Greiner's Stages of Organizational Growth Model.
· Stage 1: Concept/test
Before a business is launched, it undergoes some form of conception and planning. This may involve a
market test or running the business as a part-time operation, before the owner places complete
dependence on it. Creative thinking, information gathering and networking are key activities in this stage.
· Stage 2: Development/abort stage
The business is launched and either develops to a viable size, or it is aborted at an early stage. This
will depend critically on whether sufficient customers in the marketplace adopt the product or service
on offer, hence marketing linked to cash flow management are often the key functional activities.
Typically an individual entrepreneur manages the enterprise in this stage largely through their own
efforts. This is a particularly vulnerable stage for a business as statistics indicate that it is the smallest
and youngest firms that have the highest rates of closure.
· Stage 3: Growth/decline stage
Some enterprises that have developed into a viable entity in the marketplace continue their growth
quickly or, in some cases, more steadily. Such growth may place strains on the internal structure of
the enterprise. The management of internal processes and people are often the critical functions. The
one-person entrepreneurial management style may prove inadequate to fully sustain growth. A
division of managerial tasks, the recruitment of non-owner-managers and the development of a
functionally organised team are often prerequisites to take a business through this phase, without
which it may struggle and close.
· Stage 4: Maturity
Most surviving business go through a period of stability, when growth flattens and the enterprise
matures. It may at this stage lose its simple structure of centralised decision-making, use more
sophisticated business processes and become more bureaucratic in its procedures. In other words,
it takes on some of the characteristics of a larger organisation.
· Stage 5: Re-growth/decline
Once an enterprise has established itself in the marketplace with a competitive advantage over its
rivals, profits or external investment may be available to exploit further the successful business
model. The so-called 's-curve hypothesis' suggests that such investment may trigger a second
period of growth. Without this further period of growth, the maturity stage can turn into stagnation and
decline, as competition intensifies from existing rivals or new entrants into the market.
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