Question

Growth for the sake of growth is not always in the best interest of the firm and shareholder value. What are some of the things the firm can do to increase its growth potential, and when might an action to increase growth be contrary to the interest of increasing the firm's value?

Answer 1

Growth potential means an additional production that firm can achieve, that means firm can produce more. Another way we can say that opportunity cost that firm is bearing, now can be achieve in terms of growth. Growth potential is an organization's future ability to generate larger profits, expand its workforce and increase production

to increase growth potential firm must go towards new technology, target should set towards defect free productions,optimal cost of productions, develop new ways to achieve target set by higher level of management.some other factors that help in increases in growth potential are law and governance, labor, capital and infrastructure, technology, customer base, etc.,

When growth potential factors are not in favor of firms growth. Increases in growth may goes contrary to firm when dose not respond to external environment, when firms policy are not flexible to the some extent, when the firm management and its resources are not capable to cope up with dynamic and complex environment that may have far reaching impact on firm growth.