Question

Please write 2 -3 good paragraphs about how can an organizattion stop gowing to increase its profitability with two actaul example of organizatiions that stopped growth to increase profitability and how it worked? Thank you

Answer 1

Every company in its initial years, tries to focus on earning as much revenue possible in the first few years of its existence. Revenue is like oxygen to it. It is needed for its existence and continue its business. However after a certain amount of time when the company has become established in the market and accumulated enough cash in its reserve it needs to expand and diversify to grow big so that the surplus cash can be utilised effectively. For this, the company tries to grasp the best of investment opportunities. There are some companies who're afraid of growing too big as they think they do not have enough resources to handle the pressure and additional work that will follow. Such companies after reaching a certain level of growth decide to stop growing and focus solely on revenue and their stakeholders needs. These companies are called niche companies because they are good at crafting a niche for themselves without growing too big. The cosmetic industry is a good example of successful niches. The best niche brands include Rodin, Ilia, RGB, Oribe and Butter London. They are good at a particular product if not multiple and offer them at relatively cheaper prices than the bigger brands.

The best company outperforms all and becomes the key player in the market. Such companies are named by business analyst as Star, The more cash they generate, the more growth opportunities they avail and the bigger they become. With time they get internationally known and settle branches in multiple nations. However after decades of continous growth, they too get tired of being continously in the race to perform. After surviving such an exhaustive period, they too decide to settle down and focus on revenue itself. Such companies are then called cash cows. Current examples of such companies are Qualcomm, Chevron, Amazon, Oracle to name a few.

Amazon is at top of e-commerce world having its branches in nearly all major nations. Practically it has nothing to achive anymore by further growth. So, it focuses now on its national and international operations and keeping customers happy by ensuring quality and providing offers and discounts from time to time.