to grow organically.
>> Can someone present some evidence?
>
> One obvious example is Wal-Mart.
Wal-Mart is a poor example of organic growth. True organic growth would
only occur without government intervention on behalf of the company.
Wal-Mart has received a great deal of government intervention on its
behalf. One study tallied more than a billion dollars worth of corporate
welfare handed to this corporate welfare queen:
http://www.goodjobsfirst.org/corporate_subsidy/walmart.cfm
--
Dan Clore
New book: _Weird Words: A Lovecraftian Lexicon_:
http://tinyurl.com/yd3bxkw
My collected fiction, _The Unspeakable and Others_:
(Wait for the new edition: http://hplmythos.com/ )
Lord We�rdgliffe & Necronomicon Page:
http://tinyurl.com/292yz9
News & Views for Anarchists & Activists:
http://groups.yahoo.com/group/smygo
Strange pleasures are known to him who flaunts the
immarcescible purple of poetry before the color-blind.
-- Clark Ashton Smith, "Epigrams and Apothegms"
3877
> 3877 wrote:
>> *Anarcissie* wrote:
>>> On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>>>> ta wrote
>>>>
>>>>> Once a company grows to be a certain size, organic growth
>>>>> generally becomes very difficult, if not impossible.
>>>> That is not correct, plenty continue to grow organically.
>>> Can someone present some evidence?
>>
>> One obvious example is Wal-Mart.
>
> Wal-Mart is a poor example of organic growth.
It is in fact an absolutely classic example of organic growth
and blows the original claim completely out of the water
given that it is bigger than any other retail operation.
True organic growth
> would only occur without government intervention on behalf of the
> company.
That is completely silly.
Wal-Mart has received a great deal of government
> intervention on its behalf. One study tallied more than a billion
> dollars worth of corporate welfare handed to this corporate welfare
> queen:
> http://www.goodjobsfirst.org/corporate_subsidy/walmart.cfm
It is STILL organic growth. Organic growth means other than by takeover etc.
http://en.wikipedia.org/wiki/Organic_growth
The definition of organic growth says nothing about government intervention.
That would at most be growth not assisted by government policy etc.
Dan Clore
Okay. I didn't realize that "organic growth" was a technical financial
term with (as usual) a counter-intuitive meaning.
tg
Now you're getting somewhere.
-tg
*Anarcissie*
No, I'm not. One of the nostrums of the Net is that
small companies are more efficient, productive,
agile, whatever, than large ones. Cathedral versus
the bazaar and all that sort of thing. The assertion that
started this subject is strongly related to that nostrum.
So, here is a chance to discuss it -- with evidence.
So far, all we've gotten is Wal-mart, which is not
nothing, but it sure isn't much.
How about it? Does anyone have any facts?
Zerkon
A "sound money" system would make this much clearer, I think.
If 'organic growth' is a goal, as it well should be, the base money
system needs to be organic also which means it can not be just *poof*
created. Otherwise it is a dream land built with fairy dust.
tg
I meant that you proposed some criteria. But we can only do one at a
time---that's why nostrums are not helpful, they are overly vague.
Any company that is small (measured by gross income) and becomes big
has demonstrated something---and it would be clear that such companies
did not start out with size advantages. Walmart, however, is
'efficient' in terms of labor costs, while a start-up is terribly
'inefficient' because the entrepreneur and his wife and kids are
working 16 hour days.
Good stuff to think about, as I said.
-tg
ta
>
> > ta wrote
>
> > > Once a company grows to be a certain size, organic growth generally
> > > becomes very difficult, if not impossible.
>
> > That is not correct, plenty continue to grow organically.
>
> Can someone present some evidence?
Evidence of the previous poster's straw man, or evidence that it
becomes more difficult to grow organically as you get larger?
If the latter, I don't think that's very controversial -- as the
markets for products and services become saturated (which is the
necessary outcome of growth), there become fewer opportunities for
growth. I would think this is fairly obvious.
Exxon recently acquired XTO Energy, in large part, no doubt, because
acquiring their existing natural gas business is helluva lot easier
than growing their own natgas business.
ta
> On Jan 2, 1:11 pm, ta <tapa...@gmail.com> wrote:
>
>
>
> > Once a company grows to be a certain size, organic growth generally
> > becomes very difficult, if not impossible. Unable to grow on their
> > own, those companies acquire other firms. For example, Cisco Systems
> > has acquired over 100 different companies since its inception.
>
> > There are a number of problems with this practice, including:
>
> > -- It stifles innovation. Many times, firms acquire other firms for
> > the sole purpose of squashing the technology, which competes with
> > their existing products.
>
> > -- It stifles competition. When companies take over their rivals,
> > there is less competition in the marketplace. And competition is one
> > of the hallmarks of a "free market" economy.
>
> > -- It hurts customers. Less innovation and competition results in
> > fewer (and often poorer) choices in the marketplace.
>
> > Under what circumstances is it a) necessary and/or b) desirable to
> > have only a few large producers of a service or product, and why?
>
> It may be useful in establishing a technology---as we have seen with
> IBM/Microsoft and PC's. At some point, proprietary models become
> burdensome to the consumer.
Good example. Anything else?
> But the question is interesting in relation to your previous posts on
> empire, isn't it. And with respect to the two-party system, and the
> political structure of the US.
Certainly as an empire gets larger and larger, "growth" opportunities
become fewer and fewer, making expansion more difficult and
"acquisition" more necessary . . . as well as more dangerous (is this
even debatable?).
As to the two party system, are you suggesting that having additional
choices is "burdensome to the consumer"?
> Good one.
>
> -tg
ta
Good point . . . ah, the old adage that "large = stable" . . . like
AIG. ;-)
ta
Although it doesn't fit the technical definition, you still bring up
a good point (even if slightly tangential). In the swashbuckling
world of the "free market", where rugged individualists supposedly
compete against one another on their own raw talent, the gummint is
there to lend an invisible hand.
> --
> Dan Clore
>
> New book: _Weird Words: A Lovecraftian Lexicon_:http://tinyurl.com/yd3bxkw
> My collected fiction, _The Unspeakable and Others_:
> (Wait for the new edition:http://hplmythos.com/)
> Lord Weÿrdgliffe & Necronomicon Page:http://tinyurl.com/292yz9
*Anarcissie*
> On Jan 2, 5:55 pm, "*Anarcissie*" <anarcis...@gmail.com> wrote:
>
> > On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>
> > > ta wrote
>
> > > > Once a company grows to be a certain size, organic growth generally
> > > > becomes very difficult, if not impossible.
>
> > > That is not correct, plenty continue to grow organically.
>
> > Can someone present some evidence?
>
> Evidence of the previous poster's straw man, or evidence that it
> becomes more difficult to grow organically as you get larger?
>
> If the latter, I don't think that's very controversial -- as the
> markets for products and services become saturated (which is the
> necessary outcome of growth), there become fewer opportunities for
It's not obvious to me. So I want to see definitions,
sizes, and accounts of growth. Given the great
talent of human beings to use, abuse and waste,
I can't think of any example of the kind of market
saturation you're talking about. In any case
monopoly does not equal size.
tg
What kind of market saturation *is* he talking about? If you want
criteria, you should hold yourself to that standard---don't leave an
opening to change your definition later.
A simple example would be a small town with one diner, where everyone
goes for breakfast. Unless the population increases, the number of
breakfast-seekers is not likely to change. So, perhaps the owner will
introduce topless waitresses, but that is exactly what ta is talking
about---the business is now food with an entertainment division; it
hasn't 'grown organically'.
There are numerous large examples, often bad choices, like GM buying
Saab and other car companies, or GE going into finance. In those
cases, expansion is constrained because the industry is mature, and
picking up more market share with the base product is too difficult---
it is saturation for their particular brand and character.
-tg
*Anarcissie*
Apparently, then, we're talking about two different limits
to growth. One is some sort of limit caused by complexity
of organization, and another is caused by the company
growing so large it has no more markets for its products.
The second has little to do with size or complexity: the
diner which feeds everyone breakfast could be a one-
man operation.
How closely to we want to constrain the product
repertoire to stay within the "organic" requirement?
I had the idea that "organic growth" meant "not by
buying other companies" but might include ex-
tension of the existing business into new but
related areas, for example, Microsoft going into
web services.
ta
Actually, that is an example of organic growth. OTOH, if the diner
bought out "Stripper R Us" and then incorporated them into their diner
business, then that would not be organic growth.
ta
> On Jan 3, 11:08 am, ta <tapa...@gmail.com> wrote:
>
>
>
> > On Jan 2, 5:55 pm, "*Anarcissie*" <anarcis...@gmail.com> wrote:
>
> > > On Jan 2, 1:44 pm, "3877" <3...@nospam.com> wrote:
>
> > > > ta wrote
>
> > > > > Once a company grows to be a certain size, organic growth generally
> > > > > becomes very difficult, if not impossible.
>
> > > > That is not correct, plenty continue to grow organically.
>
> > > Can someone present some evidence?
>
> > Evidence of the previous poster's straw man, or evidence that it
> > becomes more difficult to grow organically as you get larger?
>
> > If the latter, I don't think that's very controversial -- as the
> > markets for products and services become saturated (which is the
> > necessary outcome of growth), there become fewer opportunities for
> > growth. I would think this is fairly obvious. ...
>
> It's not obvious to me.
Is it obvious to you that a company acquires another company because
it is easier to do so than develop that business on their own?
Rod Speed
>>>>> 1. Define size.
>>>> See just above.
It is in fact a hell of a lot given that its by far the biggest retailler
around and bigger than some smaller countrys economically.
Clearly organic growth is prefectly possible even for an operation as large as that.
And it aint alone either, there are plenty of the largest operations around that
have got there by organic growth, most obviously with IBM and DEC before it.
Yes, non organic growth is currently more popular, but plenty have done organic growth fine.
Its just more work that non organic growth and takes longer.
> How about it? Does anyone have any facts?
You just close your eyes to them.
Rod Speed
Yes it has when it hasnt grown by takeover etc.
http://en.wikipedia.org/wiki/Organic_growth
> There are numerous large examples, often bad choices,
> like GM buying Saab and other car companies,
Thats non organic growth.
> or GE going into finance.
That is organic growth although they did takeover some other financial operations.
> In those cases, expansion is constrained because the industry is mature,
> and picking up more market share with the base product is too difficult---
> it is saturation for their particular brand and character.
Again, you are mangling what the term organic growth means.
Rod Speed
Thats is correct, or more strictly not using takeovers or acquistions etc either.
http://en.wikipedia.org/wiki/Organic_growth
> but might include extension of the existing business into new but
> related areas, for example, Microsoft going into web services.
Yes, that is certainly organic growth if its not done by
buying an operation that is already involved in web services.
MS has done it both ways, often buy buying up companys but also by
doing its own product in a new area etc, most obviously with networking.
tg
>
> > There are numerous large examples, often bad choices,
> > like GM buying Saab and other car companies,
>
> Thats non organic growth.
>
> > or GE going into finance.
>
> That is organic growth although they did takeover some other financial operations.
>
> > In those cases, expansion is constrained because the industry is mature,
> > and picking up more market share with the base product is too difficult---
> > it is saturation for their particular brand and character.
>
> Again, you are mangling what the term organic growth means.
Actually, I'm trying to figure out what people mean by the term, and
having them correct my guesses is a pretty efficient way to do that.
-tg
tg
Ok, if that's how you wanna play! ;-)
What that means to me is that we are talking about two different
things,
1) A business defined by the service it provides.
2) A business as a financial operation or the identity of the owner/
manager.
What if we start out with a holding/management company of some kind?
If the business of the company is to acquire businesses, then is it
growing organically when it acquires more businesses?
-tg
Rod Speed
ta
That's what I'm referring to. I'm not really talking about holding
companies, which don't produce anything.
tg
Ok. The way I understand it though, once you start doing something
other than your original business, it gets difficult to distinguish
from buying an existing company.
I'm inclined to think that problems with size follow from getting so
big that your 'divisions' become like different companies; you have a
division president who is just as big an egotistical shmuck as the
CEO, and things just fall apart. GM again as a paradigm.
-tg
*Anarcissie*
> > That's what I'm referring to. I'm not really talking about
holding
> > companies, which don't produce anything.
>
> Ok. The way I understand it though, once you start doing something
> other than your original business, it gets difficult to distinguish
> from buying an existing company.
>
> I'm inclined to think that problems with size follow from getting so
> big that your 'divisions' become like different companies; you have a
> division president who is just as big an egotistical shmuck as the
> CEO, and things just fall apart. GM again as a paradigm.
So now we can get on with defining _size_. Probably, GM
will show up in the size-becomes-bad column, and Walmart in the
size-becomes-good column, but if we have a definition of _size_
and the data about the companies, we can actually put them
there rationally, rather than intuitively.
The business about the diner, though, reminded me that we may
also have to think about the domain of the proposed function.
Rod Speed
Nope, not when you just start doing something
quite different by just starting in that area too.
> I'm inclined to think that problems with size follow from getting so
> big that your 'divisions' become like different companies; you have
> a division president who is just as big an egotistical shmuck as the
> CEO, and things just fall apart. GM again as a paradigm.
That is in fact much more of a problem with non organic growth, essentially
because that is much more likely to happen with what you acquire or takeover.
*Anarcissie*
No. I think acquisitions are made for a variety of
reasons. Often, the buying company simply wants
to destroy the competition and, if possible, grab the
customers -- but you may think of the latter as
developing business.
But in regard to market saturation, that can
certainly occur, but many companies diversify
or develop their products so as to keep selling
into the same markets. Therefore, I don't think
market saturation is a sure limit to sales for most
companies.
In any case, I wanted to focus on the idea that
growth has some kind of upper limit due to
internal problems like communication, rather
than consider external constraints.
ta
Huh? A company wouldn't need to "destroy the competition" if they were
able to do that with their own products/services/resources. IOW, the
company is unable to grow the business organically; they have a
shortcoming of some sort that can not be easily addressed without
acquiring another company.
> But in regard to market saturation, that can
> certainly occur, but many companies diversify
> or develop their products so as to keep selling
> into the same markets. Therefore, I don't think
> market saturation is a sure limit to sales for most
> companies.
Sure, you can grow your business by continuing to sell your existing
customer base -- and all companies do that -- but unless you're
continually bringing in new customers, your business will slow to a
crawl. You can diversify your business by adding new products to your
portfolio, but companies often choose to buy out another company to
accomplish that, rather than do it on their own.
> In any case, I wanted to focus on the idea that
> growth has some kind of upper limit due to
> internal problems like communication, rather
> than consider external constraints.
Well, I definitely think it's much more difficult for larger companies
to act and react quickly, depending on the corporate culture.
ta
I agree with that, but I'm also questioning the *process* by which a
firm gets big, and what that signifies. To me, the inability of a
company to grow organically is a sign of weakness.
*Anarcissie*
I've been working at the remains of a company
that was bought out by another, larger company.
The main motivation seems to have been to get the
other's customers, since they have not in fact taken
over much of the actual business -- they have mostly
cycled it down and eventually out. It was probably
cheaper for the larger company to buy out the
smaller company than to compete against it and
destroy it. Also, a buyout as opposed to a
campaign of destruction leaves less room for
adverse intervention by third parties. This
experience follows the model of most of the buyouts
I know about. To wit:
1. buy the company
2. "outplace" (fire) the staff gradually, meanwhile
3. move the customers to your own business units
4. turn out the lights and lock the building
Agreed, this doesn't always happen, but it's pretty
common.
> > But in regard to market saturation, that can
> > certainly occur, but many companies diversify
> > or develop their products so as to keep selling
> > into the same markets. Therefore, I don't think
> > market saturation is a sure limit to sales for most
> > companies.
>
> Sure, you can grow your business by continuing to sell your existing
> customer base -- and all companies do that -- but unless you're
> continually bringing in new customers, your business will slow to a
> crawl. You can diversify your business by adding new products to your
> portfolio, but companies often choose to buy out another company to
> accomplish that, rather than do it on their own.
Depends what you're selling. If you're selling weapons
and ammunition, sales to A spur sales to B and vice
versa, and the sky's the limit.
Cabbages, not so zippy.
> > In any case, I wanted to focus on the idea that
> > growth has some kind of upper limit due to
> > internal problems like communication, rather
> > than consider external constraints.
>
> Well, I definitely think it's much more difficult for larger companies
> to act and react quickly, depending on the corporate culture.
This is what I want to see facts about. Define size and
growth, and then show what growth leads to. You're
proposing at least a parabolic sort of function, where
growth at first leads to prosperity (up the hill) and then
deterioration (down the hill). Let's have the physical
evidence. So far Wal-mart and GM have been
mentioned, but no specifics.
Folks, this is just a simple series of numbers. If I
weren't so lazy (and dysnumeric) I'd just do it
myself.
Rod Speed
Nope, not when you currently dont have stores everywhere that is useful.
> You can diversify your business by adding new products to
> your portfolio, but companies often choose to buy out another
> company to accomplish that, rather than do it on their own.
Yes, but that has nothing to do with your original about the size of the company.
>> In any case, I wanted to focus on the idea that
>> growth has some kind of upper limit due to
>> internal problems like communication, rather
>> than consider external constraints.
> Well, I definitely think it's much more difficult for larger companies
> to act and react quickly, depending on the corporate culture.
No evidence of that with the products that Walmart chooses to sell etc.
Didnt stop Apple doing the ipod either, tho it was rather late with the iphone.
Rod Speed
Nope, just a recognition that there are advantages in growing by takeover etc.
Rod Speed
It isnt that easy to do. In spades with the what could have happened
if say Walmart had grown by takeover instead of organic growth.
ta
And all of this serves to illustrate my point that it's usually easier
to just take over another company than to grow your company
organically.
> > > But in regard to market saturation, that can
> > > certainly occur, but many companies diversify
> > > or develop their products so as to keep selling
> > > into the same markets. Therefore, I don't think
> > > market saturation is a sure limit to sales for most
> > > companies.
>
> > Sure, you can grow your business by continuing to sell your existing
> > customer base -- and all companies do that -- but unless you're
> > continually bringing in new customers, your business will slow to a
> > crawl. You can diversify your business by adding new products to your
> > portfolio, but companies often choose to buy out another company to
> > accomplish that, rather than do it on their own.
>
> Depends what you're selling. If you're selling weapons
> and ammunition, sales to A spur sales to B and vice
> versa, and the sky's the limit.
Well, the business of warfare is surely an exception.
> Cabbages, not so zippy.
>
> > > In any case, I wanted to focus on the idea that
> > > growth has some kind of upper limit due to
> > > internal problems like communication, rather
> > > than consider external constraints.
>
> > Well, I definitely think it's much more difficult for larger companies
> > to act and react quickly, depending on the corporate culture.
>
> This is what I want to see facts about. Define size and
> growth, and then show what growth leads to. You're
> proposing at least a parabolic sort of function, where
> growth at first leads to prosperity (up the hill) and then
> deterioration (down the hill).
In general terms, this is basically common knowledge already. For
example:
But the details are going to depend on a whole host of factors,
including the corporate culture (how do you plan on quantifying
that?), the business/sector, the maturity of the business/sector, the
growth potential in the business/sector etc. etc.
*Anarcissie*
I am just interested in the outlines at this point.
It's been widely asserted that large companies
are Dilbertesque and inefficient. If so we ought
to see the pattern given in the image above
generally repeated, so that it predominates
statistically. Probably we would see a peak or
cusp during growth after which some important
variable declines. This is the evidence I'm
requesting, but I guess no one has it.
Rod Speed
It isnt even possible to have it because it isnt even possible to quantify what would
have happened if the other alternative approach to growth had been used instead.
Or even possible to quantify the situations where choosing to not go for growth was the
appropriate thing to do at a particular instant, because the cost benefit wasnt there etc.